Real estate investors sometimes avoid hiring a property manager for their vacation rental on Airbnb due to confusion over management fees, but this can hinder the optimization of their rental's performance and passive income. This article aims to clear up any misunderstandings by explaining everything about the typical Airbnb management fees, including the cost, what services are included and excluded, additional services and their costs, and factors that affect the fee.
The industry standard for Airbnb management ranges from 20% to 35% of monthly revenue for most of the US. Rural hosts may pay up to 40%. Half-service management is available for as little as 10%, but only includes marketing for the property leaving cleaning, maintenance, and guest communication up to the host.
What an Airbnb Management Fee Is
An Airbnb management fee is the total amount of money that you pay to a property management company to provide the services needed to operate your short-term rental business. In exchange for this fee, you get a stress-free experience as an Airbnb host and access to passive real estate income. Moreover, as a professional, the Airbnb manager is expected to boost the performance of your vacation rental, by an average of 20%, offsetting some or all of the management costs.
What’s covered by the Airbnb management fees differs from company to company. Typically, most property managers provide:
- Listing optimization, distribution, and marketing
- Dynamic daily pricing
- Guest communication and support
- Restocking and cleaning between guests
- Property inspections, maintenance, and repairs
- Access to online performance tracking and reporting
- Ability to block vacation rental calendar for personal use
The best Airbnb management companies offer additional services which are sometimes covered by the standard fee and sometimes paid separately:
- Interior design and furnishing
- Short-term rental licenses and permits
- Tax collection and remittance
- Vacation rental insurance
In most cases, the fees charged by Airbnb managers are calculated as a percentage of the monthly rental income before tax, i.e., the nightly rate multiplied by the occupancy rate. This includes additional guest fees such as cleaning fees, pet fees, property insurance, to compute the total revenue.
Airbnb management companies charge a wide range of fees in the US market, between 10% and 35% of revenue. This depends on the provided property management services and the company itself. An Airbnb management fee of 10% is usually considered too low, and comes at the cost of essential services like cleaning. 35% or more is considered too high as it significantly reduces Airbnb income.
Typical Airbnb Management Costs and Fees
The main factor determining the Airbnb management fees paid by property owners is the type of solutions. There are two broad types of Airbnb managers: full-service and half-service Airbnb management companies.
Half-Service Airbnb Management Costs and Fees
The typical Airbnb management fee for half-service providers is 10% to 15% of monthly rental revenue. Two of the most popular names in the US vacation rental industry falling within this category are Evolve and RedAwning. Evolve charges a universal fee of 10% of rental income, while RedAwning charges 10% of revenue plus a 3% standard credit card processing fee.
The services covered by the half-service Airbnb fee usually include:
- Optimizing and marketing listings
- Dynamic pricing and managing revenue
- Managing booking and reservations
- Communicating with and supporting guests
- Managing guest reviews
- Collecting taxes
- Property damage protection
- Reporting to property owners
Full-Service Airbnb Management Costs and Fees
The typical management fee for full-service vacation rental property management companies hovers around 25%, but can be anything from 15% to 40%. Here are the fees that some of the biggest names within this category charge:
- Awning: Starting at 15% for truly full-service coverage
- SkyRun: Starting at 20%, varying by market
- Rabbu: Around 25% as reported by Rabbu reviews by property owners
- Vacasa: 25%-35% as reported by Vacasa reviews by property owners
In addition to the services covered by half-service property managers, full-service Airbnb management companies also provide:
- Getting properties guest-ready including design, furnishing, linen, and legal requirements
- Cleaning and restocking rentals between stays
- Inspecting and maintaining properties
- Maintaining lawns, swimming pools, and hot tubs
- Coordinating property repairs
Sometimes all these services are covered by a single Airbnb management fee, and sometimes some of them are charged separately.
The services offered by these companies are supposed to eliminate the need for owner intervention, providing investors with a stream of passive income.
Additional Costs for Airbnb Management
In addition to the standard Airbnb management fee advertised on their website, many companies charge additional fees, either to hosts or guests. These include:
- Onboarding fee: While most short-term rental property managers do not charge an initial setup fee, some do. For instance, Air Concierge asks for $300 to onboard a property and an owner.
- Vacancy fee: The majority of property managers work to optimize performance in order to maximize their fee through listing distribution, direct marketing, and dynamic pricing. Others, however, charge vacancy fees.
- Cleaning fee: Most Airbnb managers charge a cleaning fee to guests rather than hosts. This typically varies between $50 and $80 per night, exceeding $100 for larger properties. When hosts reserve the rental for their personal use, they are expected to pay the cleaning fee afterwards to ensure professional service before the next round of guests.
- Pet fee: Property management companies that offer pet-friendly vacation rentals usually charge an additional fee to guests to cover the extra cleaning that will be required. This ranges between $10 and $50/night.
- Restocking fee: Some companies ask for a fee to restock guest supplies between stays. The size of the fee varies depending on the specific supplies.
- Amenity fees including lawn, swimming pool, and hot tub maintenance: Most Airbnb property managers ask for an additional fee to maintain amenities such as lawns, pools ($135-$185/month), and hot tubs ($25-$150).
- Special service fees: Some vacation rental managers charge extra fees for things like linen provision and restocking, direct booking fees, credit card processing fees, surcharges, etc.
- Vacation rental insurance fee: Some companies offer liability coverage, damage protection coverage, and bed bug coverage for an extra fee. Vacasa charges a nightly fee for booked nights starting at $7.
- Repairs: Most Airbnb property managers manage property repairs by supervising the work of local handymen and managing their payments. The money is taken from a deposit, charged to a card, or deducted from the monthly rental income.
- Early-termination fee: The top Airbnb management companies give property owners the flexibility to get out of contract whenever they want. Some, however, charge contract breaking fees. Air Concierge, for example, charges a $3,500 and $7,500 fee for getting out early of a three-month contract and a one-year contract, respectively.
Another major optional service that most Airbnb management companies charge separately is interior design and furnishing. Vacasa, for instance, offers guided design for $99 and curated design for $599-$1,199. Awning also provides vacation rental furnishing services managed by the ex-Head of Design at Airbnb, thus boosting revenue by 50%. All fees are included in the comprehensive furnishing budget, ranging between $15,000 and $45,000, depending on the size and the needs of the property.
How Airbnb Management Companies Determine Fees
Many Airbnb management companies charge a universal fee across all markets and property types and sizes. The main factor that determines the fee is the type of company: full-service vs. half-service with the former being significantly more expensive as they cover a much wider range of services.
However, some Airbnb managers vary their fees based on a number of different factors including:
- Market: Charging higher fees in top tourist destinations and lower fees in less popular locations.
- Type of vacation home: For instance, Air Concierge charges 18%-20% (three-month contract vs. one-year contract) for luxury properties and 22%-25% for regular short-term rentals.
- Size of home: Managing larger properties tends to cost less.
- Condition of home: Airbnb properties in a poor state might render higher fees to get them in proper shape and to compensate for potentially lower occupancy. Some Airbnb management companies may turn down a property if it is in disrepair.
- Revenue: Low-revenue properties are charged a higher percentage fee to cover the cost of operations, whereas high-revenue properties are charged a lower percentage fee. Awning is willing to renegotiate rates if properties outperform expected revenue.
- Occupancy rate: Vacation rental homes that suffer from low Airbnb occupancy rates are sometimes required to pay higher management fees.
- Rental duration: Many property managers charge discounted Airbnb management fees for weekly and monthly rentals (different from long-term rentals).
- Required services: While many property managers provide a standard portfolio of vacation rental property management services, some are willing to accommodate the specific needs of the property and preferences of the owner. In this case, fees will differ.
- Contract duration: Signing a long-term contract can reduce property management fees.
Many serial real estate investors wonder if they can get a discount on the Airbnb management fees when bringing in multiple vacation rentals. The truth of the matter is that most large-scale, nationwide companies are quite robust when it comes to their fees and do not offer much discounts. Awning offers discounts to Airbnb managers that onboard multiple properties.
How Airbnb Management Fees Are Calculated
To understand how Airbnb management fees are calculated by companies, let’s take a look at a specific example: the calculation of a 10% management fee.
Let’s say your property earned a total revenue of $1,000 last month. In most cases this is collected by the Airbnb manager. At the end of the month, they will take out their standard fee of 10%, equivalent to $100. Afterwards, they will take any additional fees incurred during this month such as amenity maintenance and repairs, let’s say another $350. At the end, the remainder ($550) will be wired to the host. This example does not include the fee that booking platforms like Airbnb charge property managers directly.
The variables of the Airbnb management fee formula are:
- Total revenue: Includes booking and all fees collected from guests
- Management Fee: The percentage fee charged by the management company
- Platform Fee: The fee charged by Airbnb
- Net Revenue: The earnings of the property, less the management fee
- Additional Fees: The fees from the property, including cleaning, maintenance and restocking
- Final Payment: The payment received by the host from the management company
The Airbnb management fee formula is:
Step 1: Calculate Net Revenue
(Total Revenue) * (1- (Management Fee + Platform Fee)) = Net Revenue
Step 2: Take out any fees
Net Revenue - Additional Fees = Final Payment
Here is how the formula works with the example of $1,000 in revenue, 10% fee and $350 in maintenance costs:
Step 1: Calculate Net Revenue
($1,000) * (1- (10% + 3%)) = Net Revenue
$1,000 * 87% = $870
Step 2: Take out any fees
$870 - $350 = $520
All of these details should be reported to the property owner every month, the more detail the better. We strongly suggest getting copies of sample statements from the company to understand the level of reporting and avoid extra fees.
How Airbnb Management Fees Are Charged
Most Airbnb management companies collect revenue from guests on behalf of hosts. At the end of the month, their fees are charged directly out of the monthly income. So let’s say you generated $1,000 in rental income over last month, and the Airbnb management fee is equivalent to 15%. The Airbnb manager takes out their $150 fee plus let’s say another $250 for additional ongoing and incidental charges. The remaining $600 is transferred to you - the host - as your share of revenue.
Awning charges differently. It still collects revenue directly from guests, but charges the host directly for expenses as they occur to a credit card or bank account on file. So in the same examples, hosts incur $250 in expenses throughout the month and receive $850 at the end of the month.
Hosts benefit from full transparency throughout the month knowing exactly how much money they are being charged and how much they are paying for property management and maintenance, instead of the partial transparency at the end of the month. Unfortunately, many property managers mark up fees and services for hosts and hosts are stuck attempting to dispute charges, instead of seeing the money go directly to the merchant.
How to Negotiate the Best Price for Airbnb Property Management
With the multiple vacation rental property management companies available in each and every US market, there are some things that property owners can do to get the best rates and the best value for money.
Here are a few steps you should take to ensure the best Airbnb management fees in your market:
- Shop around: Standard fees in the industry range between 10% and 40%, so you need to talk to a few different property management companies. Don’t limit yourself to just one simply because it has a nationwide reputation or your friend recommended it. Consider at least 4-5 different managers to see what your options are and compare the services they provide and the fees they charge. That’s the only way to guarantee the best value for money for your short-term rental.
- Check out local Airbnb managers: Do not limit yourself to large-scale companies with national coverage only. In most cases small local property managers are able to offer better rates because they don’t have corporate costs. However, if the team is very small (sometimes 1 person) you run the risk of not having property coverage in certain situations.
- Ask for several quotes: Get quotes from a few different big and small vacation rental management companies. Show them that you are really interested in working with them should they offer the right terms and that you are not just researching options.
- Introduce your own team: Build your own team of cleaners and maintenance people, especially if you have been self-managing your property and already know professionals in the area. In this way, the company will be responsible for only half-service, which will significantly lower the cost for you.
- Be personally involved: Take on some of the responsibilities related to running your Airbnb rental business, particularly if you live in the area. This will not only lower the fees but also give you personal control over how your property is being managed and optimized.
- Check a copy of the property management agreement: Make sure to read a copy of the contract before committing to anything and signing anything. Know the exact services you will be getting, the precise responsibilities you will have, and the specific fees you will need to pay.
- Negotiate the fees: Though most large Airbnb management companies are quite inflexible, it’s worth giving it a shot and trying to negotiate the fees with them. Bring examples of more favorable quotes you’ve got from competitors, and they might be willing to give in. After all, no one wants to lose clients to the competition.
- Ask for a discount for multiple rental properties: If you are bringing a portfolio of vacation rentals, check if you might be eligible for a discount. It’s always worth it to see your options.
- Read online reviews: Before deciding on any specific property manager, see what other property owners say about them. Frequently online reviews reveal unexpected fees and costs that get charged to hosts for no apparent reason.
Are Airbnb Management Fees Worth It?
Hiring a professional short-term rental property management company can be a very worthwhile experience. You will not only benefit from passive income, but your rental’s performance will be optimized, as long as you choose the best company and negotiate the best fees.
When deciding if the Airbnb management fees that you are about to pay are worth it, ask yourself these two questions:
Is this property manager offering me the best value for money in the area?
It’s crucial to shop around and get quotes from a number of small and big property managers. This will allow you to compare and contrast the services they cover and the fees they charge in order to select the best value for money.
Does the expected boost in revenue compensate for the management fees?:
Most good Airbnb management companies give you an estimate of the increase in rental income you can expect once you hire them. Compare this to the monthly fees you’ll have to pay. If you gain more than what you will need to pay, the management fees are worth it as they will give you access to passive real estate investing.
In the US market, Airbnb management fees start at 10% (for half-service) and reach 40% (for full-service), with some companies charging additional fees for various extra services. The main factors that affect the fee structure include the company, the covered services, the market, the property type and size, the rental duration, and the contract duration. In most cases, working with a professional property manager is totally worth it as property owners benefit from enhanced passive income.
Awning is the top vacation rental management company in the US market, offering end-to-end services for investors. Our services include 24/7 guest communication, dynamic pricing, calendar management, and more and are available in all 50 states. Plus, our fees start at just 15% of revenue, with no extra charges or fees. Call or text 415-223-2830 to learn more and get started.