Airbnb Tips | Are You Charging the Right Cleaning Fee? | Tim Hubbard

We are back and this week we're talking about housekeeping charges. Are we charging too much or are we charging too little? Stay tuned. Let's jump in.

Welcome to Short Term Rental Riches. We'll discuss investing in real estate, but with a specific focus on short term rentals. Quick actionable items to acquire, manage and scale your portfolio. I'm your host, Tim Hubbard. Welcome back to the Short Term Rental Riches podcast. All of our listings have the ability to charge a housekeep fee. Now, we don't necessarily have to charge it, but I definitely would because it's common in the industry. Everyone charges a housekeeping fee for the most part. But what price is too low and what price is too high and how do we calculate that? I want to give you just a couple details, things to consider about your housekeeping fee and how you can go about charging the right one. I think the first thing to note here is that this is something we can change all the time, right? So if you change your housekeeping fee, monitor how many views you're getting, how many people are booking your property, see if you notice a difference. Now, you can get some really good insight. If you go to Airbnb and you go to your listings and you click on the button that says Insights, you can see how many views are coming to your listing. So check that out if you're making some of these changes. But also consider if you're in a place that's seasonal, right? Because if you're changing this and you've got seasonality going on at the same time, that could affect it overall. You know, there's a few ways to do our housekeeping. We can charge $200 a night and we can pass that fee directly over to our professional housekeepers or whoever we're working with, so that it's not costing us anything and we're not making anything on it. So that's one way to do it. Another way to do it is if we have our own team. So for a lot of my properties, I've got properties in three different cities, a lot of them we've got our own teams that we're working with. And so we buy all the supplies in bulk and we pay them a per unit cleaning fee. That's another way to do it. And I would tell you that with the way prices are right now and inflation kind of shooting everything through the roof, we don't really make much money on our housekeeping fees. I should say it's not that much of a profit center for us, although it can be this, this is just my personal experience, but let's say you, you have full time housekeepers are working by the hour. That is a scenario. It's much more likely to generate a little more revenue for you. But the way we're doing it right now, it's working well for us. But it's not a giant profit center. So up to you how you want to do that. I think you can, you can get by definitely charging what it costs you. So you don't want to go too low because guests are used to paying a housekeeping fee now going too high. This has some impacts. It definitely impacts how fair a person perceives your listing to be, especially for the short term stay. So let's say someone booking your property for two nights and it's $200 a night and your cleaning fee is $300 a night. They're not going to think that's too fair. Right? So we're going to talk about some of the things. Consider here just in a quick second, how you can come up with your own fee and one that is fair. But just keep that in mind. The higher your price is, the more it's going to discourage short term stays. And short term stays can be really good. So again, something you want to play around with. So how, how, how do we calculate our own housekeeping fee? Well, there's no one perfect way to do this, but I would say one of the safest ways to do it. And what I do and what I have done is just to take an average of, let's say 10, at least 10 to 20 properties in your area that are comparable, take an average of those and charge somewhere around there. Now you want to consider things like, are these comparable properties comparable? Do they have outdoor spaces? Do they have jacuzzis, do they have barbecues or big kitchen areas? Things that may require more cleaning than others. And do they allow pets? Allowing pets can create a lot more housekeeping work for your team. Right? You've got hair and all types of things, you know, and also the longer the stay. So you want to keep in mind, is your average stay longer or is it low, lower? And you want to try to figure that with your competition, you can use air DNA. I've talked about that a bunch of times in the past to check out some of your competition to see what the average stay is in your area. But as a general rule, if you take an average of 10 to 20 properties, you're going to come up with a rate that people are going to be seeing other properties. So it's not going to scare them off, it's not going to discourage them, and it's very likely going to cover all your costs or even allow you to make a little bit of money on top. So at the end of the day, it really comes down to. To just having a fair price. A fair price isn't going to discourage a lot of people from our property, and it's not going to really hurt our occupancy. If you don't want to go through the work of finding 10 comps, 10 comparables, or up to 20 on Airbnb, remember you can just go on Airbnb and you can look at listings near your property and see what the housekeeping fee is, put it in a little Excel chart and then hit the average function and see what it is. Make sure, of course, you've got, you know, two bedroom versus two bedroom. If you don't want to do that, a quick rule of thumb is just take your daily rate and divide it by two. That's going to be pretty reasonable, right? If you got a $200 nightly rate divided by two, and you can charge $100 housekeeping fee, and that's going to be pretty good, pretty in line and a good fee to charge. But I highly recommend just taking the time, come up with the averages and also do this continuously, right? This episode just dawned on me because I hadn't changed my housekeeping rates and in a while, and we're doing hundreds of reservations every month, and I'm like, oh, my gosh, I'm quite a bit under charging these housekeeping fees because costs for everything have gone up. So if, if you take that little difference for each reservation, you multiply it by 2, 3, 400 reservations a month, it starts to add up, right? So you want to make sure that you're monitoring this, I'd say at least every three to six months. Make sure you just take a glance, see if anything's changed drastically in your market. Now, there's one other piece to housekeeping fees, and this depends on our setup, right? If we're working with professional housekeepers or if we have our own team for working with professional housekeepers, this piece doesn't come into play that much. And that's our housekeeper's perception of what we're charging. Of course, they know what we're charging our properties. Most of the time they've seen our listings. If we're charging $200 and we're trying to pay them $50, and that doesn't really seem too fair, right? So you want to make sure that your strategy and your fee is in line with the option you choose to use for housekeeping, whether that's hiring your own by the hour, whether that's hiring your own as a per unit rate, or whether you're working with professional housekeeper. So at the end of the day, we just want to make sure that it's fair that. But that doesn't mean that we can't use our housekeeping as a profit center, right? The better our operations are, the better our efficiencies are, the more economical we can buy our supplies. Doesn't mean the cheapest supplies, but if we can get them in bulk and we can cut costs there, then we can generate a little bit of extra money. So if you haven't looked at your housekeeping fee lately, prices have gone up on just about everything, right? So take a good look at it. Take a good look at your competition. Make sure you're coming up with an average and come up with a number that's fair for your guests so you don't discourage reservations, but also is fair for your housekeeping team if you've got your own team. So hopefully that provided a little bit of insight. And this is a really important piece, so don't overlook it. And until next time, I hope you've been enjoying the podcast and I'll talk to you soon. If you're looking for a ton of free resources, well, you can check out the links in the show notes or head to our website, restmethods.com where you'll find free guides, house rules, and my ebook on finding the best short term rental properties. Thanks for tuning in.