Airbnb passes marketing costs on to owners/managers

Airbnb, the largest marketing site for short term rentals, is passing on its marketing costs to homeowners and property managers. If this statement makes you scratch your head, you are not alone.

According to All About Airbnb, like most vacation rental managers, “In order to keep attracting new customers winning the over the competition, Airbnb has to run ads on Google, spending money for every click.”

Airbnb made the decision to charge suppliers (hosts, owners, managers) for the cost of this Google advertising, more commonly knows as PPC or AdWords.

 

Photo Credit: All-About-Airbnb.com

 

According to an Airbnb web page explaining this change, “The most frequent request we hear from hosts is that you want more bookings. To make this happen, we need to make sure that more people hear about Airbnb. As an organization, we’re spending as much as we can on marketing, like our first TV commercial, Never a Stranger, and many types of online advertisements. But there’s no end to the amount of advertising that can be done. By charging a higher fee—but only when hosts are directly profiting as a result of the advertisements—we can finance additional advertising.”

 

3 Implications for Vacation Rental Managers

 

1. Yes, Airbnb’s Google AdWords advertising for your properties competes with your own Google AdWords ads for your properties. 

There is one reason to use a distribution channel (i.e. HomeAway, Airbnb, TripAdvisor, Booking.com) –to get homes in front of customers who would not have otherwise found you. There is no reason to pay a distribution site to do for you what you can do for yourself.

As a vacation rental manager, you are very likely using Google Adwords in your online marketing strategy. If your management company’s Adwords cost per acquisition (CPA) is lower than the 12-15% that Airbnb is charging, there is no reason to cannibalize your own PPC strategy. In addition, Google AdWords is built on a bid model, so paying Airbnb to market your homes using AdWords actually increases your AdWords costs.

 

2. Airbnb essentially raised the take rate to 15-20% without a publicized increase to managers/hosts.

Without a press release or a host boycott or a Wall Street Journal article, Airbnb found a way to increase their take rate without disturbing the peace. Airbnb currently charges 3-5% of the booking, collects the money, and pays the host/manager 24-48 hours after check in. With this 12-15% marketing “option” the cost per booking rises to 15-20%. (Note: This $25 billion dollar online marketing channel added a 12-15% increase in the booking total for online marketing costs. That is like Apple charging you an additional 12-15% for technology.)

 

3. Airbnb’s “opt-out” page layout provides ideas for managers.

Vacation rental managers are increasingly finding the need to pass some marketing costs (i.e. distribution, floor plans, keyless locks, etc) on to property owners, and  Airbnb’s opt-out form in the property setup is smart. When adding new inventory, managers might consider ideas stemming from Airbnb’s new “opt-out” marketing form.

 

Sources: Airbnb, All about Airbnb, Tnooz

By Amy Hinote