12 Replies Latest reply: Jul 31, 2019 5:48 PM by bobbie32 RSS

    Advertised daily rate vs actual cost to customer?

    tpbeebejr New Member

      First post. Still waiting for my elusive first booking on VRBO.

       

      I have been spending an inordinate amount of time in back-and-forth conversations with prospective guests who usually begin with a first inquiry about a discount for last-minute bookings. Since I try to vet my potential guests, I first ask them to share their FaceBook and LinkedIn profiles, and home address, which they usually do if they're serious. Once I decide that I want to rent to them, we negotiate a rate, again with back-and-forth conversations. Several prospective guests then acted as if they thought my advertised daily rate is what they actually pay. Here in NJ, they are charged the new 11.625% State Occupancy fee and sales tax, plus the 10.56% VRBO commission (this is what I calculates their rate to be, based on the invoices, but I'm not sure). So after talking about amounts in the neighborhood of $X, the prospective guest then realizes that they will actually pay about $1.22X, and they get spooked.

       

      I am not sure if these folks are actually that naive to think that VRBO is doing this for free, or perhaps they are feigning ignorance to get me to agree to a lower price. Anyway, I would rather save a ton of time by allowing them to see their actual cost right up front as they peruse the listings. If they think it is too much, move right along. How do the rest of you (both the NJ owners, and others dealing only with VRBO's 10.56% commission) deal with this?

      Thank you

        • Re: Advertised daily rate vs actual cost to customer?
          feibus Senior Contributor

          Call it a sales tax, everyone pays it when they go to Home Depot, no reason to get into a big discussion about it.  Ignore the commission, that's on Vrbo, you don't control or collect it, you can point the guest to What is the service fee on my reservation? | Vrbo Help

           

          You're still waiting for your first booking, but it sounds like you've created a process that adds friction to the process: you want to have a discussion and investigation of the person trying to rent.  That gets in the way of completing the deal.  I understand you want to protect your investment -- all businesses do -- but at some point, you need to prioritize making the sale over doing what your insurance policy is in place to handle.  Otherwise, you're going to struggle to get bookings.

           

          Even if your property has special circumstances -- e.g., you're in the middle of a rain forest 3 hours from the nearest city that you can only reach by boat and mule -- you'll want to reduce the discussions with potential guests until they become real guests.  Then figure out what you need to know and advise the guest whether the home is a bad fit and let them cancel.  Get their money first.

            • Re: Advertised daily rate vs actual cost to customer?
              u0999 Premier Contributor

              I agree. people may be just kicking tires or comparison shopping and may never rent, and the OP is asking for their FB and linkedin profile? I get several inquiries a day via various sources, and vast majority of them go nowhere. I'd be spening 24 hrs a day vetting useless leads.

              If you go to an open house, you can look at it and you do not have to fill out credit application for financing as if you are buying it - you may be just looking at their staging and decor. Same here. It would save OP much of wasted effort if OP does all that AFTER the potential guests already committed to booking. JMO.

            • Re: Advertised daily rate vs actual cost to customer?
              margaret CommunityAmbassador

              Guest can see what the total cost of the booking will be during the search. Perhaps you should use the "Reply with a Quote" option in your first response to the traveler so that there is no confusion. Most locations charge taxes, many owners have cleaning fees, ect. and all bookings on the site are subject to the service fee. I don't usually negotiate rates. My rates are posted, the guest can clearly see the entire cost of the rental before they send an inquiry. I haven't had this experience of guest thinking the nightly rate is the total cost.

              • Re: Advertised daily rate vs actual cost to customer?
                wildiris Active Contributor

                I've never had a guest tell me that they didn't know they would be charged the state sales tax or pay HomeAway's traveler service fee.  I suspect that your guests are feigning ignorance of the state sales tax and Vrbo's traveler service fee as a negotiating tactic to get you to discount your rental rate further.  If they look at your listing on Vrbo with dates filled in, they are shown the total amount for the stay that includes the tax and fees.  They can click on "view details" to see the breakdown of the total cost.

                 

                It's hard starting out as a new vacation rental owner whose property doesn't have any reviews.  You may have to set your rates to be lower than those of your competitors as an enticement to get renters.  You may also want to lower your rates for open dates on your calendar that are fast approaching as an enticement to travelers to book your rental.  I've done this.  That said, negotiating prices with potential guests can be very problematic.  If you search other threads in the Community, you will find lots of posts by owners about guests who were given a discount and turn out to be terrible guests in other respects.  I don't understand why this is, but I believe it's true.  When you give a discount or waive one of your rules (such as maximum occupancy), guests seem to feel that none of your rental rules apply to them.  I never, ever, negotiate my rates.  If someone asks for a discount, I tell them that I believe that my property is competitively priced when compared with other rentals in the area with a comparable location and amenities.

                 

                Good luck!

                • Re: Advertised daily rate vs actual cost to customer?
                  u0999 Premier Contributor

                  "I am not sure if these folks are actually that naive to think that VRBO is doing this for free, or perhaps they are feigning ignorance to get me to agree to a lower price."


                  They are not necessarily naive or feigning ignorance. If they used vrbo pre Feb 2016, there was no service fee for almost 20 years . So if they haven't used it in a few years, it comes as a surprise to them.  I have had many comments saying that it was the 1st time they ever heard of vrbo service fee and I had to explain that it was instituted in 2016.

                  • Re: Advertised daily rate vs actual cost to customer?
                    ohst8er Premier Contributor

                    Paraphrasing here but agreeing with others, you’re making this more complicated than necessary. Is there anything in particular about your property that requires intense vetting of your  guests prior to booking? Make sure that your listing is clear and concise so that people know all of the details prior to booking. Make sure that you use the area on your owners side to list all of your rules and regulations. Make your listing is  as dummy proof as possible, and then set it up for instant book. Then when your guests book they will see all of the rates and fees right there in front of them.  No questions and no confusion.   Once they book you can still vet them.   If there  are red flags at that time  then you instruct them how to cancel.   I have only had to have  A guest cancel a few times  after booking. Once because they were too young, and once because they obviously had the wrong location ( they wanted an island in a different state).   After you had instant book for a little while you will know whether or not it’s working for you. If you find yourself having to ask Guest to cancel frequently  for whatever reason you can reassess. 

                     

                    As far as people who ask for discounts treating your property poorly, that’s one person’s opinion but I’ve never found that to be the case.  That being said I only discount during periods where my property would sit empty otherwise. Set competitive rates and stand by them. It’s exhausting feeling like you have to negotiate everything. 

                    • Re: Advertised daily rate vs actual cost to customer?
                      timthek Active Contributor

                      1. I disagree with those posting that you don't need to do all that vetting. I think you do what you feel is necessary based on your situation. HOWEVER, I think you are doing it at the wrong time. Answer all the potential guest's questions. Send them whatever info they are asking for. Don't start inquiring about their group or their personal information until they say "we want to book" and submit that booking request. THEN you can start vetting. When they ask how many steps is it to the beach....and your response is "what is your facebook name and what are the ages of your group"....well that can be a big turn off to potential guests. As someone mentioned, there are a lot of tire kickers out there. Don't waste your time vetting people who haven't requested to book yet.

                       

                      2. Maybe they are surprised at the service fee or the amount of the service fee. It is possible there was no fee 3 yrs ago when they last used VRBO. But now there is. And it varies...and it can change depending on the day, the rental dates, the number of guests....there is no way to predict it. They state that it varies between 5-12% typically....BUT can be more or less. Also, it is capped at $599 on bigger $ rentals.

                       

                      3. As a NJ property owner, I can assure everyone that MANY people are unaware of the sales tax. It was quietly implemented last fall and many owners and renters have no idea that it exists and it comes as a shock to them when they find out.

                      • Re: Advertised daily rate vs actual cost to customer?
                        bobbie32 Premier Contributor

                        When I reply to an inquiry, I note the number of guests (and specify the number of adults and the number of children), number of beds to be used, number of nights with check-in date and time and check-out date and time, as well as ALL costs including nightly rate, extra guest fee, cleaning fee, bed tax and the VRBO booking fee.  I then explain how we collect the security deposit via PayPal that needs to be paid within 24 hours of booking, along with recipe of the signed guest agreement where everything is repeated once again.  EVERYTHING is noted.  I would never proceed without repeating everything that is on the booking site.

                          • Re: Advertised daily rate vs actual cost to customer?
                            timthek Active Contributor

                            I typically do the same. I quote the total amount of the rent. I list the security deposit amount. I note that VRBO adds their own fees - an amount I am not shown nor have any control over. And note things that are included / not included. I don't trust that anyone reads through the details.

                            bobbie32 wrote:

                             

                            When I reply to an inquiry, I note the number of guests (and specify the number of adults and the number of children), number of beds to be used, number of nights with check-in date and time and check-out date and time, as well as ALL costs including nightly rate, extra guest fee, cleaning fee, bed tax and the VRBO booking fee.  I then explain how we collect the security deposit via PayPal that needs to be paid within 24 hours of booking, along with recipe of the signed guest agreement where everything is repeated once again.  EVERYTHING is noted.  I would never proceed without repeating everything that is on the booking site.

                              • Re: Advertised daily rate vs actual cost to customer?
                                bobbie32 Premier Contributor

                                here is an example...where I even note the VRBO booking/service fee which I take right off the site by testing...


                                Based on the details provided in your inquiry, currently we do have availability for your desired timeframe - 3 nights for 2 adults and 2 children (1 king bed and 1 queen bed and possibly 1 rollaway bed), no pets - Sept 5th - 7th (departing the 8th).  Check-in time is between 4pm and 7pm, and check-out time is 11am.

                                 

                                The rates are based on the time of year and the number of people in your party, plus cleaning fee, tax, and the security deposit.  The nightly rate for 4 guests if paying via VRBO is $395, plus $160 cleaning fee, bed tax of $174.85 and the separate VRBO booking/service fee of $132 paid directly to VRBO. Additionally there is a $300 security deposit that needs to paid via PayPal within 24 hours of booking. We also require a signed guest agreement (along with an addendum if there are young children) that needs to be reviewed and signed within 24 hours of booking. Your total would be $1,519.85 plus the $132 VRBO booking/service fee and the $300 security deposit, which is refundable less damage.   


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