A Guide to Airbnb service fees: What you need to know

Running a successful Airbnb can mean getting extra money in your pocket, but you’ll also have expenses to consider, including service fees. While it may seem like another charge that bites into your profit, it’s an essential part of letting your property.

We have put together this guide to help explain Airbnb service fees, so you can keep your guests happy and your business ticking over.

What is a service fee on Airbnb?

Airbnb adds mandatory service fees to all reservations. The company says these are used to cover various administration costs, so they can continue to provide a smooth booking experience for hosts and guests1.

Why does Airbnb charge service fees?

Airbnb helps market your property, covering you during letting periods for certain incidents. As a result, Airbnb takes a portion of the subtotal to ensure they can continue to provide these services.

The service fee on Airbnb supports products and services such as[1]:

  • Offering 24/7 customer support.
  • Marketing properties to guests, both through search engines and social media.
  • Protecting you and your place against certain risks.
  • Supplying educational resources to hosts to support your business.

How much is the Airbnb service fee?

Several factors influence how much Airbnb charges hosts, including the property location, cancellation policies, and length of stay.

Generally, most hosts pay a flat service fee of 3%. However, this depends on whether you opt for a split fee or host-only service fee2. Here’s a breakdown of both service fee structures and what to expect:

Split fee

The split service fee is the most common option. As the name suggests, the fee is split between you and the guest. However, most guests pay the largest fee — up to 14.2% of the subtotal. This includes the cleaning fee, nightly rate, and any additional guest charges if applicable 2. For example, this could mean that if you are charging a guest £100 for the property, Airbnb may charge the guest around £14.20 extra for service charge. Meaning your guest would pay £114.20, of which £14.20 goes to Airbnb.

Most hosts will pay a service fee of 3% of the subtotal. However, Airbnb may charge some hosts more, for instance, hosts with strict cancellation policies or listings in certain countries (such as Italy) can expect a higher service fee2.

Host-only fee

With the host-only fee, you cover the entire service cost — this ranges between 14-16%. Again, hosts with strict cancellation policies, classified as Airbnb Plus Hosts or in specific locations, may pay higher service fees2.

How to decide which service fee structure to use

Most hosts can select a service fee structure, although some have no choice. Host-only fees are mandatory for certain properties like hotels, hostels, serviced apartments, or software-connected hosts (i.e., people that connect CMS systems to Airbnb)2.

However, for those who have a choice, it’s worthwhile considering the pros and cons of both options. A split fee can allow hosts to charge a lower nightly rate. Therefore, your property may offer greater value for money than others, although some customers might not appreciate the additional, unexpected costs when booking.

On the other hand, the host-only fee can make your listing appear more attractive to potential renters. The price listed is the price they pay, which means no additional service costs. It can also allow you to charge a higher nightly rate, which is better for your profit. Then again, higher nightly rates may encourage customers to opt for cheaper properties.

If you already charge high additional fees, such as for cleaning, then the host-only option may be better. Otherwise, you may find that customers quickly change their minds when facing more expensive costs. But, if you’re a host that pays higher service fees, then a split fee is probably more profitable for your business.

How does Airbnb collect service fee payments?

Service fees on Airbnb are already deducted from your profit after a successful booking, so there are no further costs to pay. To see your service fee, click on your transaction history. Then find the relevant booking code and select ‘Payout’3.

Can you reduce Airbnb service fees?

In short, no. You can’t reduce the overall service fee. However, you can reduce your cost as the host by introducing the split-fee option. You could also consider reviewing your cancellation policy, as hosts with stricter policies typically have higher service fees.

Other costs to consider

Alongside service fees, there are many other costs for an Airbnb host. Perhaps one of the most important considerations is specialist holiday home insurance for protection against risks not covered by Airbnb Host Cover.

At Intasure, we offer enhanced holiday home insurance that has been designed to meet the needs of those that let their property to holidaymakers. To help you ensure you have cover to meet your needs, whether a one-bedroom flat or a large farmhouse, our policies can be tailored to suit your requirements, offering you peace of mind against risks at your property. Policies can include £1 million building contents cover, up to £5 million liability protection, cover for damage resulting from personal theft, and even optional cover for loss of keys.

Get an insurance quote for your Airbnb by calling our UK team on 0345 111 0680 or for more information.

References:

[1] https://www.airbnb.co.uk/resources/hosting-homes/a/how-much-does-airbnb-charge-hosts-288

[2] https://www.airbnb.co.uk/help/article/1857/airbnb-service-fees

[3]  https://www.airbnb.co.uk/help/article/304/finding-my-payout-information

The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited trading as Intasure accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.