Airbnb fees can make a great one-bedroom in the heart of the mountains go from cheap to amazingly expensive. Rarely do we go from "Cabin Mountain Kickass" to "I think we'll stay at the motel on the outskirts of town because we can afford it." Smart travelers. They know when they're being messed with and they know they can expect higher prices - especially now.
This is why Airbnb can charge fees for unnecessary services and people will pay them. High costs are not deterring travelers anytime soon. Travelers are too excited to experience a once-in-a-lifetime adventure to allow Airbnb's 20% service fee to keep them from booking seven nights in their mountain cabin.
Keep reading to learn how Airbnb's service fees aren't stopping people from booking and what you need to know to avoid pissing off your customers.
High costs (IE service fee) will not deter travelers
As a consumer, when you are about to pay, you are really excited about this modern home you are staying in. The last thing you want to do is start over to find something cheaper because the extra charge has doubled the price. Most likely, you will go through with the transaction because you are already emotionally invested.
Airbnb has been in the spotlight for a long time, but recently for a sudden total at checkout, which ended up nearly double the cost of the room rate, pissed off a lot of travelers. When you're expecting one total and find out it's twice that number, it can be shocking and downright infuriating.
Airbnb's service fee is part of their transaction path
buzzfeed I researched why Airbnbs cost more, especially the expensive cleaning fee, and why you don't know the total until you're ready to pay. They say it's likely due to the company's bottom line. It's a tactic, and a gross one at that.
In an interview with David Sawyer, a software developer who created an extension that shows the total cost of Airbnb listings, he said, "This kind of tactic has been around for a long time, especially on the Internet...Someone down the transaction path, or book your place, the better off," And the more money you will earn.”
David Sawyer doesn't appear to have any connection to Airbnb outside of his internet extension, so this isn't confirmed exactly what Airbnb does, but it's also within the realm of possibility. This is a well known selling/marketing tactic - get your customers down the funnel quickly and efficiently.
Travel is an emotional investment. People don't travel because it will make them better off financially or it will look better on their resume; They travel because it makes them happy and excited.
Travel bookings continue to rise despite rising costs
Consequently James Thornton“In the past few months, global concerns about shortages, penalties and rising costs have economists sounding the alarm,” said Thornton, CEO of Intrepid Travel. "Despite rising costs, travel bookings have more than doubled."
In addition to this pent-up demand for travel, consumers expect to spend more in 2022 than they did pre-COVID trips. Travelers have saved money in their travel budget for the past two years and are willing to make up for all the lost travel time. They realize that prices have gone up, and if they want to have the experience of a lifetime, they'll have to pay for it. It's a harsh reality, but to be expected.
Be transparent about service fees
A great way to differentiate your customers is to surprise them with a hidden fee. No one will derail faster than they were expecting. Ask your phone and internet service providers.
Airbnb's service fee is actually pretty expensive compared to other booking technology platforms. A whopping 14.2% of the booking subtotal (night rate + cleaning fee + extra guest fee, if applicable - excluding Airbnb fees and taxes), guests can expect to pay this for every Airbnb reservation they make. Airbnb also charges hosts a 3% fee.
The Airbnb Experience service fee costs hosts 20% of the total price
For Airbnb Experiences, hosts pay a service fee of 20% of the experience price.
Imagine that you expect to make $100 on an experience you give and instead only make $80. Knowing this, hosts can increase their prices to offset the high service fees Airbnb charges. This still doesn't change the fact that hosts lose 20% of their income to Airbnb just for hosting their experience on the site.
Airbnb listed why it pays 20% more on experiences. They said, “We charge a 20% service fee for trials to help cover the costs of our products, services, and support, including maintaining liability insurance for most trials.” they charge 14.2% Service charge on bookings for marketing assistance, administration and 24/7 customer support services. And people pay this because you need these things in exchange for good service.
How is the origin different
Unlike Airbnb's service fee, The origination fee is 5% of the total reservation, and operators can either absorb the fee, split it with customers, or pass the 5% service fee on to customers. Whichever you choose, the total payment is the same at the end as it is at the beginning. Your customers aren't surprised by a list of fees like Airbnb customers do. This makes for a better experience for you and your customers: charging them what they expect to pay.
Transparent pricing matters
Transparency about fees is crucial. Your customers need to understand that providing service, exceptional service, costs more money. Investing in technology that makes it easy for your customers to book and delivers amazing customer service (and the experience of a lifetime) costs more.
That's right, it's hard to convince customers that it's worth spending more on a trip, something that's not a real product, than an iPhone. They can place a value on something they can hold in their hands, like an iPhone. A life-changing journey is not tangible. Plus, consumers are smart. They know when they are being messed with and there is already a suspicion that the system has been rigged against them.
In order to charge a service fee and not surprise too many people, they have to be Designed with care and transparency. For example, Airbnb continues to piss off customers because they see a $150 cleaning fee for a one-night stay in a one-bedroom apartment downtown, and we know there's no reason for the cleaning fee to be so high. Add Airbnb fees and taxes and that customer will know you're playing with them.
Get your rates upfront
We believe in providing the total price up front so there are no surprises in the end (and less Abandoned reservations). When someone sees $146 for their flight while clicking on a date, that's the price they'll see when they enter their credit card details. There are no scams as the fee is part of the total cost.
If your customer wonders why it costs more than usual, you can tell them they're paying for something better Online booking processcomplete with secure payment, a guaranteed trip for the day and time they booked, and a legitimate receipt they can keep along with electronic reminders and waivers, too.
Your customers benefit as much as you do when you partner with a booking and scheduling system.
Quality above service fee
We know Airbnb's service fee doesn't stop travelers from booking, but keeping prices transparent will earn their trust. The third thing you can learn from their service charges is that quality is more important than cost.
Staying Competitive With inflation, rising costs and the unpredictability of post-COVID travel, there are more important things to offer customers than lower prices. In fact, this is probably the last thing you need to do. in Expedia Group's Value Traveler Index 2022 Outlookthey list ten things to focus on to stay adaptable in these "turbulent times".
- You must have clear cancellation policies and make sure that customers can get a refund or credit.
- Have different pricing structures to accommodate all types of travelers.
- Proactively share any and all COVID updates and advice with your customers.
- Act like a partner in your clients' travel plans - do what you say you'll do, listen to feedback, etc.
- Offer incentives to get new customers and to differentiate yourself from your competitors.
- Offer different deals for quick trips for a "competitive edge" (we also like the idea of having specific local deals).
- Consider starting a rewards program.
- Invest more in marketing.
- Incorporate more healthy and meaningful experiences into your packages, as this is something that is growing in popularity among travelers.
- Start committing to a sustainable process and make your travels more environmentally friendly.
Based on the Expedia listing, we can assume that if you use any or all of these tactics, not only will you help increase revenue, but you'll avoid having to cut costs just to compete.
People are willing to pay more For online services that they use most and that are convenient. You know what's comfortable? The ability to book a flight online, at night, and not have to chat with anyone. This is what most travelers want. If you are ready for something like this, You can start today.
People will pay more for the experience
Arrival Report 2021, "Today's Tour Taker," shows how today's travelers get around, their way to buy, and what they want in terms of health and safety. We are interested in how willing travelers are to pay the service fee. Although Arrival doesn't go into detail about the extra fees people pay with reservations, they do talk that travelers desperately want and will pay for an amazing experience.
It may be because we've been cornered for the past two years, but travelers have said that tour content and how it fits into their overall tour schedule are the most important factors when it comes to booking a tour.
This tells us that if you offer a once-in-a-lifetime experience, people will pay for it—service fee and all.
TL; DR
People will pay more as long as it's of high quality. In this case, if you are charging for the service, make sure your adventure is worth paying more.
When you charge extra, be honest about it. Nobody likes a liar. Let people know why you're charging extra if they order or add a proactive note. If people understand that they're paying more for a better online user experience, customer support, and an overall better adventure, they'll be perfectly fine to pay more.
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