The Hidden Cost of Vacation Rental Payouts

When you decide to rent your property on the short term market, there are a few things which you need to figure out. Of course, there are the basic things like, what price do I charge? How many people can stay here etc etc. But there are other things which you will not realise til later down the road. One of these things to consider is the hidden cost of vacation rental payouts.

If you do decide to use a site such as AirBnB, HomeAway or the many other sites which you can use for marketing your property then you will have to pay them a commission for any bookings they send your way. This is fine, if they help you to get bookings then you shouldn’t have to worry about giving them a small cut of the action. What is a bit less transparent is the cut they take to cover the payment fees. Payments are never free so someone needs to cover them, this means that you will often see another 3% subtracted from the amount you would receive to cover this. This isn’t the only cost however!

Quite often there will be more fees involved depending on which currency you have your properties listed in. There are some sites which only support payouts in say three currencies; USD, EUR and GBP, this means that if you are operating in another area, at the time of payout, your amount will be converted to one of these currencies. You will lose a small amount of money on the conversion and then you will lose money again when the transfer is made to your account. Banks do not like to receive foreign currency and they quite often give you a rubbish exchange rate and take a fee. In reality, you could be losing as much as $20 on each transaction.

Now there are a few sites which are tackling this problem and things are getting better. For example, AirBnB is using Payoneer for their payouts and they are supporting more and more currencies. This means that if we have the pricing in THB and then the booking is confirmed. We will receive exactly the amount of money for which we expect. This makes things a lot easier. Other sites are still lagging behind.

If you are on the cusp of starting your own short term rental empire then it is worth considering the hidden costs of short term rental payouts. Of course, it is possible to factor it into the cost if you know that you must make a certain amount for each night booked. Be clever, read the small print and ensure you are getting the margins you think you should get. It is simple, not easy.


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