As of the 4th January 2016 the increased 12-15% host fee for participating in the online advertising program is only applicable for hosts in the following 4 locations:
Rome, Italy
London, UK
Boston, USA
Lisbon, Portugal
Based on the piloting within these cities, a decision will be made as to whether to continue the program and in which cities to extend it to.
When it comes to fees, Airbnb hosts have traditionally had a fairly good deal…
They are charged only a 3% host service fee – a modest figure that justifiably covers credit card charges and general site upkeep
The 3% host fee is much lower in comparison to the standard 6-12% service fee charged to guests who book through Airbnb
There is no annual fee for Airbnb; which differentiates it from other major home rental websites like HomeAway, VRBO and Vacation Rentals
As a non-negotiable requirement for hosts to use the site, there’s little wiggle room for hosts to do anything but pay this fee.
A recent game-changer has been the option for hosts to pay a higher service fee in exchange for the opportunity to have their listing be found by guests that originate their accommodation search through search engines like Google.
Whilst the idea sounds good in theory, the realities of the opportunity are a little more controversial:
Airbnb will not advertise YOUR specific listing
Airbnb will charge you a disproportionate increase relative to the additional pool of prospective guests they will prove you access to
Choosing not to participate requires actively opting-out (instead of electing to opt-in)
These new host fees represent a departure from the historical host-friendly pricing structure that traditionally ruled the Airbnb game
Understanding the New Airbnb Online Advertising Option
According to Airbnb, in an effort to get more guest traffic to view their hosts’ listings, they are running online advertisements to guests searching on Google for places to stay in certain markets.
Travelers who come to Airbnb through these ads see customized search results for their area of interest.
For example, a prospective Airbnb guest may enter the search query “places to stay in new york city” into Google. At the top of Google’s search results page, these prospective guests may see the following advertisement amongst the other search results:
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This is an example of a paid-for advertisement by Airbnb.
Clicking on the ads will link back to the Airbnb website, where a page displaying Airbnb listings for the locality that the prospective guest was looking for will load. In the example above, it would load a page displaying Airbnb listings for the city of New York. It will not display or link to a specific property listing.
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The motivation for Airbnb undertaking such online advertising is to catch prospective guests that originate their searches for travel accommodation options outside of the Airbnb website. Aside from this, there is no difference, as these advertisements inevitably link back to the same Airbnb search result pages that would have been displayed had the prospective guest originated their search on Airbnb instead of Google.
Your listing will be shown along with other listings in your area that are participating in the online advertising program (unless you opt out).
To check if your Airbnb listing’s location is in one of the markets that Airbnb undertake additional online advertising, go to Account > Settings.
Airbnb claim to cover the cost of these advertisements by increasing the host fee for reservations that result from these ads. Bookings that originate from one of these paid-for advertisements on a search engine such as Google will incur a host service fee that ranges between 12-15%. The 3% host fee remains however for reservations that were not made as a result of these ads.
When Airbnb travelers find your listing through these specific ads, Airbnb will let you know that online advertising has brought them your way, and their booking requests will display the updated host payout.
You can choose to opt out and not receive these additional guests from the ad campaigns at any time. You can always opt back in at any time. If you opt out, travelers who come to Airbnb directly through these ads won’t see your listing, but nothing else in your account will change.
The ads also don’t affect Airbnb guests’ regular search experience, so bookings from travelers who already know about Airbnb will continue to come your way, with no changes to the 3% host fee.
The Controversy
Visitors arrive at any given website in a variety of ways.
If you think about your own personal web-browsing experiences, sometimes you may enter a website address direct into your web browser. For example, maybe a friend has told you to “go to www.airbnb.com and check out this site with great short-term travel accommodation options”. This is called ‘Direct traffic’.
Sometimes however, you don’t necessarily know the exact website where you’ll find what you’re looking for, even if you know what it is you want to find. This is where search engines such as Google become handy. Visitors arriving at a website after clicking on a link from a search engine results page such as Google are called ‘Search traffic’.
As it currently stands, 22% of Airbnb’s website traffic come from visitors originating their search for a place to stay on a search engine (like Google) rather than the Airbnb website itself.
In contrast, 45% of Airbnb’s website traffic was direct, meaning that these searchers bypassed a Google search in preference for going straight to the Airbnb website to find a place to stay.
With this being the case, we’d expect that charges for participating in any program that leads to more guests seeing your listing to be proportionate to the increased pool of prospective guests that may now consider staying at your place.
So if the traditional host fee of 3% was responsible for 45% of direct traffic, we’d expect any additional fees that brought in 22% more visitors to be in the same proportions. Those same proportions would amount to an additional 1.5%.
In summary, the new host fee should justifiably be no greater than 4.5%.
Instead, Airbnb will charge you a 12-15% host fee for participating in the program. Even if we take the smaller figure of 12%, this is still 7.5% more than what should proportionately be. On a $1,000 booking, this 7.5% works out to $75 of lost income to you as the host – not an insignificant number.
So What to Do?
This presents Airbnb hosts with an awkward dilemma: Can they afford to opt-out of a program that provides benefit, even if they know the cost of participation is beyond what it ought to be?
The answer to that question hinges on the number of listing views you currently receive in the absence of the program.
You should already have your finger on the pulse and have a fairly good idea of how many listing views you currently recieve. Listing views are the best measure of how frequently you are being found. You can see how many listing views you receive by viewing your host dashboard. Below is an example:
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If you are already receiving a significant number and consistent flow of listing views, then the value of being found on alternative channels like Google will be of lesser importance. Your focus should be on converting those listing views into booking requests.
If however, you are struggling to get found in the first place, the online advertising program opens you up to a larger pool of prospective guests able to consider your listing. Non-participation will deny you the opportunity of being found more often. Therefore this program will be of more value to you.
It is important to remember that this program provides no other benefit than increasing the likelihood of getting found. It does not guarantee booking requests, nor will it increase the amount you’re able to charge for your place. Any decision on whether to opt-out should hinge on whether you anticipate being able to get found solely on Airbnb and convert those listing views into booking requests without the aid of a supplementary pool of prospective guests coming from additional sources.
In Summary...
Airbnb’s online advertising program represents a disappointing departure from their historical host-friendly service fee arrangement.
For hosts that do not struggle to get prospective guests to look at their listings, opting-out may make no difference to their success on Airbnb.
However, for newer hosts or hosts struggling to get found in search results, the program may represent a lifeline for creating new opportunities to get found by additional prospective guests.
Airbnb are themselves still trying to determine the optimal service fee structure for hosts and guests. This program represents an ongoing experiment, with continuation of the program and fee structure far from set in stone. It is likely that even if continued, the additional fees charged may reduce over time and become more in sync with historical charges and fees considered more palatable to Airbnb hosts… a definite ‘watch this space’.