What You Don’t Know Can Cost You: Know These 5 Vacation Rental Management Fees

Managing a vacation rental property can be a lucrative venture, offering the promise of passive income and hosting travelers from around the world. However, this dream often has a hidden cost: vacation rental management fees. 

Often buried in the fine print, these fees can significantly impact your bottom line. Whether you’re a seasoned property owner or new to the vacation rental market, vacation property owners must know these 5 vacation rental management fees to avoid losing money, maximize your profits, and ensure a smooth operation. 

From damage protection to cleaning, each fee serves a specific purpose and is calculated based on different factors. 

In this comprehensive article, we’ll delve into the different types of vacation rental management fees and who bears the cost.

1. Cleaning Fees

Cleaning fees are a common expense associated with vacation rentals. They cover the cost of cleaning the property before and after each guest’s stay.

The cleaning fee amount varies depending on the property size, the number of bedrooms and bathrooms, and the location. Some vacation rental management companies charge a flat cleaning fee, while others charge a percentage of the rental rate.

Who pays the cleaning fee?

Guests typically pay the cleaning fee in addition to the rental rate. However, some vacation rental owners include the cleaning fee in the rental rate. Understanding who pays the cleaning fee is important because it can eat into your bottom line depending on how it’s structured.

Private hot tub overlooking Main Street Park City, Utah

2. Hot Tub / Pool Fees

Hot tub or pool fees are an additional charge that some vacation rental owners charge for using a hot tub on the property. These fees vary depending on the location and the hot tub or pool type. Some owners charge a flat fee per stay, while others charge a daily or weekly rate.

Who pays the hot tub/pool fee?

Guests typically pay the hot tub fee in addition to the rental rate. However, some vacation rental owners include the hot tub fee in the rental rate.

3. Damage Protection Fees

Vacation rental damage protection fees are an additional charge that some vacation rental owners or property management companies require guests to pay. These fees are designed to protect the owner from financial losses incurred due to accidental damage caused by guests during their stay.

The amount of the damage protection fee varies depending on the property and the length of the stay. Some owners charge a flat fee, while others charge a percentage of the rental rate.

Damage protection fees are typically non-refundable, but some owners may offer a refund if the property is not damaged.

Who pays the damage protection fee?

Guests typically pay the damage protection fee in addition to the rental rate. However, some vacation rental owners include the damage protection fee in the rental rate.

How often does damage occur?

At All Seasons Resort Lodging, we experience damage on less than 0.01% of our reservations. This is due to our tenant screening process and strict No Party Policy. With our Accommodation Protection Program, if the damage is less than $1,500 and we can’t get the guest to pay for it, we cover it.

4. Resort Fees

Resort fees are commonly assessed by vacation rental properties, typically in resort destinations. These fees cover the cost of resort amenities and services, such as access to pools, fitness centers, parking, ski lifts, etc.

The amount of the resort fee varies depending on the property and the location. Some resorts charge a flat fee per night, while others charge a percentage of the rental rate.

Who pays the resort fee?

Guests typically pay the resort fee in addition to the rental rate. 

What amenities and services are included in the resort fee?

The amenities and services included in the resort fee vary depending on the property. Some common amenities and services include:

• Access to pools
• Access to fitness centers
• Access to parking
• Wi-Fi
• Shuttle service
• Beach chairs and umbrellas

5. Reservation Fees

Reservation fees are a common charge assessed by vacation rental properties when a guest makes a reservation. These fees are typically based on a percentage of the reservation total and help cover the cost of 24/7 guest support.

Here’s a brief overview of reservation fees:

• What are reservation fees?
  Reservation fees are a non-refundable charge that guests pay when they make a reservation for a vacation rental property.
• How much are the reservation fees?
  Reservation fees vary depending on the property and the booking platform, but they are typically around 10-15% of the total reservation cost.
• What do reservation fees cover?
  Reservation fees help cover the cost of 24/7 guest support, which includes answering questions, resolving issues, and assisting guests before, during, and after their stay.
• Why are reservation fees important?
  Reservation fees are important because they help vacation rental owners and property managers provide excellent customer service to their guests. A dedicated team of guest support representatives is available 24/7, so guests can rest assured that they will have assistance if needed.

Avoiding Decreased Income

Vacation rental fees are significant when selecting a property management company. These fees, such as cleaning, hot tub/pool, damage protection, resort, and reservation fees, are additional costs charged to guests and are not shared with the property owner. 

The more fees a property management company charges, the higher the overall reservation total, making it less competitive. To remain competitive, the management company may have to lower the rental rate, resulting in decreased income for the property owner. 

Therefore, choosing a property management company with reasonable fees and transparent pricing is crucial to maximizing the owner’s earnings and maintaining a successful vacation rental business.

Maximizing Your Income

Some property management companies adopt different strategies regarding vacation rental management fees.  Companies like All Seasons Resort Lodging absorb some or all of these fees within their revenue split. By doing so, they aim to provide a more competitive overall reservation price, attracting more guests, increasing occupancy rates, and higher revenue for the owner. 

On the other hand, some companies opt for a lower revenue split, which initially seems great to owners, but it allows the property management company to retain a larger share of the revenue and not share it with the owners. 

The choice of approach can impact the property owner’s income, as a lower revenue split may result in decreased earnings for the owner.

Conclusion

In conclusion, vacation rental management fees can significantly impact an owner’s bottom line. 

While some fees are necessary to cover the cost of cleaning, damage protection, and other services, owners need to understand the fees charged by their property management company and how they affect their overall income. 

Owners can maximize their rental revenue and maintain a competitive edge by choosing a property management company with reasonable fees and transparent pricing.