If you’re investing in Airbnb to create more cash flow and financial freedom, there’s a major change happening that could quietly cost you thousands of dollars if your pricing and Airbnb tech stack aren’t set up correctly.
We discovered this after one Airbnb investor suddenly started booking like crazy—only to realize months of inventory had been sold at around $100 a night because her pricing systems had disconnected.
So Culin spent days digging into the issue, testing it across our own portfolio of 14 properties and the listings we help manage, to figure out exactly what’s happening and how to fix it.
In this episode, we’re breaking down Airbnb’s new single-fee model, the pricing disconnect you need to watch for, and exactly what to check in Airbnb, PriceLabs, and your PMS before September 15th—so you can protect your cash flow and keep your Airbnb investment working toward the financial freedom you built it for!
Host Coach Airbnb Podcast Episode 151 Show Notes:
Heads up, there are major implications of the Airbnb single-fee model, and here's what you should do on September 15th to avoid the disconnect that could cost, cost you thousands. So many of our coaching clients and investor friends have been asking us about the Airbnb single-fee model situation, and I'm also seeing a lot of conversations and questions and misinformation popping up on online Airbnb groups.
So I thought we would take a moment and interview the expert on this, my amazing husband, Culin, because he understands all of the different layers of plug-ins and technologies, and took a lot of time to figure out what the heck is happening.
What is Airbnb's Single Fee Model and Why is it Being Implimented?
So without further ado, Culin, what exactly is the single-fee model situation, and why is it being implemented?
So this goes back to last October 27th or so. Airbnb has made some business decisions to go away from the split-fee model that we've been used to, meaning hosts pay 3% and guests pay a 12% fee, and Airbnb collects roughly 15 and a half percent fee on every booking.
And why are they changing that?
Well, nobody knows exactly. Airbnb will say they're doing it to keep up with industry standards. I know Booking.com has a single fee. I think there's a marketing aspect to it that I'd actually like to see explored or exploited even more, which is Airbnb can say to guests, "There's no fees," right?
They've done away with all fees to guests. They've just passed them on to the host to cover those fees. Yeah. And we can deal with that. It's not a big deal. Starting back in October 27th, all hosts that were using a PMS, property management software, like Hospitable. So we think of Hospitable often as our automated messaging platform, but it's really evolved over the years into a full-blown property management software.
Back in October, if you were using Hospitable or any other PMS, Airbnb just *boop* popped you over into their single-fee model, putting all the fees on the host --15% for the host. So, back then what we did is just went in and upped our prices. In the PMS systems there's usually a category, and we'll dive further into this, called markup, and we all just marked up our prices either 15% or 18%. The 18% really was a bonus for us, because at an 18% markup we as hosts aren't paying any of the fees, right? We're no longer paying the 3%, we're covering the whole 15% fee through a markup on our prices.
I think from the consumer perspective, when I'm on Airbnb and I see a place and I see the nightly rate, I'm like, "Oh, it's beautiful. It's the price range I was thinking of." And then when I go to book, there's the extra 15%, the cleaning fee, all of that, and I think that caused a lot of booking friction.
We often have Airbnb guests message us and say, "Wait a second. I saw it at this price, but now it's this price. What's going on?" And I would have to answer, you know, "Airbnb has fees. There's taxes." I think they were trying to streamline the purchase process for the Airbnb guests.
What's Happening with Airbnb Single Fee Pricing on September 15th
We've had this gap in time between last October and this September. On September 15th, Airbnb is doing away with the split fee model, so everyone will get forced into the single fee model. It gets a little bit messy because what happens if you started your listing between October and now? If you're using a PMS system, Hospitable, we're going to need to get in there and take a look and see if you have a markup going on, and if you don't, we want to add one in.
All right. So if you have a PMS system and you're listening right now, stop what you're doing and listen to what Culin said, which is: Go into your PMS and look for something called listing markup.
What to Do About The Airbnb Single Fee Switch if You Do Not Use a PMS
If you're an Airbnb investor who's not using a PMS, you're going to get switched to that single fee, and instead of having the ability to mark up in your PMS, you're going to want to go to your pricing software, most likely PriceLabs, and adjust your base and your minimum price up by anywhere between 15 and 18%.
So you're just doing the calculator. If you were at $100 a night, you're going to make that $115 a night minimum. And that's to make sure that you aren't losing money.
There's been a lot of stress and apprehension around hosts thinking, "Well, if My base price is higher and if my nightly rate is higher, am I going to be less competitive?" It works out that the guest is paying the same amount, it's just either they're paying it in your base price or your nightly rate, or they're paying it in a combination of fees.
It really has not affect the end price for the guests, and hasn't been a problem in the marketplace at all. Which is a relief.
The Airbnb Disconnect Issue That Can Cost Hosts Thousands
And so with all of this going on, has the change to the single fee model caused any issues for Airbnb investors?
In parallel, there's something else that's taking place. I don't know exactly how related to the fee structure change it is, but Airbnb is also looking for what they call the single source of trust... meaning You have settings in Airbnb, you have settings in your pricing software, you have settings in your property management software like Hospitable, and Airbnb is like, " somebody's gotta be in charge here." And what they have done is said, "If you're using a PMS, that's going to be our single source of trust." So your pricing software needs to report to your PMS, and your PMS needs to report to Airbnb. In turn, Airbnb will report information back to the PMS, which will inform back to your PriceLabs or your pricing software. It's like a giant feedback loop. But it needs to be arranged in the right order, and the problem is coming where there's been disconnect, have fallen off and/or just got out of order.
Can you give an example? I know you've had so many different client phone calls about this issue.
This Airbnb disconnect issue really came to our attention early last week, where we had a client, who was not an ongoing revenue management client, but she's someone we'd set up a listing for a couple years ago. She called on Monday and said, "Hey, we started receiving a lot more bookings than usual, and we were pretty excited about that at first. And then we started getting a lot more bookings, and then all of a sudden we realized that our entire month was booked out at, like, $100 per night."
Unfortunately, they ended up selling six months worth of inventory at a very low price because of this disconnect, this break. Her PriceLabs was communicating to Airbnb, Airbnb didn't want to get the pricing from PriceLabs because she was using a property management software, Hospitable. It was looking to get those numbers from Hospitable.
So it was all confused, the pricing got all humble jumbled. And she's lost thousands upon thousands of dollars in bookings. This was when Culin locked himself in the office because he had to figure out why this was happening." He spent days digging around, and it's the beauty of having so many coaching clients and so many revenue management clients, plus our own portfolio of 14 -- he was able to test all of this stuff. I live with a genius, and he was just grinding on it. He's like, "I have to figure out how to fix this for everybody before it costs everyone all of this money."
How to Fix the Airbnb Disconnect If You Have A PMS System
All right, so we now understand the fees are being implemented. We now understand that there's this sort of disconnect, and I'm curious because we have two buckets of people, people with PMS systems and people without. So specifically, what is the problem for hosts using a PMS system?
Potentially the connections between your pricing software and Hospitable, and potentially your connection between Hospitable and Airbnb have broken. So what do we want to do about this? (Personally I would just freak out.) So go into Hospitable and reconnect Hospitable to Airbnb, and it says re-import listings. So you re-import your listings from Airbnb freshly into Hospitable.
From there, we'll go to PriceLabs and reconnect PriceLabs to Hospitable. That's the order of flow. Pricing connects to the PMS, and PMS connects to Airbnb. And when we asked PriceLab about the disconnec issue, they're said, "Well, you know, connections fall off, or APIs change, or tokens get deauthorized, and..."
I hate hearing things like this. This is why I'm so glad I have Culin in my life because I'm like, "Oh, I'm going to make this beautiful, and I'm going to talk to guests, and we're going to upgrade our amenities," and there's all of this background nitty-gritty going on.
How to Fix the Airbnb Disconnect If You Do Not Have a PMS System
All right, so we talked about PMS system clients. On the flip side, what is the problem for hosts who are not using a PMS system? So this would be hosts that do their own messaging or use the Airbnb auto-messaging system. It's a little simpler there, right? The whole test for this is
Go into your PriceLabs account and look at your listing, and right above your listing it's going to either say Airbnb or Hospitable. If you're using Hospitable and it says Airbnb, it's talking to the wrong place. Okay. To answer your question, if you're not using Hospitable, you're not using any PMS, it should say Airbnb directly above the name of your listing in PriceLabs.
What you want to do is do a end-to-end test: make a specific change to price, hit save and refresh and sync, and just make sure that that number comes across in your Airbnb calendar. And then you can change it back, or you can do this before you make your 15% price increase or just test end to end that price increase.
What To Do To Test if You Have an Airbnb Disconnect Issue
Okay. So just to make sure we've got this straight, what should our listeners do to make sure their listings aren't experiencing a disconnect they didn't authorize? Do an end-to-end test.
What does that mean?
So an end-to-end test means starting with your pricing software, pick a specific date, put in a specific amount, change that nightly rate to $200, hit save and refresh, go to your PMS, make sure that it's coming out at $200.
From your PMS it will mark it up that 15 or 18%, and then check your Airbnb calendar and make sure that it's now not saying $200, it's probably marked up that 18% at $240 or so.
If you were in the situation where you had PriceLabs communicating to Airbnb, but you were using a PMS, one way to turn that off to make sure that that doesn't happen again is to go to your account settings, select privacy, and scroll down, and it will show you which accounts are trusted by Airbnb or are connected to Airbnb, and you want to disconnect PriceLabs in that case.
So you want PriceLabs only talking to your PMS, Hospitable. Wow. Okay. Again, so grateful that you're the person that handles that.
How to Prepare For Future Airbnb Changes
So reflecting on this multi-day research project of yours to pinpoint the issue and then how to fix it for the two different buckets of Airbnb hosts out there, do you have, any overarching observations about this change? And more importantly, how do you prepare for future changes orchestrated by Airbnb? Because we all know that's going to happen.
Right. Things break, APIs change, Airbnb does updates all the time, and it just goes back to what we say about dynamic pricing, which is you can't set it and forget it. Nobody ever really explains past that. What does that mean? What do I need to do if I'm not setting it and forgetting it?
It means that you really need to be checking it once a week, going into your pricing software and making sure that the prices that you are setting in the pricing software are flowing through to your Airbnb calendar with the markup. So each week, set a day: Sunday night, Monday morning.
You just can't set it and forget it. You need to be looking at it. You need to be on top of it. As Airbnb Revenue Managers we were able to be proactive and be ahead of this situation for our clients, and get them fixed. That's what we spent the last week doing -- making sure they were connected correctly and not losing money.
Pro Tip: if all of a sudden you're booking like gangbusters, while it feels good, it may indicate a problem with your listing, and the sooner you can look to see what might be the problem, the better.
I realize that this is complicated and probably frustrating, but we felt like it was incredibly important to let you know as soon as possible about the change, why the change happened, this Airbnb trust/disconnect problem, and how to fix it on your end.
But if you feel like you need help handling this single fee situation with your Airbnb listing or listings, we're here to help. Book a free 30-minute call on hostcoach.co, and we can sort you out and make sure you're not in a situation where you could lose thousands of dollars in bookings because remember... our joy is in your success!