If you’re looking to get into the vacation rental market, you may have heard of VRBO and how easy it is to rent your property on the platform.
VRBO stands for Vacation Rental by Owner, a website connecting travelers with vacation rental properties. VRBO has been around since 1999 and is expanding its service to more countries worldwide. VRBO also offers owners the opportunity to list their property on other websites like HomeAway and earn additional revenue from these listings as well!
However, doing this isn’t free and will incur some costs, for both owners as well as travelers.
VRBO fees for owners include pay-per-booking charges or a yearly subscription method. Pay per booking will cost you 5% of the booking plus 3% for payment processing fees. If you opt for the yearly subscription method, it will cost $499 plus the 3% payment processing fee.
In recent years, VRBO’s fee structure has changed quite a bit – in some cases doubling or even tripling what they were before! This blog post will explore those changes and how they impact owners.
Percentage Taken by VRBO From the Owner
VRBO is a great way for property owners to make money from the properties when they are not being used. But, this does come at a price. To list on VRBO, you need to be ok with their fee structure.
One of the options VRBO offers is the pay-per-booking method. If you choose this method, VRBO will charge you 5% of your booking. There is also a 3% payment processing fee on top of that.
VRBO will also charge you a fee for cancellations, which is up to their discretion.
Example: If the rental rate is $500 per night and VRBO takes their cut of $25 plus fees, then what they make off this booking could be as high as $37.50!
VRBO also has a yearly payment model for those who rent their property more often, which can make more sense if you have vacation rentals that are popular and in demand.
The fee for listing your property is $499 per year with this option. This doesn’t include the 3% payment processing fee, so that will need to be paid as well.
Example: If the rental rate is $500 per night, then VRBO would charge you 3% for the payment processing and $499 per year.
This comes to $15 per night on top of the $499 per year.
So, if you are renting your property out 100 nights per year, you would pay $1,500 in processing fees but only $499 commission (instead of $2,500 with the pay-per-booking model).
Which Payment Model Is Better?
The pay-per-booking model is better if your property earns less than $10,000/year, otherwise the annual subscription fee will be cheaper.
Another downside to the annual payment option is that the subscription fee is per property. The fee won’t cover other properties you have listings for. The annual subscription will keep your fees lower if you plan to make more than $10,000 per year on your property.
Also, keep in mind the annual subscription does come with access to tools like a reservation calendar to make it easier to track when people are staying at your properties.
How To Minimize Listing Fees
There are ways to spend less on VRBOs fees if you don’t mind putting in some effort. If you are willing to deal with multiple platforms, or with building your own booking website with Lodgify, you can benefit from other booking and listing opportunities.
List on Multiple Platforms
Using other platforms like Airbnb can help you avoid some of the fees because they charge 3% of the booking.
You can use a platform like Wheelhouse to manage and export calendars to each platform, so you don’t have to worry about double-booking.
Create a Website and Book Direct
If you want to avoid commission fees entirely, and don’t need VRBO for anything else, you can use a service like Lodgify to create your own website on their platform or integrate their direct booking software into an existing website.
The one drawback of this is that you will need to market your own property, as you no longer get the exposure of VRBO and their user base. A website would be a good option if you already have a client base.
Is It Beneficial To Rent Out My Property With VRBO?
It is beneficial to rent out your property with VRBO because you can make money on idle properties, charge cancellation fees, opt for short term rentals which will mean less damage, and charge service fees for added peace of mind.
Make Money on Idle Properties
If you have a second home or other property that isn’t always rented out, you can use vrbo to make money, because in most vrbo listings there is an option where the owner can pay to keep their listing active.
VRBO gives you all the tools to cash in on your idle property with a lot less hassle than doing it yourself. More than half of homeowners listing on VRBO can cover 75% or more of their yearly mortgage payments using VRBO rental income.
Charge Cancellation Fees
If your reservations don’t work out, not all is lost. If you choose to charge a cancellation fee, VRBO will take care of all that for you.
VRBO offers several cancellation options for peace of mind. These include:
- No Refund: Should a guest cancel, they will not receive any refund. As the host, you keep whatever the guest has already paid.
- Strict: For cancellations 60 days or more before their scheduled stay, guests are refunded 100%. If the cancellation is closer to the check-in date, the host keeps all of what the guest has paid.
- Firm: There is a 50% refund if the guest cancels at least 30 days before check-in. There is no charge for guests who cancel their reservation less than 30 days in advance of the reservation.
- Moderate: Full refunds for guests who cancel at least 30 days before check-in, they’ll get a full refund. If the cancellation is at least 14 days before arrival, guests receive a 50% refund.
- Relaxed: Those guests who cancel at least 14 days before check-in receive a full refund. Guests who cancel at least seven days before check-in will receive a 50% refund.
Short Term Rental = Less Damage
Short term rentals usually have less damage because the renters typically take better care of the property. Guests are typically more mindful of where they walk, sit or place things in the house so that when it comes time for them to leave, everything looks as good as how they found it.
Service Fees for Piece of Mind
Finally, VRBO offers several services fees you can add to guests’ bills if they qualify. These include:
- Damage Deposit – If you are traveling as a group, don’t be alarmed if you see a damage deposit added to your bill. The deposit is designed to protect the property owner and encourage people to take care of the place they are staying in.
- Owner Fee – One additional fee a VRBO rental property may include is Owner fees. This will contain cleaning, pet, parking, and administration fees. If this is included, that means the cost has been combined for convenience.
- Cleaning Fee – Almost every VRBO property charges a cleaning fee which will typically only vary according to the location, size of the property, and how much you pay for your cleaner.
- Pet Fee – To bring your pet with you on your vacation, expect to be charged by the host both a refundable pet deposit fee or a flat fee. Considering service animals are not considered pets, you may ask the host to remove this charge if traveling with one of these certified servicemen.
- Extra Guest Fee – VRBO properties show up on your search results page and state if they are suitable property for groups of at least three or more travelers. If you are looking for accommodation that will sleep 3-5 people or are traveling with children over 12, the ‘Extra Guest fee’ will be added to your total cost.
- Parking Fee – If you are staying in a condo or apartment with parking for a fee, don’t be surprised to find this expense on your bill. Check with the owner to see if they offer any discounts for not using the parking space.
For owners of VRBO listings, it’s important to understand how much you’re paying in commission fees so that you can decide which model is best for your business. Pay-per-booking will cost 5% plus 3% payment processing fee and the yearly subscription will be $499 plus a 3% transaction fee.
If your property gets a lot of bookings and does well over $10,000/year in revenue, then you can save significantly by opting for the annual subscription. Otherwise, the pay-per-booking model will be cheaper.