VRBO now charging guests 20 percent for a booking

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VRBO now charging guests 20 percent for a booking

Collin HaysBusiness Member
Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes

Wow, it's getting to where it's VRBO is the one making all of the money.  2 years ago, the service fee was under 10 percent.  If you add in the owner's portion, VRBO is carving off 30 percent or more per reservation.  I guess you grab it while you can.  Pretty unreal.

At some point, this house of cards will collapse.

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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
2y
Quote from @Collin Hays:

Every company does this as they grow. Nobody is happy making $X per year. They have to show growth every quarter or they act like the sky is falling. 

Someone will eventually come along and offer a better product for a better price. That will roll nicely for a while, then they will fall into the same pattern. Rinse and repeat.

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  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    2y

    Yep. Everyone is getting greedy, I see it everywhere.

    Like you said, 'House Of Cards'. We know what happens to those....

    0Reply
  • Account Closed
    Investor · FL · Member since 2016 · 332 posts · 388 votes
    2y

    It is funny as the OTAs are trying to get people to stay on platform, but are giving everyone every reason to go off platform. With Google image search trick getting out, more and more people will go to direct booking sites to avoid fees.  The OTAs are biting the hands that feed them as food (money) is getting scarce.

    2Reply
  • Matthew Gentile
    Real Estate Agent · Worcester, MA · Member since 2023 · 88 posts · 52 votes
    2y

    I had been wondering myself just how far this could go. I can't imagine it gets any higher without the House of Cards doing what they do. 

    Similar to the 15$ Big Mac, even inflation adjusted from 5$ should be around $8.50 so the gouging is greedy and it is real on all accounts. Should be interesting to see how this all shapes up. 

    1Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    2y
    Quote from @Collin Hays:

    Every company does this as they grow. Nobody is happy making $X per year. They have to show growth every quarter or they act like the sky is falling. 

    Someone will eventually come along and offer a better product for a better price. That will roll nicely for a while, then they will fall into the same pattern. Rinse and repeat.

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  • Patricia Andriolo-Bull
    Member since 2022 · 527 posts · 413 votes
    2y

    Odd. It must be a sliding scale or something. I had a VRBO booking yesterday and it was no where near 20%. Looks like they charged my guest 11.2% on my nightly fee + cleaning. 

    0Reply
  • Collin HaysBusiness Member
    OP
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    2y

    I called this a.m to inquire about another issue. I was lucky enough to be connected to "Ann".  Poor Ann and I were having great difficulty communicating with each other. I knew we were in trouble when she asked "Is this for the Americas"?  

    I see what they did there!  ;)

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  • Collin HaysBusiness Member
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    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    2y
    Quote from @Patricia Andriolo-Bull:

    Odd. It must be a sliding scale or something. I had a VRBO booking yesterday and it was no where near 20%. Looks like they charged my guest 11.2% on my nightly fee + cleaning. 


    I have been looking through our reservations, and it appears that their fee can be as high as 24 percent.

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  • Patricia Andriolo-Bull
    Member since 2022 · 527 posts · 413 votes
    2y
    Quote from @Collin Hays:
    Quote from @Patricia Andriolo-Bull:

    Odd. It must be a sliding scale or something. I had a VRBO booking yesterday and it was no where near 20%. Looks like they charged my guest 11.2% on my nightly fee + cleaning. 


    I have been looking through our reservations, and it appears that their fee can be as high as 24 percent.


     My guess is that the fee decreases as price increases.  My rate was $1638 for the stay which had an 11.2% VRBO fee.  Yours is under $1000.  I have people pay $18K for a month in high season, I can't imagine they could get away with charging 20% on that.  This past February, I had a 28 night stay for just over $16K and VRBO charged the guest $787 (shy of 5%).

    2Reply
  • Collin HaysBusiness Member
    OP
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    2y

    Seems that as the fee increases, the service decreases.  I've been on hold with VRBO for 45 minutes now on a very simple issue.  I've got the entire Pakistani team stumped!  

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  • Andrew SteffensBusiness Member
    Tampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
    2y

    I am seeing 11% on some more expensive reservations and I saw for at 16-19% in the $1000-2000 range.  This will further hurt the "small guy", cheaper houses and units that already have to constantly compete on price.  The luxury properties can probably absorb more.  Interesting.

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  • Collin HaysBusiness Member
    OP
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    2y

    Just for fun, I tried to make a reservation with a rate of $1 per night for 2 nights. The VRBO fee was $67.  That's about 3350 percent.  

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  • Jon Martin
    Member since 2022 · 1k+ posts · 1k+ votes
    2y

    VRBO is flailing as ABNB continues to eat their lunch. Nebulous and seemingly redundant fees- what is a "Host" fee vs a "Service" fee? Painfully clunky and outdated interface for both guests and especially hosts. Pushes the cost of damage protection insurance onto the hosts and guests. Rewards program that killed the legendary hotels dot com 10 for 1 that doesn't even work on most of the listings when you try to apply it. Just an all around crappy UI for everyone. 

    Expedia's stock price is almost exactly where it was 5 years ago YTD. The only benefit I see is that it provides at least some competitive counterbalance to ABNB. 

    3Reply
  • Collin HaysBusiness Member
    OP
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    2y
    Quote from @Jon Martin:

    VRBO is flailing as ABNB continues to eat their lunch. Nebulous and seemingly redundant fees- what is a "Host" fee vs a "Service" fee? Painfully clunky and outdated interface for both guests and especially hosts. Pushes the cost of damage protection insurance onto the hosts and guests. Rewards program that killed the legendary hotels dot com 10 for 1 that doesn't even work on most of the listings when you try to apply it. Just an all around crappy UI for everyone. 

    Expedia's stock price is almost exactly where it was 5 years ago YTD. The only benefit I see is that it provides at least some competitive counterbalance to ABNB. 

     The "Host" fee is the cleaning fee. But I don't know why VRBO doesn't just state that. Well actually, I have my ideas...

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  • V.G JasonPro Member
    Investor · Member since 2022 · 3k+ posts · 3k+ votes
    2y

    This need for perpetual growth will cause the crash.

    Colin you say the recession is here, it's knocking. It's not here, it's coming if folks keep pushing the envelope. But if you look at other global macro trends you see other things forming quicker and I won't get into that, but that doesn't mean this isn't coming.

    I'm very tempted for the first time ever to sit 100% cash and watch, I may do this as we enter first business week of June. Tap out of all short-term plays. I am not a market-timer, and a time in market person so just for folks calling that out that is with this considered. We are month 27 since the rise of rates, and month 11 of the expected peak of rates. I have still of a ton of investments that will ride the course, but that's because I can weather those storms.

    2Reply
  • Paul Azad
    Member since 2024 · 162 posts · 232 votes
    2y

    Everywhere I have traveled this year, New York, Paris etc Hotels are much cheaper than VRBO/AIRBnB and the experience and safety, location, quality of beds, bathroom fixtures are better at Hotels, but 5-10 years ago it was the opposite. I suppose the inflation adjusted 88% home price appreciation since 2000 has forced the nightly rates up to point now where short term rentals are just an all around crappy experience. Well, was nice while it lasted. 

    4Reply
  • Collin HaysBusiness Member
    OP
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    2y
    Quote from @Paul Azad:

    Everywhere I have traveled this year, New York, Paris etc Hotels are much cheaper than VRBO/AIRBnB and the experience and safety, location, quality of beds, bathroom fixtures are better at Hotels, but 5-10 years ago it was the opposite. I suppose the inflation adjusted 88% home price appreciation since 2000 has forced the nightly rates up to point now where short term rentals are just an all around crappy experience. Well, was nice while it lasted. 


    I think you are on to something, particularly in large metro areas with lots of hotel choices. The cleaning fees and platform fees combined can exceed the cost of a couple of nights at a four-star hotel, not even including the rent.

    That’s a problem for not only the hosts, but the platforms. Greed kills. 

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  • Collin HaysBusiness Member
    OP
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    2y
    Quote from @V.G Jason:

    This need for perpetual growth will cause the crash.

    Colin you say the recession is here, it's knocking. It's not here, it's coming if folks keep pushing the envelope. But if you look at other global macro trends you see other things forming quicker and I won't get into that, but that doesn't mean this isn't coming.

    I'm very tempted for the first time ever to sit 100% cash and watch, I may do this as we enter first business week of June. Tap out of all short-term plays. I am not a market-timer, and a time in market person so just for folks calling that out that is with this considered. We are month 27 since the rise of rates, and month 11 of the expected peak of rates. I have still of a ton of investments that will ride the course, but that's because I can weather those storms.


     I have thought seriously about investing heavily in long term Airbnb put options.  I believe they’ve crested and will not be able to sustain their revenue growth.  Both them and VRBO have about squeezed the turnip dry.

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  • Mark S.
    Real Estate Investor · Saint Paul, MN · Member since 2017 · 543 posts · 474 votes
    2y

    @Collin H. I just checked a reservation that came in for one of our properties today. Total nightly fees were $1140. Vrbo charged $340. So yea, about 30%!! One of the impacts is going to be making it more difficult for guests to afford our nightly rates which is going to create pressure to reduce them. Just what we need with other expenses going up! 

    1Reply
  • Collin HaysBusiness Member
    OP
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    2y
    Quote from @Mark S.:

    @Collin H. I just checked a reservation that came in for one of our properties today. Total nightly fees were $1140. Vrbo charged $340. So yea, about 30%!! One of the impacts is going to be making it more difficult for guests to afford our nightly rates which is going to create pressure to reduce them. Just what we need with other expenses going up! 


    …and then VRBO is charging you anywhere from 7-11 percent.  So your example, they are adding almost 40 percent of the rent for their take. Long term that isn’t sustainable.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    2y
    Quote from @Paul Azad:

    Everywhere I have traveled this year, New York, Paris etc Hotels are much cheaper than VRBO/AIRBnB and the experience and safety, location, quality of beds, bathroom fixtures are better at Hotels, but 5-10 years ago it was the opposite. I suppose the inflation adjusted 88% home price appreciation since 2000 has forced the nightly rates up to point now where short term rentals are just an all around crappy experience. Well, was nice while it lasted. 


    Totally agree  to me the risk of getting a bummer after flying all the way from the west coast to Paris or anywhere across a pond is simply not worth it other than maybe a wine tour group to Tuscany etc.. I want a US flagged Hotel period :)   I dont want to risk getting a bummer been there done that in Europe their standards and ours are quite different.

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  • Mark S.
    Real Estate Investor · Saint Paul, MN · Member since 2017 · 543 posts · 474 votes
    2y

    @Jay Hinrichs yes that probably reduces the risk and makes sense. I travel quite a bit and have always had good luck overseas, fortunately. And have conversely have had some very poor stays domestically. But my sample size is greater here in the US.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    2y
    Quote from @Mark S.:

    @Jay Hinrichs yes that probably reduces the risk and makes sense. I travel quite a bit and have always had good luck overseas, fortunately. And have conversely have had some very poor stays domestically. But my sample size is greater here in the US.


    ya myself I had horrid room in Venice  also Rome   London and Paris were OK when I went for local brands..  But for me since i business travel in the US extensively and build up a lot of points I use those for hotel rooms .  Last 3 trips for me  Paris ,  Tel Aviv and lisbon  since I had premier status I got upgraded for free to suites still while using my points.. So that was very nice.. Although domestically I rarely get upgraded with just my status.  But Ya know to each their own.. And its just my wife and I get it when your traveling with the kiddos BNB could for sure be a better option than multiple hotel rooms.
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  • Collin HaysBusiness Member
    OP
    Property Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
    2y
    Quote from @Account Closed:

    It is funny as the OTAs are trying to get people to stay on platform, but are giving everyone every reason to go off platform. With Google image search trick getting out, more and more people will go to direct booking sites to avoid fees.  The OTAs are biting the hands that feed them as food (money) is getting scarce.


     Interesting. I have never thought about the Google image search, but sure enough, it works pretty well!  I wonder how long until travelers start figuring that trick out in masse ?

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  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    2y

    Investors in the STR market who do not create their own methodology for direct bookings risk getting "killed" in the next economic correction. It's imperative to build an increasing percentage of your bookings from direct sources and be able to offer and fill up days at 20-30% less than Airbnb costs without affecting net income.

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  • Patricia Andriolo-Bull
    Member since 2022 · 527 posts · 413 votes
    2y

    A few additional thoughts, the platforms consistently push us to reduce or eliminate cleaning fees especially on short stays because of how much they are proportionally. Look what they are doing! VRBO is killing it on these short stays. 

    Re: service, VRBO had wonderful service. Something happened 3-4 months ago. I can’t seem to get someone on the phone that knows anything and none of my issues get resolved anymore (I created a new listing for a new property, they forgot to add taxes and insurance, I have had issues reviewing guests and a host of other things). Meanwhile, I’m finding Airbnb is getting easier to deal with and my bookings have switched from 70/30 VRBO to 70/30 Airbnb all in the same timeframe. Something is definitely amiss with VRBO of late. 

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