Controversial VRBO fees boost vacation rental costs

Jun 9, 2017

Vacation rentals are suddenly more expensive, thanks to a new guest service fee tacked on to the rental price by the big sites VRBO and HomeAway.com.

Travelers looking for a place to stay will pay up to $499 a week extra now that the sites have instituted a 4% to 9% service fee on all vacation rentals.

“You are just adding more cost to the renters,” said a frustrated Nick Agnew of Evanston, Ill., who owns two vacation rental homes in Saugatuck/Douglas, Mich. He has advertised both on VRBO for many years.

In the month since the new fee was added, Agnew is not seeing the renter requests he usually does.

“Renters are trying to get the comforts of home with vacation rentals and save some money. Now, it’s going to cost them more. They are being slapped with all these fees," he said.

How does the fee impact travelers? A look at the VRBO site shows that a typical vacation condo that rents for $1,420 a week is subject to a new 9% guest service fee of $121, a $124 cleaning fee and taxes of $163, putting the actual rental price at more than $1,800.

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Owners who rent properties on the sites are protesting the new fee online and saying their rentals have plummeted. Some have vowed to use rival sites instead, not realizing that most of them also have added new charges for renters.

The Expedia link

The timing of the new fee coincides with Expedia's $3.9 billion purchase of HomeAway.com and its other sites in late 2015.

Officials from the online giant told Wall Street investors that it expected adjusted earnings from its new HomeAway sites to nearly triple to $350 million by 2018. The service fee likely will be its golden goose. 

But HomeAway CEO Brian Sharples said the fee was being planned and researched even before Expedia bought the company. It allows them to do more marketing, safeguard customers and owners' financial transactions and do a better job of governmental relations to protect the right of homeowners to rent properties.

"We’ve always been proud to be the lowest cost solution for renting your home. But we simply can’t provide the level of marketing and service that today’s travelers expect without asking travelers to also pay a fee for the service we provide," said Sharples in an e-mailed statement to the Free Press.

HomeAway officials also say competitors charge similar fees.

That is partly true.

Airbnb imposes a guest service fee of 6% to 12% on every rental.

TripAdvisor and its site FlipKey.com recently instituted a "booking fee" for vacation rentals  of 5 to 15% — a fee that is buried deep in the booking process.