Airbnb vs. VRBO: Which is Better for Investors?

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There are plenty of platforms that short-term rental real estate investors can use to market their space, but two of them make up the lion’s share of the industry: Airbnb and VRBO (Vacation Rentals By Owner). While their primary functions are similar, Airbnb and VRBO have many key differences in the types of properties available, target audiences, fees and commissions, and much more. 

Let’s match Airbnb vs. VRBO to determine which platform best suits your investment strategy.

What is Airbnb?

Airbnb’s mission is “to lock the power of sharing space, resources, and support in times of need.” The platform started in 2007 when two hosts welcomed three guests to stay in their San Francisco home. Sixteen years later, the platform has grown to more than 4 million hosts and over 220 countries and regions across the globe.

As of December 31, 2022:

• Over 100,000 cities and towns have active Airbnb listings
• There are 6.6 million active listings worldwide
• Hosts have accommodated more than 1.4 billion guest arrivals

What is VRBO?

VRBO’s mission is to “find every family the space they need to relax, reconnect, and enjoy precious time away together.” They have been pairing homeowners and families seeking places to stay since 1995 and have grown into a global vacation brand with more than 2 million whole homes actively available on their platform. VRBOs are currently available in nearly 200 countries.

Airbnb vs. VRBO: Property Types

The most distinct difference between Airbnb and VRBO is the types of homes available on each platform. 

Airbnb offers nearly every space imaginable. You can stay in mansions, treehouses, houseboats, tiny homes, private islands, caves, containers, windmills, and everything in between. 

These spaces are broken up into four distinct categories:

• Entire space: Guests have the whole place to themselves, which typically includes a bedroom, bathroom, kitchen, and a dedicated, separate entrance.
• Traditional hospitality spaces: These rooms indicate that the host provides the same customer service and hospitality that guests would experience at a hotel. Hostels, bed and breakfasts, and comparable properties are also included in this category. Hotel rooms typically have a common area for guests to interact with one another.
• Private rooms: Instead of getting an entire space to yourself, you’re renting a room in a property others may occupy. They’re great for guests who want a little privacy but don’t mind sharing common areas. 
• Shared rooms: Shared rooms are great for travelers who want to socialize with others and don’t mind a lack of privacy. You’ll sleep in shared spaces when booking a shared room. 

VRBO only offers entire spaces, such as condos and vacation homes. This is one of the reasons why VRBO has around 2 million listings, while Airbnb offers more than three times that amount.

Related: Ultimate Guide to Top-Notch Airbnb and VRBO Listings

Target Audiences

Airbnb markets to a wide range of people looking for an alternative to hotels. VRBO’s target market is more specific. It markets to families who are vacationing together and want to spend more quality time with one another.

Here’s a breakdown of who stays at each:

	Airbnb	VRBO
Guests aged 18-24	15%	13%
Guests aged 25-34	36%	22%
Guests aged 35-54	36%	37%
Guests aged 55+	13%	28%
Male guests	46%	54%
Female guests	47%	53%

Fees and Commissions

Airbnb and VRBO let you set up and list your property for free and offer liability coverage at no extra cost. Both platforms require you to pay host service fees when monetizing your property but offer different options for you to consider. 

Airbnb host fees

Airbnb offers two fee structures: a split fee and a host-only fee. Not fully understanding Airbnb host fees can have a big impact on your profits.

Split fees let you split the costs between the host and the guest, with the guest paying the lion’s share of them. Here, the host pays a 3% fee (or more if you have “super strict” cancellation policies or are listing in Italy) that’s determined by the booking subtotal and gets automatically deducted from your payout. The subtotal calculates:

• Nightly rate
• Cleaning fee
• Additional guest fee (if applicable)

The guest service fees usually come to less than 14.2% of the booking subtotal, including the abovementioned fees.

Here’s what this looks like if a guest books your Airbnb for four nights at $200 per night:

• $200 x 4 = $800 + $100 cleaning fee = $900 subtotal
• $900 x 3% = $27 host service fee
• $900 – $27 = $873 total profit for the host
• $900 x 14% = $126 guest service fee (including taxes and occupancy)
• $900 + $126 = $1,026 total cost for guest

Host-only fees mean that you, as the host, cover all of the added costs, usually between 14-16% of the booking subtotal. This fee structure is mandatory if you offer a traditional hospitality space (i.e., hotel rooms, hostels, bed and breakfasts, etc.). 

Here’s what this looks like if a guest books your Airbnb for four nights at $200 per night:

• $200 x 4 = $800 + $100 cleaning fee = $900 subtotal
• $900 x 15% = $135 host service fee (including taxes and occupancy fees)
• $900 – $135 = $765 total profit for the host
• $900 = total cost for guest

VRBO host fees

VRBO also offers two fee structures: subscription and pay-per-booking methods.

The subscription model covers unlimited bookings for an entire year for $499, paid a year in advance. This plan is the way to go if you make more than $6,250 in bookings annually. 

The pay-per-booking model charges you 5% of the booking subtotal and an additional 3% payment processing fee for the total amount. Like Airbnb, the subtotal includes: 

• Nightly rate
• Cleaning fee
• Additional guest fee (if applicable)

Here’s what this looks like if a guest books your VRBO for four nights at $200 per night:

• $200 x 4 = $800 + $100 cleaning fee = $900 subtotal
• $900 x 5% = $45 host service fee

Let’s assume the taxes and extra fees come to $150:

• $900 + $150 = $1,050 total payment amount
• $1,050 x 3% = $31.50 payment processing fee
• $45 + $31.50 = $76.50 total host fees
• $900 – $76.50 = $823.50 total profit for the host

Airbnb vs. VRBO: Property Damage Protection

Compared to other rentals, vacation homes are more likely to incur property damage because more people use them. Understanding this risk, Airbnb’s Aircover for Hosts and VRBO Host Insurance offer host damage protection.

Aircover for Hosts provides “top-to-bottom protection for hosts,” including: 

• Reservation screening
• Guest ID verification
• $3 million for host damage protection
• $1 million for host liability insurance
• $1 million for experiences liability insurance
• 24-hour safety line

Aircover for Hosts protects your property while you’re hosting guests. However, you’ll still need personal insurance if something happens to your property when you don’t have guests. 

VRBO Host Insurance offers $1 million in primary liability coverage at no additional cost, which protects you against any property damage or travel injury claims made against you. If you file a claim, it’s recommended that you do so as quickly as possible. VRBO’s insurance services are available 24/7. 

Airbnb vs. VRBO: Cancellation Policies

Airbnb and VRBO each have several cancellation policies. Here are your options for each:

Airbnb cancellation policies

• Flexible: Guests are fully refunded until 24 hours before check-in. If they cancel within that window, you’ll be compensated for each night they stay + one additional night.
• Moderate: Guests are fully refunded until five days before check-in. If they cancel within that window, you’ll be compensated for each night they stay + one additional night + 50% for all unspent nights.
• Firm: Guests are fully refunded until 30 days before check-in. If guests cancel between seven and 30 days before check-in, you’ll be compensated 50% for all nights booked. You’ll be fully compensated if they cancel within seven days of check-in. Also, if a guest cancels within 48 hours of booking, they can receive a full refund if they cancel at least 14 days before check-in. 
• Strict: If guests cancel within 48 hours of booking, they can receive a full refund if they cancel at least 14 days before check-in. If a guest cancels between seven and 14 days before check-in, you’ll be compensated 50% for all nights booked. You’ll be fully compensated if they cancel within seven days of check-in. 

Airbnb hosts can also set long-term “firm” and “strict” policies, “super strict” policies, and a non-refundable option. 

VRBO cancellation policies

• No refund: All bookings are non-refundable.
• 60-day policy: Guests are fully refunded until 60 days before check-in. Bookings are non-refundable within 60 days of check-in time.
• 60/30-day policy: Guests are fully refunded until 60 days before check-in and receive a 50% refund (minus service fees) if they cancel between 30 and 60 days of check-in time. Bookings are non-refundable within 30 days of check-in time.
• 30/14-day policy: Guests are fully refunded until 30 days before check-in and receive a 50% refund (minus service fees) if they cancel between 14 and 30 days of check-in time. Bookings are non-refundable within 14 days of check-in time.
• 14/7-day policy: Guests are fully refunded until 14 days before check-in and receive a 50% refund (minus service fees) if they cancel between seven and 14 days of check-in time. Bookings are non-refundable within seven days of check-in time.
• Custom policy: Hosts can set their cancellation policy terms.

Which Platform is Best for Me?

Airbnb is more flexible simply because you can offer all kinds of spaces, while VRBO requires renting out an entire space. However, Airbnb and VRBO are great platforms for beginning investors and homeowners interested in entering the short-term rental space. 

Many real estate investors have turned hosting into full-time jobs by operating multiple vacation rentals all at once, and with enough experience and know-how, you can too! 

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.