When I walked into my Hawaii vacation rental, I collided with a wall of hot, humid air. Instinctively, I scanned the house for a thermostat or air conditioner. I found a small wall unit, but I couldn’t plug it in. It had a lock on it. I called the owner, who said she’d be happy to remove the lock — if I paid her an extra $300.
Apart from cleaning fees and insurance, vacation rentals used to be one of the last all-inclusive travel products. You could count on utilities, wireless Internet, cable TV and other basic amenities being included.
Extra vacation rental charges galore
“There is nothing more maddening than when your expectations for your vacation are shattered just moments after you arrive,” says Steve Schwab, CEO of Casago, a property management and vacation rental company in Scottsdale, Ariz.
Schwab and other industry experts say experiences like mine are becoming more common. Owners and managers are quietly instituting new fees to offset rising expenses or to meet increasing customer demands. You can easily spot most of these fees before you book — and it’s worth a careful look. Otherwise, you could be on the hook for something like overpriced air conditioning.
The vacation rental owner in Hawaii said she started locking the wall unit after a previous tenant ran the air conditioning constantly, leaving her with a costly utility bill. I assured her that we would only run the AC during the hottest hours of the day, but she wouldn’t release the lock unless I paid the $300. I refused.
For the rest of our stay, we made plans to be out of the house during the early afternoon to escape the oppressive heat. We learned a valuable lesson. Always — always — find out if air conditioning is included in the price of your rental. When I checked the property description, there was no mention of the air-conditioning fee. I called the vacation rental site through which I’d booked the house, and it quickly refunded $280, the full amount of its commission.
Kiedra Hinkle-Tyson, who co-owns vacation rentals in St. Louis and in Punta Cana, Dominican Republic, explained the economics of vacation rentals. She says that there is a surcharge for electricity usage at both houses, and three additional fees at her St. Louis house: a cleaning fee, an “extra person” fee and a service fee.
Why all these additional fees?
“We have additional fees because our vacation rental companies charge us fees,” she says. “Airbnb charges us 3 percent, and Booking.com charges us 15 percent. So to offset some of these charges, we pass those charges on to the customer because they are the ones staying and enjoying the home.”
Sam Zuo specializes in Airbnb arbitrage, an emerging business that takes advantage of cost differences between home rental and home sale markets. He manages more than 10 vacation rental properties, and he says fees are a big part of his business. Among his bestsellers: early and late check-ins (at $25 an hour) and items from the minibar, which he stocks with wine.
Zuo says Airbnb has made it easier to add “resort” fees or “management” fees to reservations. “These are one-time fees that hosts can add to their listing for every new reservation,” Zuo says.
Increased booking fees
In the early days of online vacation rentals, the sites charged modest booking fees. But lately, those charges have increased. Last year, for example, the popular vacation rental site HomeAway increased the subscription price that property owners pay to list on its platform by 25 percent, to $499 a year per listing. When I made my last booking on the HomeAway site, it also charged me a $300 “service fee.”
Fees imposed by booking platforms aren’t the only costs cutting into owners’ profits. Daniela Andreevska, the marketing director at Mashvisor, a real estate data analytics company, says many destinations have introduced new taxes on short-term rentals.
“Frequently, vacation rental owners have to pay the same taxes as hotels, in addition to income tax on their rental income as well as other fees,” she says. “This is a new trend as many local authorities are trying to regulate and control the short-term rentals business. Naturally, owners have to increase the nightly rates or add service fees to protect their profit.”
Another factor: guests’ expectations
For example, some homes in the Hawaii neighborhood where I rented didn’t have air conditioning. As a visitor from the mainland, I expected it.
“The industry really shouldn’t be headed this way,” says T.J. Clark, co-founder and CEO of TurnKey Vacation Rentals, a national full-service property manager. Certain essential amenities should always be included in the rate. At TurnKey, for example, high-speed WiFi is included in every home. There’s also a washer and dryer or a comparable service on the premises. “In fact, we won’t work with homes that don’t have these capabilities,” Clark says. “We see these items, and many more, as standard amenities for vacation rentals, which guests should expect to be included, not part of an upsell. We’re also not shy to highlight these items that aren’t always free at hotels as benefits for staying at one of our properties over another .”
Avoiding extra charges takes a little sleuthing. That’s because there’s no standardized way of displaying rental amenities, like a nutrition facts food label. You have to read every line of the property description, including details rendered in “I-can’t-see-this-without-reading-glasses” type, in light gray.
“The best way for renters to know about these fees is to ask,” says Jim Prugh, owner of Lindsborg Vacation Rentals in Lindsborg, Kan. Sometimes, emailing the owner a simple question — “Is everything included?” — will clear up any misunderstandings.
Prugh points out that travelers can also avoid booking fees from Airbnb, HomeAway and Booking.com by reserving a stay directly with an owner. “I steer my guests, whenever possible, directly to my website,” he says. Typically, that can save you several hundred dollars per rental, depending on the length of the stay, although you also lose having an intermediary help you should something go wrong.
Most important, though, is to read the contract before you agree to pay a deposit. It should describe everything you thought you read in the property description, including any special terms — or conditions about air conditioning.