Airbnb vs VRBO - Which Is More Profitable?

Traveling to a new country or a city is always exciting, but what makes it even more interesting is when you can get a place to rest your head without paying an arm and a leg for it. Today, thanks to a brilliant brain of business entities, no matter where you travel in the world, bed and breakfast stay options are always there to help you control your budgets. In fact, in many parts of the world, these bed and breakfast options have more guests than the hotels. They are much cheaper, much less monotonous, and offer an intimate and home-like perspective to the town or city that is your temporary abode.

However, the fun doesn’t stop here only! A lot of them also offer additional activities such as guided trips into the city, seasonal recreations that are local to the place, and not to mention some excellent quiet time with the owners' pets (who doesn't want that?). Contrary to hotels, they are much more personal. However, all of that is just the consumer side of the story. The hosts of these places also have huge stakes in this business and in sharing their property.

Let’s take a look at how two of the biggest names in BnB: Airbnb and VRBO incentivize the hosts, so if you are looking into sharing your home with a stranger, you make the right decision!

Airbnb

(Which was initially named Air Bed in Breakfast) was founded in 2008 and now has 7 million listings for rental services in over 220 countries. It's a rental platform with a simple, focused premise: to connect homeowners with extra space around with customers looking for a short term rental. The plethora of benefits bed and breakfast offers outweigh renting a room in a hotel, which we'll talk about further.

Vrbo 

(Originally known as Vacation Rental by Owner) was founded in 1995 and is now owned by the Expedia Group. There are around 2 million listings on VRBO available in 190 countries. It falls among the foremost companies that offered vacation homeowners a choice to get their homes added for guests looking for a rental place.

There are a few steps to consider before listing your place out for a customer to live in.
 

Listing A Place With Airbnb

1) The host has to check the legal processes of listing a rental in that particular neighborhood or city because some areas have conditions and rules against listing your accommodation for a more extended period. The host can decide whether to rent out a specific free part of their home, a room, or the entire house.
 

2) According to the area you are listing, the host must add in the specifications in detail for the guests to have a complete idea of your place. This includes but is not limited to, size, the number of rooms, square area, attached/separate bathrooms, accessibility to a lawn or a backyard, etc. Pictures of the space are also encouraged.

3) As the guest’s approval is up to the host, the host can read the reviews about a potential guest of his experiences with other hosts as the Airbnb website allows hosts to access reviews from other hosts. By doing this, one can ensure that the potential guest is someone they can trust their place.

4) After approving a guest, the platform holds onto the payment until 24 hours after the guest checks in. This makes sure that if the guest has to cancel due to any circumstance, there's no hassle in it.

The most crucial point to note is that it is free to list your rental on Airbnb initially.
 

Similarly, like Airbnb, anyone can list their property on VRBO. There are three main differences in the initial rental fee, the kind of property listed on both these platforms, and reviews.

1. To list a rental on VRBO, hosts have to pay a subscription fee. They can either choose a pay per booking option, which Airbnb also has, or choose a flat $499 fee upfront annually. The company recommends this option for hosts that offer year-round services.
    
2. The property listed on VRBO is different from the ones on Airbnb. Unlike Airbnb, you can only rent complete homes on VRBO. Rather than listing smaller spaces like rooms, it allows you to rent a complete house or condominium. This allows complete freedom and a no-share policy; it also narrows your options if you are looking for a place where 2 or 3 people have to stay. Renting an entire place for few people might turn out to be very costly.
    
3. VRBO allows user to rate their stay at a property. However, it will further enable homeowners to post a reply to their reviewers so that they can get full insight from the homeowner before picking a place.

As much as these rental platforms are beneficial for the guests and make finding a temporary abode on their travels more comfortable, it also holds benefits for the owners renting out their place. To understand this, let us look at and compare the fee aspect for both places, both from the owner and the guest's perspective.
 

For Airbnb, the process starts as soon as a booking is made. The consumer is charged 5% to 15% of the reservation subtotal, which is normally refundable for a limited time if the booking is made well in advance. At the same time, Airbnb also takes out a 3% commission from the host for a visit, so the rest is the owner's to keep. If you are hosting an experience, Airbnb charges a hefty 20 percent as commission from the host.
 

For VRBO, this process is similar for the guest as they are charged six to 12 percent of the total, hence VRBO is invariably cheaper. However, for the owner, VRBO offers two options.

1.  For the hosts who are new or do not rent more than six weeks a year, VRBO has a pay-per-booking plan; hence it charges 8 percent from the host every time the booking is made, which is much higher compared to Airbnb. This 8 percent includes a 5 percent commission and a 3 percent credit card processing fee.
    
2. On the other hand, VRBO offers an annual subscription of $499 to the hosts who host guests all year round. This is ideal if you are living in a location that has a constant influx of guests.

To break down the math for easy comparison; If you host guests with VRBO for 166 days out of 365 (which is less than half a year), the commission rate becomes equal to that of Airbnb. If you are lucky enough to host a guest every day of the year, the commission fee goes to as low as 1.65 a day. Since owners rent out bigger places on VRBO, which can go on average anywhere from $60 to $100, the commission loss is much better than that of Airbnb. What's more, you can also get perks like a reservation manager and a calendar, which can help keep track of the guests.
 

Conclusively, if a homeowner expects to collect more than $10,000 in annual rental, a year-round subscription fee is the better option when renting on VRBO as the pay per booking one on the VRBO platform is pricey for the host. This option is encouraged for the hosts who

• are renting a place which is a famous, well-visited tourist spot
• are renting that place all year round, so the hefty initial fee is reimbursed by the profit margin.

For those who get relatively lower bookings throughout the year and only rent out their place for a shorter period of time, the pay per booking cost in Airbnb is more economical and is a more viable option for such hosts.

1. Cancellation Protocol

Both the hosts of Airbnb and VRBO are protected from bearing the full brunt of cancellation cost by requiring the guests to pay a certain percentage, depending on when they canceled, of the booking cost.
 

In Airbnb, there are three standards types of policy offers from flexible to strict, which the owner can choose accordingly. The circumstances in which each policy is implemented is according to the hours after which the guest cancels. In detail, they can be checked out on the Airbnb home cancellation policy site.
 

For VRBO, five cancellation policies include “relaxed, moderate, firm, strict, and no refund.” Overall, VRBO’s policies are relatively simpler and easier to understand than Airbnb’s. They can be checked here.
 

2. Popularity Scope

In terms of popularity and thus, the number of bookings your rental will get, there is a comparative analysis.
 

Airbnb is relatively more popular in the sense that it has over 7 million listings throughout the world. It dominates the short term rental accommodation business as even people who can't rent out their entire place can rent a particular part or a few rooms on Airbnb. The drawback of this popularity is competition. Due to increased listings, your rental would be up against dozens around your area and would make it difficult to get a booking.
 

VRBO has fewer listings because it has the option of renting a whole place instead of separate rooms, and fewer people are willing to trust their entire place to a new guest. It also means that the competition will be lesser and thus, more bookings to your unique place.
 

3. Bonus Features

VRBO offers several other bonus features and services to renters, such as individual damage protection tips, travel tips, the option to let the guests pay for extra cleaning services, and remote rental managerial tips. However, it doesn’t boast a user-friendly interface and has a more complicated system
 

Airbnb has a host guarantee program covering the renters and the guest from accidental and serious liabilities by offering $1,000,000 worth of property coverage in the event of guest damage.

Each of these rental platforms offers a myriad of services, each commendable on its own. However, from an owner's point of view, a few factors have a comparative analysis. If we consider the price, if you are an occasional host, then Airbnb's pay-per-booking price is lesser. If you are a more regular host, then VRBO's annual package is worth looking into, especially if renting multiple places or renting is too high. Both offer additional benefits, each making the process for the host more hassle-free. That being said, both options are very reputable, and they are transforming experiences of both hosts and visitors extraordinarily.

If you are looking for additional help be sure to check out our Airbnb Cleaning Service in Dallas.