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[00:00:01] Sarah: Hello. Welcome back. My name is Sarah Karakaian.

[00:00:03] Annette: I am Annette Grant. And together we are–

[00:00:05] Both Annette & Sarah: Thanks for Visiting.

[00:00:06] Sarah: And this is the–

[00:00:07] Both Annette & Sarah: Hosting Hotline.

[00:00:08] Sarah: If you want to get your hosting questions answered here on the Hosting Hotline, all you have to do is go to hostinghotline.com, ask your question just like Samantha did today, and we’ll answer it here on the podcast. Samantha has a good question today.

[00:00:23] Question: Hey, there. Samantha with Coops Vacation Rentals in Gulf Shores, Alabama. You guys haven’t led me astray yet, so I wanted to ask another question. Right now, we have our two beach properties only listed on Airbnb and Vrbo, and we’re getting ready to bite the bullet and get a PMS software with the website builder so that we can start doing direct bookings.

[00:00:42] As we were syncing everything up, I realized our host fee on Airbnb would change from our current 3% rate and go up to the dreaded 15%. I realized that we can adjust our pricing to offset it, but I wanted to ask, is it really worth it? We get about 95% of our bookings from Airbnb, and I’m nervous about how our listings will compare to others in our area.

[00:01:05] It seems that most hosts still use the split free structure in our area. Another idea I had was to still get a PMS and sync it with Vrbo and then list on other OTAs for exposure but not sync it with Airbnb to avoid that fee. Or make a direct booking site through something like Squarespace and not use a PMS at all. But that also makes my head spin. So I would love to hear y’all’s thoughts on this. Thanks.

[00:01:33] Sarah: Really good question, Samantha. And you have to do some host research, some host math.

[00:01:38] Annette: Yeah. And I want to point out, and Samantha, this was all so good. I was taking some additional notes, but as we’re going to talk about the math, which is the most important, you said some words. I just want to pull them out. Dreaded 15%. Is it worth it? Nervous, head spinning. And this is how I think most hosts feel often when there’s big decisions.

[00:02:03] And so I encourage everybody to write those feelings down. But then we have to back it up with data. So we have to have data over drama and really dig in. The one thing I want to point out is you said, “Is it really worth it?” And you’re nervous about the fee increase. But something that makes me nervous, Samantha, is that you said 95% of your bookings come from Airbnb.

[00:02:31] So Sarah and I want to talk about having all your eggs in that Airbnb basket. And we understand right now this is a big, big decision. So we’re going to help you start with the math and then figure out where that helps you with the nerves, the head spinning, and is it really worth it? We’re going to get the math to back it up.

[00:02:51] Sarah: So Samantha said that she was nervous how she would compare to others in her market, and she thinks most hosts in her area are using the split fee structure. But being nervous about it and thinking is different than knowing. And I would be harsh. I would guess, and this is a guess because we didn’t go into PriceLabs and do this research for you, Samantha, but you certainly should.

[00:03:12] I would be shocked if a vacation rental marketplace like Gulf Shores, a majority of those rentals aren’t being professionally managed or aren’t on a property management software. I could understand how a secondary market most of your competitors aren’t on a PMS. But in Gulf Shores, there are so many property management companies, a lot of legacy companies out there, and you better believe they’re not on Squarespace doing direct bookings and Vrbo separately and Airbnb separately.

[00:03:43] So Samantha, the first thing that you have to do is get a subscription to a dynamic pricing software, something like KeyData, and find out if you were to increase your rates by 15% to offset the fee, how would you compare to your competitors? Because here’s what I can tell you. Here in our market, we’re Columbus, Ohio. We are on a PMS, and we pay the 15% fee, and so we do the pricing adjustment by 15%, and we’re still beating our market and have appropriate occupancy.

[00:04:21] It’s not crazy high where we’re priced too low. We’re right at down that 75, 80%, somewhere even 85%, which tells me that, yes, I’m having to increase our prices by 15%, but a majority of our competitors are doing the same. And the history of our rentals with the countless five-star reviews is also enough to tip someone over the edge to book our place instead of someone else’s.

[00:04:46] Annette: Sarah, for a moment, we forgot to do this. Let’s explain to the listeners that might not know what we’re talking about why Samantha is even nervous about this 15%. The PMS, when you connect your listing to a software, i.e., a property management, 15% host service fee is deducted from each payout for software connected hosts with no guest service fee.

[00:05:13] So that is what Samantha is nervous about, that if you are just on Airbnb right now and aren’t using any software, you can control the rate. We also believe that this rate, this percentage, in some other countries, it’s 15% across the board, whether you are connected to a software or not.

[00:05:34] So that’s one thing we wanted to mention too, is that in the future, everyone might be at 15%. So this might be coming in your future, no matter what. We don’t know, but we’re just assuming as the brand grows and as they sink their teeth in even deeper into the markets, they’ll have that increase there. So for all of you that aren’t connected to any software or PMS yet, that’s where that comes from.

[00:06:01] Sarah: We haven’t done an episode on this yet, I don’t think. But Samantha, here’s why Annette said she’s nervous that 95% of your leads or your bookings come from Airbnb. Because it’s happening all over the place, and it’s happening to really good hosts like us, where Airbnb, without consulting you, will shut down your listing or suspend your listing for claims that a guest might make. Actually, our friend in Arizona– 

[00:06:33] Annette: He just had his listing suspended because someone claimed there were inside cameras. There were no inside cameras. It was actually the guest’s first stay ever on Airbnb. This host is a super host. He actually works hand in hand with Airbnb, and they delisted him or suspended him until they did the research on it.

[00:06:45] And so we had something like that happen here. Also, we will go deeper into that and make that its own episode. But that’s why I said I’m nervous, Samantha, is we’re talking about risk here. You’re risking your profits decreasing. If Airbnb wants to change something or suspend your listing, then it goes from 95 to zero.

[00:07:09] But here’s where we think the real work– obviously we want you to look in your market and see who is using software, who isn’t. Also, how confident are you? And this is work that you can start today, which I’m excited about because this is where the real work. Everything is going to be work when you’re doing this, but how confident do you feel in your guests wanting to come back again and again and again?

[00:07:36] And if you have these guests that want to enjoy your property every year, Samantha, we believe right now the work needs to be put into obviously your five-star stay, but communicating with your guests, making sure you’re getting their information. Therefore, you can follow up with them so they can book on your direct booking.

[00:07:55] So we want you doing this no matter what to get those guests, a, coming back year and year, and if it’s not them, referring their friends and family or other people that are staying with them. Because that is the work. If you’re going to go on the PMS and you want to have direct bookings, you just don’t put a website up and the direct bookings are going to flow in.

[00:08:16] You’ve got to do the work of making your guests, your current guests, your past guests, and future guests aware of your website. So there’s going to be a lot of work in there. So that’s one of Sarah and I’s questions. How have you been communicating with your past guests? How probable do you think it would be to get them to book direct with you?

[00:08:33] Because that’s some of the math that we want you to do also of like, okay, last year I had 50 bookings. I feel like 20 of them I could get to book direct. What were their average daily rates? What would that percentage be? So that’s some of the math that we want you to do also. And it’s great that you have two properties because maybe if one is booked, you can still take that repeat guest and put them in your other unit.

[00:08:58] Sarah: Then you can do the math of whatever that is, let’s say the 20 of the– what did you say, Annette? 20 of how many?

[00:09:03] Annette: 50.

[00:09:04] Sarah: I don’t know. We’re just making things up.

[00:09:06] Annette: One a week.

[00:09:07] Sarah: Let’s say 20 of the 50 are direct booking. And so what would you be saving per year even if you did a split pricing? And here’s the thing too. I’m not going to lie to you. You still have other fees. You’ll have your PMS fee. You might have your Stripe fee. Your payment processor will charge something.

[00:09:26] But then I’m also thinking about your other questions. Should you do a Squarespace website? And you could have Vrbo and Airbnb talk to each other, but then if you got a direct booking, you’d have to block out those calendars. There’s some manual work there, which might be worth it to you for those host fee savings.

[00:09:45] And then while you’re working on making sure that you’re collecting guest information and doing the work of calling guests and seeing if they would book direct with you next year, which in a market like Gulf Shores, I imagine that’s something that is easier for you to do than someplace like where Annette and I are, where, yes, people might come back to Columbus and might book direct, but not in this habitual cyclical way they might do it in Gulf Shores with their family vacation.

[00:10:08] And then I would not advise you doing the whole PMS channel manager, put them all on the different channels, but not on Airbnb. I also looked up to see if there’s a Zapier connection. So Zapier is a software that is like an, if this, then that. So if you get booked on Airbnb, then it would block off your calendar.

[00:10:26] But according to the web, a quick search, there is no Zapier integration with Airbnb. There are Zapier integrations with your PMS, but that defeats the purpose. And so I would just be very worried about you getting double bookings. And that’s not fun.

[00:10:40] Annette: Yes. That amount of worry, oh my gosh, that would stress me. That would actually stress me out more than anything of that potential. Again, we’ve got to go back to the math because Sarah and I were doing scenarios. We don’t know your average daily rate. We don’t know your occupancy, and we’re like, is this a 10,000-dollar decision? Is it a 15,000-dollar decision? Is it a 20,000-dollar decision?

[00:11:03] And so that’s where we really do encourage you to go in, do the math, and maybe it isn’t this season. Maybe you’re still only on Airbnb this season while you’re collecting all that guest data from this entire year and you feel much more confident in getting direct bookings.

[00:11:20] And maybe you do a physical calendar while people are staying, like, “Hey, do you want to book this week next year?” And you can start mapping that out. One thing you didn’t let us know, and that’s okay because you’re asking a different question, we want to know, is this a long-term play for you? Are you going to maybe purchase more properties? You already have two.

[00:11:39] And so we also just want you to think about the long-term health of your business, the growth, and what your plans are for past this year. Because maybe your goal is to have these two properties and sell them in two years. So it might not be worth it if that’s the goal.

[00:11:57] Sarah: For anyone wondering, we made it up that Samantha made $100,000 a year, just an easy number to work with. So 15% would be–

[00:12:06] Annette: Will be 12,000 difference from the 3 to 15.

[00:12:10] Sarah: Right. The 3% that she has to pay with the split fee structure, or the 15% that she would have to pay with the software connected fee structure. So $12,000 a year if–

[00:12:22] Annette: She doesn’t change her pricing at all.

[00:12:24] Sarah: If you don’t change your pricing at all and if you’re not working on your direct booking to offset that. If you’re still getting 95% of your bookings from Airbnb.

[00:12:32] Annette: So that’s how Sarah and I would do it, is just start with that math, work backwards, see what you can do. But we’re glad that you paused when you saw that because we do know some hosts that aren’t aware of that and then it happens and then they haven’t adjusted their rate and then they’ve got a ton of reservations, and they haven’t noticed that they’re absorbing all the fees. So kudos to you for catching it ahead of time. There’s power in the pause there for sure.

[00:12:58] Sarah: Samantha, I’m really curious, though. I would do the work, find out if you raise your rates by 15%, how much, against your competitors, would you really be overpriced? And take in consideration I don’t know how long you’ve been open, how many five-star reviews do you have, how beautiful is your property, how likely is it to get booked over someone else?

[00:13:17] Do that work. You could even, if you buy a subscription to the data software, get on the line with their customer service and make sure that you’re reading it correctly because I would just be hard pressed to find out that most of the hosts in a vacation rental market like Gulf Shores aren’t software connected.

[00:13:31] Annette: And there’s probably some Gulf Shore vacation rental by owner sites. I would start putting in your marketing calendar of connecting with these other sites that are out there, maybe other hosts, and just seeing how you really can increase your direct bookings.

[00:13:49] Sarah: All right, Samantha. You’ve got some work to do, girl.

[00:13:51] Annette: But it’ll be worth it. It’s going to be worth it.

[00:13:53] Sarah: Yes. And then please let us know how it turns out, Samantha, what you decide to do. Email us at hi@thanksforvisiting.com, and we can update all the listeners as well. Listeners, if you have any feedback, we’d love to hear from you. You can also email us. And again, if you go to hostinghotline.com, ask your hosting questions, we love answering them every Tuesday here on the podcast. And with that, I am Sarah Karakaian.

[00:14:14] Annette: I am Annette Grant. And together we are–

[00:14:15] Both Annette & Sarah: Thanks for Visiting.

[00:14:16] Sarah: Talk to you next time.