What Is a Host Fee: Everything You Need to Know as a Host

Running a successful vacation rental business is not just about welcoming guests and offering a comfortable stay. Behind every booking, there are costs and service charges that impact your earnings. One of the most important of these is the host fee.

Understanding what a host fee is, how it works across different listing platforms, and how to manage it effectively can make a real difference to your bottom line. In this article, we’ll explain what a host fee means, review the most common types, and share tips on saving money. Finally, we’ll also look at what other expenses you should consider as a host.

What Is a Host Fee in the Vacation Rental Industry?

A host fee – sometimes also referred to as a hosting fee – is the service charge that booking platforms collect from property owners or managers for the services that they provide to them. It’s typically calculated as a percentage of each reservation and deducted automatically before you get your share of the booking revenue.

The exact amount of host fees depends on:

• The platform
• The type listing
• The host’s pricing setup (in some cases)

Why Are Host Fees Important?

The host fee matters in the short-term rental business because it directly affects your profit. It gets subtracted from your revenue to determine your cash flow and your return on rental property, whether cash on cash return or cap rate.

A small percentage difference may seem negligible, but it can add up to a significant amount across dozens of bookings. Hosts who understand how host fees work are better equipped to set competitive prices, maximize net income, and plan their rental strategy in the long term.

Host Fee Types on Popular Platforms: Run-Through

Hosting fees vary across booking websites. Here’s what you need to know about the major players in the industry if you’re listing your vacation rental on multiple platforms:

Airbnb Host Fee

Airbnb applies two types of host fee models: 1) Split fee and 2) Single fee.

Split Fee

The majority of hosts pay an Airbnb service fee of 3%, while guests cover 14.1-16.5%. This percentage is calculated on the booking subtotal which includes the nightly fees and additional fees (such as Airbnb cleaning fees, extra guest fees, pet fees, etc.) but excludes taxes.

Single Fee

Some listings fall under the single fee model where the host fee is equivalent to 14-16% of the booking subtotal, while guests don’t pay any Airbnb service fees. These rates will soon be unified to 15.5%, except for hosts in Brazil who will pay 16%.

This model applies to certain locations, traditional hospitality listings such as hotels and serviced apartments, and hosts who use vacation rental management software. Additionally, hosts with a Super Strict cancellation policy might need to pay extra 2% and those with long-term rentals (28 days+) may pay lower rates.

Vrbo Host Fee

Vrbo offers two fee structures: 1) Pay-per-booking and 2) Annual subscription.

Pay-per-Booking

The pay-per-booking Vrbo host fees include a 5% Vrbo service fee and a 3% payment processing fee, bringing the total hosting fee to 8%. This is calculated on the booking total.

This fee structure is usually a good option for part-time hosts who occasionally welcome guests as an income supplement.

Annual Subscription

Alternatively, Vrbo hosts can pay an annual subscription fee of $499 and have unlimited reservations. This model works better for full-time hosts who list their property on Vrbo year-round.

Booking.com Host Fee

The Booking.com fees for hosts follow a standard commission-based model at a rate of 10-25%, with an average of 15%. This commission is charged on the total booking amount.

The exact Booking.com host fee rate depends on:

• Country and local regulations
• Preferred level of visibility and partner programs
• Cancellation policy flexibility

Expedia Host Fee

Hosts need to pay a commission of 15-25% when listing a property on Expedia. The percentage is deducted from the booking amount.

The main factors that affect the Expedia service fee rate are location and property type.

5 Tips on How to Save Up on Your Host Fee

While host fees are unavoidable, you can reduce their impact with smart strategies:

1. Compare Platform Options

As you’ve already seen, not all booking platforms charge the same. Analyze your typical guest source, booking volume, and applicable host fee structures to decide which platform works best for your property

2. Use a Subscription If It Saves Money

On platforms like Vrbo, a flat annual subscription can save you money if you receive frequent bookings.

3. Optimize Your Pricing

Use PriceLabs to set up a vacation rental dynamic pricing strategy. With smart pricing, you can automatically adjust daily rates to cover host fees while still attracting bookings.

4. Encourage Direct Bookings

Build a solid vacation rental direct booking website to attract reservations outside listing platforms. Promote your website and social media accounts to generate direct bookings and cut platform host fees altogether.

5. Track All Costs

Keep a detailed record of every fee and expense. This allows you to optimize pricing strategies and make informed financial decisions.

Key Expenses for Vacation Rental Hosts

Beyond the hosting fee, short-term rental property owners should plan for the following recurring costs:

• Cleaning fees: Payments to professional cleaners or supplies for self-cleaning.
• Property management fees: Airbnb management fees paid to professional managers or the subscription cost of short-term rental management software.
• Maintenance and repairs: Ongoing costs to keep the property in good condition.
• Utilities: Electricity, water, Wi-Fi, and cooling/heating.
• Insurance and taxes: Vacation rental insurance, short-term rental license/permit fees, and various taxes (property tax, Airbnb tax, etc.)

You should take all these costs into consideration when budgeting and calculating your expected ROI.

Final Words on Host Fee in the Short-Term Rental Industry

A host fee may seem like a small percentage, but it plays a big role in the profitability of your vacation rental business. By understanding how different platforms calculate and collect their fees and applying cost-saving strategies, you can protect your income.

PriceLabs’ Dynamic Pricing & Revenue Management tool helps you stay competitive by adjusting nightly rates to cover recurring expenses and maximize earnings. This ensures you get the most of every booking without leaving money on the table.

Frequently Asked Questions

1. What Is a Host Service Fee?

A host service fee is the percentage of booking revenue that listing platforms deduct for each reservation as payment for using their marketplace and services.

2. Who Pays the Host Fee?

The host or the property manager is responsible for paying the hosting fee. It is usually automatically deducted from the booking payout before funds are transferred.

3. What Is the Host Fee on Airbnb?

The standard Airbnb service fee for hosts is 3%, but in some cases it can go up to 14-16%, depending on the pricing model.