Vacation Rental Fees and Add-ons Beyond the Nightly Rates
Hi Robert. My husband and I are both retired and are planning a trip in the hopes that at sometime during the four week stay some of our children can visit for short intervals. That’s why we are looking for a house this size.
Some of the websites advertise a house for a certain amount but then there are add ons like service fees, lodging fees, cleaning fees and pool heating fees. These things add tremendous cost to the nightly rate. Some places add money for extra people. One house I looked at would have cost an extra 1500.00 USD. This is very frustrating.
I understand. How each particular villa owner of management company chooses to deal with the pricing of their properties can vary significantly.
Driving up revenue with Additional Fees
It is a very common business tactic (if you prefer to do business that way) to keep the nightly rate artificially low in order to attract customers, but then to charge a lot of additional fees in order to raise the revenue. The tactic often works because guests either assume that everyone operates in the same way, and/or get worn down by the tactic and simply don’t bother to shop around further.
I have seen the additional fees on some vacation rental properties add up to more than the nightly rate! It’s crazy! Guests should not assume this is the norm. It’s not something that we do, and I know lots of other vacation rental owners who don’t play these games either.
Another tactic is to simply ‘bury’ or hide additional charges until after the guest is committed, and expect/hope that the guest won’t do anything about being asked to pay more later… and they’ll just pay the extra amount.
The worst tactic is to hit the guest with things like this after they arrive. It’s not fun being hit with unexpected charges while on vacation, and who wants to make a fuss about it when family is waiting? They’ve ‘got you’ and at that point, what can/will you do?
Fees added by Others
Adding to the complexity of extra fees in the last few years are the additional ‘service’ fees charged by major websites like AirBnB, HomeAway/VRBO, TripAdvisor and other similar sites, which add on an extra amount to what the owner charges simply for processing bookings through their web sites. We have had guests who paid $600 over and above what we charge, simply because they booked our property through one of these sites, when they could have saved that amount simply by booking directly with us.
The listing sites call these fees ‘Traveler Service Fees’ but they actually don’t provide any service for them at all. They tell guests that it is safer to book through their site, and to always submit payments for their stay through the site because it is safer than paying an owner directly, but this isn’t true at all. The only protection offered by these sites are the protections provided by the guest’s credit card issuing bank. In other words, if a guest books through a listing site and later has a problem, the listing site will simply tell the guest to call their credit card company! It’s really kind of outrageous, especially after selling guests on booking through their site because they claim to offer some sort of protection or guarantee for the booking, and charging the guest a fee for doing so. This is how they make their billions of dollars in revenue and feed their shareholders dividends.
The fact is, the guest has those protections as long as they pay by credit card, no matter who they submit their payment to. So there is no reason to not submit a payment for a vacation rental directly to the owner or property manager, again as long as the guest is paying by credit card.
The lesson here is avoid the extra ‘service fees’ on vacation rental listing sites, and book directly with the owner whenever possible.
Unavoidable Fees added by Others
The one extra you can’t avoid, no matter where and how you book? State and County Sales Taxes.
If an owner isn’t charging them, they’re playing games with regulatory requirements, and you should avoid them. If an owner won’t follow the rules when it comes to regulations, how can you trust they won’t take short cuts with you or your stay? Florida legislation requires that taxes be shown separately, and must be charged. I won’t ask our guests to like them, but they must be paid unfortunately. And they’re always extra.
The Most Common Vacation Rental Fee of All
Another way that booking through vacation rental listing sites can become more expensive is the inflexible or simply poor and unsophisticated way the sites function.
For example, we usually don’t charge a Departure Cleaning Fee. A departure clean is always required, so why not just have it covered by the nightly rate? It makes sense, so this is what we do.
Except this doesn’t work if a stay is less than a week, because the cost of the clean to us (what we pay the cleaner) is almost equal to the cost of a single night’s stay. If a stay is less than a week in length, the cost of the departure clean will completely eat up the small amount of money left after our expenses for the stay. This means that we would actually be better off the guest hadn’t booked their short stay at all. So on stays of six nights or less, we do charge a Cleaning Fee, over and above the total nightly rate, to recover the expense.
Because we often use vacation rental listing web sites like VRBO to fill in gaps in our calendar between other bookings made directly with us, bookings through these sites are commonly shorter than a week and we need to add a cleaning fee to them to not lose money. But as of writing this, there is no way to program this variability for the Cleaning Fee on popular listing sites like VRBO! It is an all or nothing kind of set-up. So on every booking that comes in through VRBO, just as an example, a cleaning fee is automatically added by the site no matter how long the booking is for! This means that guests booking two week stays through a listing site are paying for a cleaning fee that we normally don’t charge!
This is just another example of how it is more expensive to book through these sites than directly with us.
Sometimes extra Fees are Appropriate. Here’s why:
To be fair, we do charge extra for certain optional items that a guest may want to add to their reservation. We don’t do this in an attempt to drive up revenue, but rather to be fair to all of our guests, by not making them pay for things that they may not want, need or use.
The simple truth is that in business, nothing is ever free. Anything provided to a customer has a cost. And that cost must be recovered through the revenue that the business generates. So if a vacation rental provides ‘free’ baby items, like strollers, a high chair, pac’n’play, etc. they are not really free – the costs of providing and maintaining them are being recovered in the nightly rate that every guest pays.
This means that if the owner chose to not provide the ‘free’ baby items, they could lower the nightly rate they charge everyone.
Strategies for Vacation Rental Extras
So another strategy to increase revenue is to add a bunch of items that only some guests will want or use, label them as being provided ‘for free’ and hope that doing so increases the value proposition they present to customers. Some guests think they are being ‘nickel and dimed’ by having to pay additional amounts for extras, and would simply prefer to pay an all-in price, even though they may actually be paying more than they have to. The additional cost is worth it to them to avoid being surprised or unexpectedly charged extra.
Another approach is to include ‘free’ items with every rental, but what is included for free sounds much better than it actually turns out to be. In the Orlando area, BBQ’s are an excellent example of this.
We have a vacation rental two doors down from us that includes a ‘Free’ BBQ with every rental. Which sounds great until you arrive and find out that the ‘BBQ’ is a metal firebox with a heavy steel grate on top, the kind that you will find in a regional park campground. And no firewood is provided for it; the guest must go out and purchase some at a local store. But is it reasonable to expect guests to know where to buy firewood when on vacation in a strange location? Or that they may want to do so?
Or one could provide a BBQ at an additional cost, and present it as being something top end… until one arrives and actually goes to use it.
For example, another home that I am aware of has an incredible top-end propane BBQ available for guests, which they charge an extra $100 a week for, but if the guest wants to use it they must go out and find propane, and purchase a tank and fuel for it, and haul it back to the vacation rental. Oh yes, and the guest must use whatever utensils for it they may find in the kitchen. But there aren’t any suitable ones, only regular cutlery. As a result, the guest may choose to purchase BBQ tools too. So what kind of value is the guest getting for their extra $100 for use of the BBQ?
Is it really an extra? Or an essential part of a stay?
Our overriding philosophy about extras at our villas and whether or not we charge for them is governed by these points:
- Will every guest need or use this item/service? If so, it should be included in the nightly rate. Call it free if you want, but the point is the guest shouldn’t be paying extra for it. WiFi and internet access is a good example of this. Everyone wants and needs it.
- Don’t make every guest pay for something that only some guests will need, want or use.
Personally, I hate being forced to pay for something that I don’t need or want, or won’t use. Like, for example, when I show up at a resort that I have booked, and am told that there is an extra ‘resort fee’ of $15 per night (plus tax) being tacked on for the pool, weight room, games room, and other facilities that I simply won’t use because I am staying there on business. As a result, I avoid businesses which do this whenever possible.
And because I believe in treating our guests the way I want to be treated, we choose to lower our nightly rate for everyone, and charge extra for those options which only certain guests choose to add to their booking because they want or need them.
The most important thing about Additional Fees
There is one remaining piece of the Additional Fees puzzle that every vacation rental owner must address, and every guest must be aware of. You can read about it here: The best surprise is no surprise at all!