Understanding VRBO Fees in 2024: A Comprehensive Guide
For hosts on VRBO in 2024, mastering the platform's various service fees is crucial for maximizing rental income and optimizing guest experiences. This blog offers a detailed breakdown of VRBO's fees, including both the pay-per-booking model and the annual subscription option, helping you determine which plan best fits your rental strategy.
VRBO Fee Overview
VRBO charges fees to both hosts and guests to support the operations and services provided by the platform, such as customer service, platform maintenance, and marketing. Here’s an overview of the fees you can expect:
What are VRBO host fees
When listing your property on VRBO, you have two main fee structures to consider: the pay-per-booking model and the annual subscription. Each has its benefits and is suited to different types of hosting scenarios.
1. Pay-per-Booking Fees:
Commission:
VRBO charges a commission of 5% on the booking total, which includes the rental amount plus any additional fees such as cleaning fees.
Payment Processing Fee:
There is also a 3% payment processing fee applied to the total payment collected, including taxes.
2. Annual Subscription Fee:
Flat Rate: Hosts can choose an annual subscription for approximately $499 per year, which covers unlimited bookings without additional per-booking fees. This is suitable for hosts with higher booking volumes.
Guest Service Fee
Guests pay a separate service fee that typically ranges from 6% to 12% of the booking's subtotal. The service fee changes based on the nightly rate of the property. The higher the rate, typically the lower service fee percentage the guest sees. This fee covers the use of VRBO's platform and contributes to customer support.
Choosing the Right VRBO Plan: Pay-per-Booking vs. Annual Subscription
Selecting between a pay-per-booking model and an annual subscription depends on various factors such as booking frequency, average revenue per booking, and financial management preferences. Below, we present examples of each VRBO host fees to illustrate when each option might be more beneficial.
Example 1: Advantage: Pay-per-Booking Plan
Scenario: You own a mountain cabin that's primarily in demand during the ski season. Outside of this peak period, the cabin sees limited bookings.
Bookings: 8 stays per year
Average Stay Duration: 4 nights
Average Rate per Night: $150
Total Annual Revenue from Bookings: 8 stays x 4 nights/stay x $150/night = $4,800
Additional Fees per Booking: $100 (cleaning, etc.)
Service Fee Calculations:
Total Collected per Booking: $4,800 + (8 x $100) = $5,600
Commission (5%): 5% of $5,600 = $280
Payment Processing Fee (3%): 3% of $5,600 = $168
Total Fees: $280 + $168 = $448
Results:
In this scenario, the total fees of $448 are lower than the annual subscription fee of $499. For a property like this mountain cabin, which has concentrated bookings during a particular season and fewer overall bookings, the pay-per-booking plan is cost-effective. You avoid the higher upfront cost of the subscription, and your financial obligations are directly tied to when the property generates revenue. This flexibility can be especially beneficial for managing cash flow during the less busy months.
Example 2: Advantage: Annual Subscription
Scenario: You manage a property that is popular year-round with tourists.
Bookings: 30 stays per year
Average Stay Duration: 4 nights
Average Rate per Night: $150
Total Annual Revenue from Bookings: 30 stays x 4 nights/stay x $150/night = $18,000
Additional Fees per Booking: $300 (cleaning, etc.)
Service Fee Calculations:
Commission (5%): 5% of ($18,000 + $9,000) = $1,350
Payment Processing Fee (3%): 3% of ($27,000) = $810
Total Fees: $1,350 + $810 = $2,160
Results:
With a higher volume of bookings throughout the year, the annual subscription fee becomes more economical. The fixed cost of $499 is significantly less than the cumulative fees of $2,160 incurred with the per-booking plan.
Conclusion
Choosing between VRBO service fee structures is a bit of a chess game and involves analyzing your rental's booking frequency, seasonal fluctuations, and overall earnings. For hosts with fewer or highly seasonal bookings, the pay-per-booking option offers flexibility and lower upfront costs. Conversely, for properties with consistent or high booking volumes, the annual subscription can provide substantial savings on fees.
Remember, the right choice varies based on individual circumstances, so consider your specific situation to determine the most cost-effective and strategic option for your rental property on VRBO in 2024.
