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Understanding Vrbo host fees will help you maximise the potential of your rental property’s income in London.
Listing on multiple letting platforms is one of the strategies that will increase your property’s profitability. Property experts believe that it not only broadens your reach but it also mitigates your risk. Getting into multiple platforms allows you to explore new markets. According to short-term rental statistics, those who learn to adapt enjoy up to 14% increase in rental yields. So if you want to increase your rental yields this year, you should start cross-listing.
Vrbo is one of the channels you can use to market your short-term rental. Short for Vacation Rentals by Owner), it is a letting platform used by millions of travellers across the world – with 1.1 million views coming from the UK.
The market reach provided by Vrbo can increase your rental profit significantly – but it comes with a cost. Understanding the Vrbo host fees you pay allows you to calculate your overall earnings accurately.
In this article, you’ll get a deeper look at the different pricing models that affect Vrbo host fees. You’ll find out how to factor them into your property’s rental income and make strategic decisions that will lead to revenue growth.
About Vrbo Host Fees
Listing your property on Vrbo will help you reach more people – especially if it has multiple bedrooms. According to AirDNA, Vrbo is preferred by families and group travellers so they’ll be looking for rentals with more than 1 bedroom.
Of course, getting access to the millions of Vrbo users comes with a cost. You have to pay Vrbo host fees. These will cover secure transactions, platform and interface development, 24/7 customer support and many more. The platform is supported by the latest technology – something that requires constant and costly updates. Vrbo can afford these updates because of the commissions and processing fees paid by hosts.
Vrbo’s host fees follow 2 pricing models.
Pay-Per-Booking model
The first is called the Pay-Per-Booking model. Every time you get a booking, Vrbo will get a percentage of the fee paid by the guest. It usually totals 8% where 3% covers the processing fee and 5% covers the commission fee. This does not include cancellation protection or property damage protection.
The commission fee is 5% of the rental amount plus additional fees charged to the guest (e.g. cleaning fees, pet protection fee, etc.) while the processing fee is 3% of the total payment amount (including taxes and any damage deposits).
This type of pricing model is ideal for those who are just starting or only rent their property a couple of months a year.
Annual Subscription model
The second is called the Annual Subscription model. Vrbo requires hosts to pay this amount in US Dollars, which is currently $699 (£550+) per year. This model doesn’t require hosts to pay a commission fee on every booking. For a year, you get to keep 100% of your rental price. Not only that, your property can be listed on international sites. You also get access to a Reservation Manager and an interactive map.
While that seems appealing, consider the high upfront fee you have to pay. Get enough bookings throughout the year to cover this payment.
If you’re not sure you can get the bookings to cover the yearly subscription fee, use the Pay-Per-Booking model first. However, if you’re confident you can meet the booking requirement, get the subscription model.
You can check out Vrbo’s fees on their site.
Are Vrbo host fees worth it?
Three things make Vrbo host fees worth it.
- Reach. The extensive reach of Vrbo and the billions of site visitors will give your property global exposure. It can increase your property’s earning potential and boost occupancy rates. You don’t have to create your system to reach people from all over the world.
- Reputation. Vrbo’s reputation for providing quality properties will work in your favour. Your property will get the same reputation by association. The site is also known for attracting high-quality guests like families and groups. These often lead to longer stays and higher revenue potential.
- Resources. Vrbo provides hosts with various resources to protect their property and investment. They secure payments and provide a customer service team to ensure smooth property management operations. These resources help hosts stay updated on the rental property market so they can make smart decisions to grow their STR business.
The fees paid by hosts help Vrbo improve their system, platform and services. It boosts bookings and allows hosts to enjoy higher rental revenue.
As you consider the Vrbo host fees, it’s important to keep in mind that these payments are subject to change over time. With the increasing competition in London (and the rest of the world), Vrbo is constantly making innovations and changes to ensure your short-term rental property will stand out. Keep yourself informed of these changes so you can adjust your strategies accordingly.
Tips to Maximise Rental Yields on Vrbo
Maximising your rental yields is the best way to cover Vrbo host fees and get a sizable profit on top of it. To get the best out of your property investment, there are key strategies you can follow.
- Optimise your property listing. Invest in professional photography to get high-quality photos that highlight the best features of your property. Write a detailed description to discuss what makes your property stand out (e.g. proximity to tourist hotspots, bathtubs, room with a view, etc).
- Set competitive rental fees. Use dynamic pricing tools to adjust your rates according to current demand and competition. This will allow you to set affordable rates without compromising your property’s profitability.
- Encourage longer stays. Come up with promos and discounts to encourage guests to book longer stays. This will reduce turnovers and keep housekeeping and cleaning costs down, leading to higher profit margins.
- Offer add-on services. Research what your guests would need. You can offer airport transfers, pet boarding, babysitting, meal services, car rentals, guided tours, etc. These will increase your profit and elevate the guest experience during their stay.
Boost Your Vrbo Rental Income
Don’t think of Vrbo host fees as an added expense. Think of it as an investment that will give you access to millions (or even a billion) of potential guests. Vrbo offers more than just a platform to connect your property to guests. You also get an incredible opportunity to grow your short-term rental business.
While Vrbo can only help you market and increase bookings, managing rental properties includes more work than that. You have to think about housekeeping, maintenance, guest communication, check-ins and check-outs, and many more.
Remove the stress from property operations by partnering with a reputable property management company like City Relay. Let us take care of the daily operations so you can focus on growing your business. Contact us so we can discuss how you can maximise your property’s earning potential on Vrbo.
