How do you calculate gross revenue?

Question

Is the "gross revenue" $708.10 or $541.26 for this booking?Is it what the guest pays? Or what the host receives?And is cleaning fee part of revenue?What is the industry standard for underwriting?

Nathan Gesner · Answer

Gross would be $708.10. Net income would be the Host Payout of $541.26.

But your true net is what's left over after deducting all expenses not accounted for in this calculation, such as utilities, internet, consumables, etc.

Trent Reeve · Answer

gross income is usually all money coming in, before any taxes and fees. $$$ after taxes and fees is Net income

Kate Stoermer · Answer

Gross revenue is all income except taxes collected.  Cleaning fees and other line items are revenue; its just a way of parsing out revenue to try to reel in customers.  My cleaning fee's don't have a direct correlation to the amount paid for cleaning.  Historically cleaning fee's reflected pre-Airbnb the  way that Mom and Pop joints allowed customers to pick if they would clean up the cabin or if the resort did.  Now its just a way to generate more revenue per booking.  Keep in mind platform fee's are, by the IRS definition, also revenue.  You don't pay those directly - they are retained by the OTA, but your revenue includes those (the Host fee's, not the guest fee's).

Lauren Kormylo · Answer

I agree - it's your total "host payout" plus the "host service fee" added back in.  That's what the IRS wants to see for gross.

But is that what AirDNA and others like it use as the gross?  I thought they used what the "guest paid" minus taxes.

Ryan Moyer · Answer

It's $558 and anyone saying otherwise is wrong :P

Patricia Andriolo-Bull · Answer

You actually have different answers here. Gross revenue includes the nightly rate plus and fees you charge. Sales taxes received go to a sales tax payable account and is not considered revenue. I have never included the amount a platform charges a customer as that is their revenue. It doesn’t come to you and you don’t pay it to the platform. The commission you pay to the platform is an expense but it doesn’t not impact your gross revenue only your net. Since you asked about underwriting, you could potentially have other revenue such as add on services so I would t rely on solely platform revenue in this case.

Michael Baum · Answer

Everyone covered it @Stefan St. Marie.

Andrew Steffens · Answer

We calculate gross income as all dollars coming in except taxes.

Our clients gross revenue is the room rate (top line) expenses minused out and then they receive their net income.

Net profit (or loss) would be then when they subtract debt service, property tax, insurance, utilities, etc.

How do you calculate gross revenue?

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