17 Replies Latest reply: Jan 7, 2019 8:51 AM by ohst8er RSS

    3% commission on VRBO/HomeAway's guest fees - Do you agree?

    vacationrentalsdc New Member

      I've just learned, that VRBO/HomeAway is charging homeowners the 3% commission on the taxes due to the city on the service fee VRBO/HomeAway charges each visitor. To be fair, for many homeowners this is not a lot of money, For those who operate in an area where taxes are required but NOT collected by VRBO/HomeAway, it would not have any affect. In  my case, as a rental agent, representing 30+ properties, it adds up to a sizeable amount. This of course, is over and above the cost of a listing and the 3% commission on the rate for each reservation. The customer service representatives I spoke with (both 1st level and supervisor) were sympathetic, but honest -- don't expect it to change. Given other experiences with VRBO/HomeAway, I wasn't really expecting it to change, but really it is the principle of the matter. I do not believe we as homeowners should be paying any fees towards the income VRBO/Homeaway is collecting from the customer as their service fee (it should just be part of their cost of doing business). 

        • Re: 3% commission on VRBO/HomeAway's guest fees - Do you agree?
          ohst8er Senior Contributor

          So are you saying, that in addition to paying 3% to Yapstone for cc processing, you are now paying an additional 3% fee to VRBO for the taxes you are collecting from your guests?

           

          As in, if you have to collect $100.00 in taxes VRBO takes $3.00 of your rental income from YOU to process these taxes? 

            • Re: 3% commission on VRBO/HomeAway's guest fees - Do you agree?
              vacationrentalsdc New Member

              Yes, that is correct. I have room to accept that charging the 3% on the taxes that are due on the reservation fees coming to me -- it is essentially a credit card fee for the transaction amount. Where I have difficulty is that the service fee charged to the guest by VRBO for making the reservation on the VRBO website, is taxable in my city as well, and VRBO is charging me the 3% on the taxes due on their income. In my case, that can be as little as a few cents to more than $20 - it all depend on the rate. Here is an example:

               

              Guest rental for a 7 night stay is $1450.00 including a cleaning fee of $100

              Taxes on the stay (14.8%) for my area are $214.60

              The service fee charged to this guest was $138 for the reservation, payable to VRBO

              The local taxes required on the $138 (again 14.8%) are $20.42.

              VRBO charges 3% of the $20.42 ($.61) to the homeowner.

               

              Not all that much, but now take the same property in season:

               

              $5000 for a 7 night stay, plus a cleaning fee of $100, $5100.00

              Taxes on the stay are 14.8% or $754.80 (Ouch!)

              The service fee charged to the guest for VRBO is 6-12%. Lets stick with 6% for this example so the service fee is $306

              The tax the city requires on that fee is $45.29, 3% of that is still small, $1.36 BUT that is $1.36 that a homeowner is paying for VRBO's income of $306 -- why should I be paying a credit card fee (what I call the 3% fee) on money that is going to VRBO.

               

              Now, again unique to me, factor that cost across 30+ properties, operating year round -- for $2018 that resulted in over $1500 in additional fees, over and above the listing costs ($499 per listing, no volume discount is offered anymore) and the 3% I would expect to pay on the room rate. It is my opinion that VRBO should be paying its own credit card fees on money it is charging the customer that then goes into their pocket. Imaging how much money VRBO and all the other websites it owns is taking if on the backs of its homeowners!

            • Re: 3% commission on VRBO/HomeAway's guest fees - Do you agree?
              feibus CommunityAmbassador

              Commission?  Commissions only apply to PPB and those haven't changed, it was always on the full total, including any fees and taxes.

               

              If you're talking about CC fees, that's also normal that they would charge CC fees on the total amount just like every other CC processor.


              So... I think some clarification on your part might be in order.

                • Re: 3% commission on VRBO/HomeAway's guest fees - Do you agree?
                  ohst8er Senior Contributor

                  +1... I'm super confused and I hope you are the correct one feibus...

                    • Re: 3% commission on VRBO/HomeAway's guest fees - Do you agree?
                      feibus CommunityAmbassador

                      Now that I see the example... I am.

                       

                      OP is also maybe thinking the service fee has a CC charge on it, it does not and never did.

                        • Re: 3% commission on VRBO/HomeAway's guest fees - Do you agree?
                          vacationrentalsdc New Member

                          Now I'm not clear -- what is OP? You are correct, they do not charge a CC charge for the service fee, however they do charge a CC fee on the taxes required on the service fee. Here again, is seems like a very small amount of money, however it adds up and it is my opinion still that homeowners should not be paying any fees on the service fee, or the taxes required by the city on that service fee.

                            • Re: 3% commission on VRBO/HomeAway's guest fees - Do you agree?
                              feibus CommunityAmbassador

                              OP is a general forum term for the originator of a thread.  Meaning you in this case.  Easier than trying to get "he" or "she" from a forum name.

                               

                              Yes, EVERY CC processor everywhere will charge a processing fee on the total.  This is normal.  If you went through PayPal, they wouldn't charge you any different for the rent total vs taxes for processing the credit card.  That's just what all the processors do.

                               

                              You are not paying any fees on the service fee.  You are not paying taxes on the service fee either.  You are only paying taxes on your rental charges that are taxable (usually related to whether they are required for the rental, like cleaning or nightly rate); and you are paying CC fees on your portion of the total that the guest pays (meaning all rental charges + taxes).

                                • Re: 3% commission on VRBO/HomeAway's guest fees - Do you agree?
                                  vacationrentalsdc New Member

                                  Except I am paying a fee on the service fee -- 3% of the taxes on the service fee. I agree it is seemingly small, but it adds up. It is true that VRBO is not charging a fee on the base service fee charged to the guest, however they are charging me a fee on the taxes required for that service fee -- Here is where we seem to disagree -- VRBO should not be charging me a fee on anything to do with the service fee they are charging a guest -- that transaction should be completely between VRBO and the guest using their platform.

                                    • Re: 3% commission on VRBO/HomeAway's guest fees - Do you agree?
                                      feibus CommunityAmbassador

                                      No, you are most definitely not being charged a CC fee on the service fee.

                                       

                                      I got a booking two days ago for 2 weeks from now, so the entire booking amount was charged to the guest.  The CC fee was $19.74, the actual total of my rental charges was $658.30 (without the service fee, which was another $80+).  Do the math and you'll see I'm right.

                                        • Re: 3% commission on VRBO/HomeAway's guest fees - Do you agree?
                                          vacationrentalsdc New Member

                                          I have done the math, and done it with 2 customer service representatives with VRBO who have verified the charges. I am absolutely being charged 3% of the taxes due on each service fee. It may be different in  your location, I do not know your specific situation, but I am absolutely being charged, and I have hundreds of transactions from 2018, resulting in more than $1500 in charges.

                                            • Re: 3% commission on VRBO/HomeAway's guest fees - Do you agree?
                                              feibus CommunityAmbassador

                                              Perhaps that is where we are not seeing the same thing: it sounds like your VR is in a state that specifically taxes the booking fee, Florida is not one of those places (and in fact 2016 case law backs up the lack of taxes on booking fees paid to booking agents for Florida transient rentals).

                                               

                                              If they are indeed charging taxes on the service fee, then you might consider trying to escalate your complaint beyond the first level of CSR because it might be a programming mistake.

                                                • Re: 3% commission on VRBO/HomeAway's guest fees - Do you agree?
                                                  vacationrentalsdc New Member

                                                  The bulk of my listings are in Washington DC, others in other states. According to VRBO, cleaning fees, pet fees, and even the fee they charge the visitor who books using their website are taxable in DC. I don't have the highest level of confidence that VRBO knows the correct tax structure, as I know they do not charge the correct tax rate for parking, but that is really up to them and is their responsibility if they were to get it wrong.(PS, Airbnb does not operate the same, but also has the parking tax rate incorrect) The CSR has escalated the issue, but as I stated earlier, was candid to not expect a change. The more likely avenue for change would be if many hosts logged the same issue.

                                • Re: 3% commission on VRBO/HomeAway's guest fees - Do you agree?
                                  mikempson New Member

                                  I totally agree with you we all pay a subscription fee per year + tax and on top of that each booking that is received HomeAway take a further cut of 3% other sites don’t charge any fee for sending my rental fee to me!!!! And the booking fees are also less for the renter just think how many properties are listed on HomeAway and then do a quick average calculation they rake in over 2 MILLION just in fees.  Not bad considering without us OWNERS they would have no INCOME subject for thought don’t you think.


                                  They should offer a little more respect to us and rethink.

                                    • Re: 3% commission on VRBO/HomeAway's guest fees - Do you agree?
                                      ohst8er Senior Contributor

                                      mikempson, the only fee VRBO charges/takes from subscription owners is the annual subscription fee.   If you have PPB you are different, you pay per booking but DO NOT pay a subscription fee, as you probably already know.

                                       

                                      Other fees that owners pay, 2.9% to Yapstone for payment processing (if any of the customers of the small business I work for pay via credit card, we pass on a 3% fee as well, it's CODB).  Yes it is frustrating that there is no other payment option available to us, but if there were, I'm sure there would be fees attached to that as well.  Do you really think a payment processor is going to process our payments FOR FREE?

                                       

                                      Edited:

                                      Slight correction, Yapstone is charging 3% within USA and 5% for international charges.  And this only applies to USA owners, other owners have their own set of CC fees and tax issues that we don't.


                                       

                                        There are NO OTHER fees that SUBSCRIPTION owners pay. 

                                       

                                      Fees that travelers pay:  VRBO service fee.  Don't agree with this, but it is what it is. And.. TAXES.    The owners do not pay taxes, the travelers pay the taxes, we just process the money.

                                       

                                      If you, I, WE don't like it, we are free to find other sources to market our VR's.   It's their platform.  Honestly, I don't have the ability to market myself the way VRBO can market me, and I don't have the time to attempt to recreate the wheel.

                                       

                                      I hear your frustration, but to say that "without us owners they would have no income..." works for EVERY company out there. Without coffee drinkers Starbucks would go out of business.  Without burger eaters there would be no McDonald's, and on and on.

                                       

                                      VRBO isn't perfect, of course.   And there have been PLENTY of things about the platform that have driven me crazy, mostly the CONSTANT changes.  But I don't know why people come on this forum and constantly berate fees and charges.   VRBO is a business.  Businesses are in business to make money.   Successful businesses make alot of money, and they use that money (hopefully, ideally) to constantly improve their product.    Unsuccessful businesses fold.    I NEED VRBO to be successful.  Don't you?