VRBO Accounting: Incompetent or sleezy?

Question

Just in case you aren't aware, we are being charged a 3% processing fee on the taxes that are collected from VRBO's traveler service fee.  This has been happening for years.  I have been on the phone many times with support explaining why this is wrong.  They all think it is just fine.  Let's do some quick math here...

Here are my assumptions:

1 million listings - I know the number is higherbookings/year per listing: 20 - I get 60/yearaverage traveler service fee $150 - mine average $400tax rate: 5% - mine is 11.2%

How much money is Expedia making by not fixing this bug:

1 million listings x 20 bookings x $150 service fee = $3,000,000,000Taxes on that revenue @ 5% = $150,000,000Service fee on those taxes (3%) = $4,500,000/year

My assumed numbers are VERY conservative....so the overall amount is likely significantly higher.  So this BUG is providing $4.5 million to Expedia's bottom line....likely much more.  I wonder why they won't fix it?

Am I incorrect in thinking this is wrong?  Would love for someone to explain it to me.

John Underwood · Answer

Exactly.  My thoughts too.

Paul Sandhu · Answer

I think it to offset the credit card fees.

Kenny McCarty · Answer

@Paul Sandhu @John Underwood Yes I understand that...but why are we footing the bill for CC fees on their revenue?  Does that make sense?

Colleen F. · Answer

@Kenny McCarty its that 1995 start for vrbo vs  2008 for airbnb,  I bet the tech is older.   It is kind of strange they don't address it.    I guess you are ready for those IRS guys.

Kenny McCarty · Answer

@Colleen F. Airbnb is only charging 3% on payments made directly to me and nothing else.  Another irritation point for me is that when I reconcile my bookings with payouts I can never gets VRBOs to reconcile exactly.  There is always a few cents discrepancy.  With Airbnb it is always exactly what it should be.  This is what led me to discover this issue in the first place.

I am extremely obsessive about my accounting and have been known to waste hours tracking down an errant penny…it’s a problem haha.

Colleen F. · Answer

@Kenny McCarty  how does that compare with the industry?  is airbnb doing the same?

Collin Hays · Answer

I think users of VRBO understand the rules.

The OP’s question pertains to credit card fees on VRBO’s service fees, which are 100% VRBO revenues.  Essentially a tax on a tax.  It is a valid point.  The homeowner is underwriting the credit card fee for the entirety of VRBO’s revenues.  And not at VRBO’s actual cost of the credit card fees - approximately 1.5%, but at a 100% markup by VRBO, 3 percent, paid by the homeowner.

So not only is the homeowner paying the credit card fees on VRBO fees, it is actually a profit center for VRBO, as they doubling those fees from their actual cost. The issue isn’t “if you don’t like it you can pull your listing down”, but of business ethics.  On this matter, VRBO flunks.

Shane H. · Answer

@Collin H.

I dont have any STRs. I do however run a service business, and if i get charged a fee to process your credit card that i allowed you to pay with for your convenience, you should be paying that fee. ESPECIALLY if its on an ammount that is not profit for me like a pass through tax. Granted VRBO is not accepting the credit cars for your convenience, but its pretty simple, you want to use their platform, they set the rules and fees. Youre more than welcome to pull your listing down...

Collin Hays · Answer

I don’t think it makes sense at all.  We are in agreement.

Kenny McCarty · Answer

@Collin H. so it's ok for us to pay a fee on VRBO's revenue?  I still don't understand how this makes sense...

Rent: $1000Tax on Rent: $50

I am fine paying the CC fee on the above

VRBO Service fee: $100 - we don't pay the CC fee on thisTax on service fee: $5 - we DO pay the CC fee on this

Clearly I am missing something here.  Please explain it to me in baby terms because I am really confused on how this makes sense.

VRBO Accounting: Incompetent or sleezy?

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