May 27, 2021

Vacation Rental Pricing Deep Dive into Fees

Fees can feel like a bit of a mystery. How many fees are too many? And can they really impact a property’s booking conversion and revenue? We sat down with Venture Found’s President, Nick Borst, and our own Director of Revenue, Kevin Lincicome, to discuss the tips and tricks for handling vacation rental property fees, and how a vacation rental property management software can help make setting fees a little easier.

Handling OTA and Credit Card Fees

Some of the vacation rental property fee “sticker shock” guests experience is fed by high OTA and credit card fees, especially when guests book on sites like Airbnb or VRBO. And because those listing sites often itemize their fees in a list, it can make booking a vacation rental even less appealing. Nick and his team have a few different methods of handling this challenge. 

  1. Push Direct Booking. Nick and his staff put marketing effort behind advertising direct booking, especially on listing sites where they get the most inquires. “We advertise as aggressively as possible that our site offers the best, guaranteed rate,” Nick says.  

Fee Bundles: Venture Found bundles its OTA and credit card fees into a single “admin fee,” and provides itemized fee lists only when asked or if a guest books directly. “That way guests can see that the OTA fee dropped off,” Nick says.

Yes, High Fees Impact Your Booking Conversion

Fees may be different between markets or between peak season and offseason, but Nick and Kevin both agree that exorbitant fees, no matter what they’re for, can impact bookings. And they’re right: According to a recent study conducted by VRBO, guests are 50% more likely to book a property if the vacation rental property fees are at or below the nightly rate. 

Kevin’s advice? Just be reasonable. “People expect things like a cleaning fee, but they don’t expect a $150 nightly rate and $350 worth of fees. That just doesn’t ever fly.” 

What About Damage Deposits? 

For many years, vacation rental property managers required refundable damage deposits, just like a landlord may require of a long-term tenant. Venture Found, however, has made a recent change—from damage deposits to accidental damage fees. 

Why the switch? To Nick, it was really about the financials. After several years of requiring deposits and struggling to cover the actual cost of repairs and getting little assistance from insurance companies, Venture Found decided to charge a simple accidental damage fee. “Because really,” Nick says, “what does a $250 deposit cover, anyway?” 

Kevin agrees that adding damage coverage to the list of vacation rental property fees can work well, as long as the fees are reasonable for the individual property, and that the guest bears most of the cost rather than the homeowner. 

To Pet-Fee or Not to Pet-Fee?

One of the most controversial vacation rental property fees out there is the pet fee. On the one hand, having a pet-friendly vacation rental property opens you up to a whole new group of travelers who may struggle to find lodging anywhere else. However, managing a pet-friendly property does come with certain costs, including longer cleaning times and more maintenance.

Kevin argues that most pet owners will happily pay a little more for a chance to travel with their furry best friend. But rather than making it a fee, consider simply increasing the nightly rate or the housekeeping fee. It’s his personal experience that pet-friendly properties are booked more often and get better reviews than properties that aren’t pet-friendly, even if the property itself is plain or outdated. Nick offered an additional incentive. 

“We split our pet fee with the owners, which often encourages them to keep the property pet-friendly,” he says. 

Managing Fees and Vacation Rental Revenue Management 

Using vacation rental revenue tools like Rented’s ART can help you set your rates, but it isn’t a “set it and forget it” kind of thing. In fact, it’s important to do quality assurance on OTA listings to make sure everything shows up correctly.

“There’s no communication between the OTA and the property management system,” Nick explains, “so it’s good to go and see what the guest sees to lessen sticker shock.” 

Also, Nick recommends leaning on the account managers for the OTA sites you use, as they will have access to a whole host of data that you may never see otherwise. It can help you better understand where guests are dropping off, and whether that has anything to do with the fees or not. 

When it comes to vacation rental property fees, it’s most important to keep it reasonable, bundle when necessary, and to think about the kinds of fees that make the most sense in your market. Lean on experts in the field and from your OTA channels, and consider vacation rental revenue management tools to do some of the math for you! 

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