Homeaway (VRBO) vs. AirBnB – Costs to Owners
This article is to help those with a home that they want to rent decide which site will yield them the greatest return, AirBnb or Homeaway (VRBO). [if you’re a renter, know that in my opinion, AirBnb provides the most seamless and easy experience – here is a referral link for $25 off your first booking].
I’m assuming that you already have a basic understanding of what both of these companies do. In essence, they allow you to provide your home as a rental on a short-term basis, whether that’s 1 night or longer terms like a month or so. For us, the average has been 2-3 nights, with folks coming to town to visit, vacation, do business. So, which do you think, Airbnb or VRBO?
Homeaway was started in 2005 and is more focused on vacation rentals. It has acquired a number of other rental sites in order to increase its market share and help with productivity tools for owners and property managers (a large part of their model).
AirBnB started in 2008 and was more geared towards the tech-savvy traveler looking for a room to rent. But it’s grown and has expanded into full home rentals and vacation properties, since in essence any home can be used for vacation.
Both are close in terms of their number of listings and worldwide presence, but I feel that AirBnB is much better positioned for growth. They seemed to have the vision from the start and Homeaway seems to be playing catch up and acquiring companies that can help them make things easier (which I find in the short term can have an adverse effect and be more difficult for their users, owners and renters alike).
Maybe you’re thinking about renting your home using these platforms or maybe you’ve already done it a few times. You may have known about one but not the other. I’ve found that after close to 6 months of renting my home full time that we get close to 50% of our bookings from AirBnb and the other 50% from VRBO, so I’d definitely recommend setting your rental up on both of the websites. It also helps if your property is close to where people want to be (downtowns, beaches, lakes, quiet peaceful country, etc.)
You also might want to check out these software tools that will help you run and operate your short term rentals.
Understanding the costs is pretty simple, but you have to spend a bit of time studying closely to understand them, so let me break down what I’ve found out.
AirBnB: Takes 3% of the overall rental price (plus added fees) as their charge. This includes credit card processing fees also. (note: guests are apparently charged 6-12% of the booking as a fee to them, so keep this in mind when pricing your home compared to your competition).
VRBO: They have the option of no listing fee and 10% fee per booking. This includes the credit card processing fees also. You can also choose to pay a yearly fee starting at $349 for the year. It says there’s a 0% fee, but it’s a bit misleading since you still have to pay for credit card processing. So in reality it’s a 10% fee with no yearly fee or a 3% with $349/yr. (or more depending on plan).
We are actually in the process of determining if that net 7% booking fee will cost us more than the $349/yr. And it’s looking like it may. If that’s the case, we may be upgrading and paying the yearly fee in order to lower our fees from 10% to about 3% (credit cards).
So the net effect to the renter is that clearly AirBnB will leave more money in your pocket.
But what will your pricing need to be to stay competitive?
Will you have more renters from VRBO?
My advice is to get your home on both platforms and measure your experiences over time, both with finances and your enjoyment of the experience of working with both.