How Much Should I Pay for Vacation Rental Management?

Lauren KayeLeave a Comment

Vacation Rental Management Fees Explained

Vacation rental management fees can be confusing. Some traditional property managers charge commissions as high as 50%, while unbundled management services like Evolve charge as little as 10% per booking.

Why is there such a big difference? What are you really getting for your money?

To clear up the confusion, we put together a breakdown of vacation management service fees and what those charges cover.

Commissions and Booking Fees

The majority of property managers and vacation rental management companies operate on a commission or booking fee structure. They take a percentage-based cut of the bookings they secure for you.

Commissions or booking fees generally range from 10% to 50% of the booking, depending on the management company you use and the services they offer.

Here’s an idea of how those fees add up:

If you work with a vacation rental management company that charges a 10% booking fee and you earn $40,000 in rental income for the year, you’ll end up paying $4,000 in fees. With a property manager that charges a 40% booking fee, you’re going to be spending $16,000 on those services.

Booking fees typically cover the suite of services a company provides, including marketing, booking, guest communication, etc.

Marketing Services

You should get a custom listing for your property that makes your home look appealing and that travelers can easily find when searching for vacation rentals! Make sure you listing comes with professional photos so you can make a great first impression on travelers.

Nightly Rates

Depending on the level of sophistication, your management company might provide a basic rate table or dynamic pricing. The advantage of dynamic pricing is that rates increase or decrease to reflect demand, seasonality, neighborhood comps, and other factors.

Distribution

Your listing should be distributed in places where guests can find you. Popular choices include the company’s website, local tourism board pages, or listing sites like VRBO, Airbnb, HomeAway, TripAdvisor, and Flipkey.

Listing sites charge an additional fee to use their sites. Your management company may cover that fee as part of their booking services or they may pass that along to you as an extra charge. This post has everything you need to know about listing fee costs.

Booking Services

To secure bookings, your management company might have people on staff to respond to inquiries in a timely manner. Ideally, you should reply to travelers within 15 minutes so they don’t lose interest and make a reservation somewhere else – this is everyone’s goal at Evolve.

Guest Communication

Your vacation rental manager should assume the responsibility of sending confirmation details and check-in instructions in the days leading up to the start of the reservation.

Guest Contact 

A guest contact is someone who is available to greet guests, hand over the keys, and provide on-site assistance. It’s an invaluable service that gives owners peace of mind, and your management company might include this in the commission you pay. If not, you can secure a guest contact for a flat fee as low as $50 per booking.

If the service you’ve chosen doesn’t offer all of these essential parts of the vacation rental process, you may want to reevaluate your management choice.

A la carte vacation rental management fees

In addition to what’s covered in the commission or booking fees your pay, your management service might offer a la carte services to supplement their basic offerings. Here’s a look at some of those extras and how they add up:

Cleaning

How Cleaning Services Impact Vacation Rental Management Fees

In most cases, you won’t have to worry about paying cleaning fees because they get passed along to guests. When travelers book your property, they see the total based on nightly rates, plus taxes and cleaning fees.

Because costs depend on your location and the size of your home, cleaning fees can range from $25 for a studio apartment in Nashville to $250 for a five-bedroom home in Park City.

Some vacation rental managers require that you work with their preferred service. Make sure your cleaning fees are competitive for your area or you could lose bookings to neighbors because they charge less overall. Also, do some digging to verify that the preferred service provider has a solid reputation.

You don’t want to go months before discovering that they’re failing to keep your home in excellent condition.

To avoid issues like this, Evolve gives you the freedom to choose your own cleaning companies and negotiate fees directly. So you never end up over-paying for services or working with companies you don’t trust.

Maintenance

Some management companies that charge a higher commission cover run-of-the-mill maintenance, like an oven that won’t turn on or a smoke alarm that’s beeping.

But you might end up having to pay out of pocket if the repairs go beyond a basic fix. Clarify what’s included in their fee to avoid an unpleasant surprise when something breaks or needs regular upkeep. Also, keep an eye out for additional required services, such as snow removal and landscaping, as these recurring services aren’t included in their basic costs.

Unbundled services like Evolve allow you to select your own maintenance provider, choose the services you want, and pay for them directly. That way, you know exactly what you’re paying for and only spending money on services you know you need.

If you don’t have a preferred maintenance provider, Evolve can help you find a trusted company through its partner network. You can negotiate a price that works for your budget and walk away if you find a better partner.

Stocking

Stocking fees for vacation rentals range from $5 to $25, depending on the size of your home and the supplies needed (soap, toiletries, kitchen basics, etc.)

Read the fine print of your agreement to see if your management company does it automatically or if it’s a service you can elect. If you can do it yourself, check out these tips on keeping your property well-stocked on a budget.

Payment Processing

When guests pay with a debit or credit card, there is a 3-5% fee that payment processors charge to complete the transaction and get the money to your account.

Most vacation rental management services charge this fee as a separate line item because it falls outside of the commission or booking fee they receive. The fee goes directly to a payment processing company like Stripe or VacationRentPayment.

Keeping vacation rental management fees low

While running a vacation rental is lucrative, it’s also a lot of work. Because most owners decide that it’s too much to do themselves, they turn to vacation rental management services for help.

The management solution you choose will depend on your budget, your time constraints, and your rental income goals.

What’s important to you? Having a one-size-fits-all solution that leaves you with fewer decisions to make, but costs more? Or having a flexible service that gives you the freedom to decide where to spend your hard-earned cash so you can earn more rental income?

Evolve is changing the vacation rental industry by outperforming traditional property managers at a fraction of the price. See how our services have helped owners from Stowe, Vermont, to San Diego, California.