There are lots of platforms that short-term rental real estate investors can use to market their space, but two of them make up the lion’s share of the industry: Airbnb and VRBO (Vacation Rental By Owner). While their primary functions are similar, Airbnb and VRBO have several key differences in the types of properties available, target audience, fees and commissions, and more.
Let’s compare Airbnb vs VRBO to determine which platform is the best fit for your investment strategy.
What is airbnb?
Airbnb’s mission is to “lock up the power of sharing space, resources and support in times of need”. The platform began in 2007 when two hosts welcomed three guests to stay in their San Francisco home. Sixteen years later, the platform has grown to over 4 million hosts and in over 220 countries and territories worldwide.
By December 31, 2022:
- Over 100,000 cities and towns have active Airbnb listings
- There are 6.6 million active listings worldwide
- Hosts have accommodated over 1.4 billion guest arrivals
What is VRBO?
VRBO’s mission is “to find the space every family needs to relax, reconnect and enjoy precious time together.” They’ve been pairing homeowners and families with accommodations since 1995 and have grown to be a global vacation brand with over 2 million entire homes actively available on their platform. VRBOs are currently available in about 200 countries.
Airbnb vs VRBO: Property Types
The most striking difference between Airbnb and VRBO is the types of homes available on each platform.
Airbnb offers almost every location imaginable. You can stay in mansions, treehouses, houseboats, tiny houses, private islands, caves, containers, windmills, and everything in between.
These spaces are divided into four different categories:
- the whole place: Guests have the entire space to themselves, which usually includes a bedroom, bathroom, kitchen, and a dedicated, separate entrance.
- traditional hospitality: These rooms indicate that the host offers the same customer service and hospitality that guests experience at a hotel. This category also includes hostels, bed and breakfasts, and comparable properties. Hotel rooms usually have a common area for guests to interact with each other.
- private rooms: Instead of taking an entire place for yourself, you are renting a room in a property that other people can occupy. They’re great for guests who want a little privacy but don’t mind sharing common areas.
- shared roomsShared Rooms: Shared rooms are great for travelers who want to socialize with others and aren’t bothered by a lack of privacy. When booking a shared room, you will be sleeping in shared spaces.
VRBO only offers entire spaces, such as condos and vacation homes. This is one reason VRBO has about 2 million listings, while Airbnb offers more than three times that amount.
Connected: The Ultimate Guide to Top-Notch Airbnb and VRBO Listings
target audiences
Airbnb markets to a wide range of people looking for an alternative to hotels. VRBO’s target market is more specific. It is marketed to families who are holidaying together and want to spend more quality time with each other.
Here are the details of who stops at each:
| Airbnb | VRBO | |
| 18-24 year old guests | 15% | 13% |
| Guests aged 25-34 | 36% | 22% |
| Guests Aged 35-54 | 36% | 37% |
| Guests aged 55+ | 13% | 28% |
| male guest | 46% | 54% |
| female guest | 47% | 53% |
fees and commission
Airbnb and VRBO let you set up and list your property for free and offer liability coverage at no extra cost. Both platforms require you to pay a host service fee when monetizing your assets, but offer different options for you to consider.
Airbnb host fees
Airbnb offers two fee structures: a split fee and a host-only fee.
Split fees let you split the costs between host and guest, with the guest paying the lion’s share. Here, the host pays a 3% fee (or more if you have “extremely strict” cancellation policies or are listed in Italy) which is determined by the booking subtotal and automatically deducted from your payout . Calculates the subtotal:
- nightly rate
- cleaning fee
- Additional guest fee (if applicable)
The guest service fee is usually less than 14.2% of the booking subtotal including the above fee.
Here’s what a guest looks like when she books your Airbnb for $200 per night for four nights:
- $200 x 4 = $800 + $100 cleaning fee = $900 subtotal
- $900 x 3% = $27 hosting service fee
- $900 – $27 = $873 net profit for the host
- $900 x 14% = $126 guest service fee (including tax and occupancy)
- $900 + $126 = $1,026 total cost for the guest
Host-only fees mean that you, as the host, cover all additional costs, usually between 14-16% of the booking subtotal. This fee structure is mandatory if you provide a traditional hospitality location (eg, hotel rooms, hostels, bed and breakfasts, etc.).
Here’s what a guest looks like when she books your Airbnb for $200 per night for four nights:
- $200 x 4 = $800 + $100 cleaning fee = $900 subtotal
- $900 x 15% = $135 hosting service fee (including taxes and occupancy fees)
- $900 – $135 = $765 net profit for the host
- $900 = total cost for the guest
vrbo host fees
VRBO also offers two fee structures: subscription and pay-per-booking methods.
The subscription model includes unlimited booking for a full year for $499, paid for a year in advance. If you make more than $6,250 in annual bookings, this plan is the way to go.
The pay-per-booking model charges you a payment processing fee of 5% of the booking subtotal and an additional 3% of the total amount. Like Airbnb, subtotals include:
- nightly rate
- cleaning fee
- Additional guest fee (if applicable)
Here’s what a guest looks like if a guest books your VRBO for $200 per night for four nights:
- $200 x 4 = $800 + $100 cleaning fee = $900 subtotal
- $900 x 5% = $45 hosting service fee
Let’s assume taxes and additional fees come to $150:
- $900 + $150 = $1,050 total payment amount
- $1,050 x 3% = $31.50 payment processing fee
- $45 + $31.50 = $76.50 total hosting fee
- $900 – $76.50 = $823.50 net profit for the host
Airbnb vs. VRBO: Property Damage Protection
Compared to other rentals, vacation homes are more prone to property damage because more people use them. Recognizing this risk, Airbnb’s Aircover for Host and VRBO Host Insurance provide host damage protection.
AirCover for Hosts provides “top-to-bottom protection for hosts”, which includes:
- reservation screening
- guest id verification
- $3 million for host damage protection
- $1 million for host liability insurance
- $1 million for experience liability insurance
- 24 Hour Security Line
AirCover for Hosts protects your assets when you’re hosting guests. However, you’ll still need personal insurance if something happens to your property when you don’t have guests over.
VRBO Host Insurance provides $1 million in primary liability coverage at no additional cost, protecting you against any property damage or travel injury claims made against you. If you file a claim, it is recommended that you do so as soon as possible. VRBO’s insurance services are available 24/7.
Airbnb vs VRBO: Cancellation Policies
Airbnb and VRBO each have multiple cancellation policies. Here are your options for each:
Airbnb Cancellation Policies
- flexible: Guests are fully refunded up to 24 hours prior to check-in. If they cancel within that window, you’ll be compensated for each night of their stay + one additional night.
- moderate: Guests are fully refunded up to five days prior to check-in. If they cancel within that window, you’ll be compensated for each night they cancel + one additional night + 50% for all uncanceled nights.
- firm: Guests are fully refunded up to 30 days prior to check-in. If guests cancel between seven and 30 days from check-in, you’ll be compensated 50% for all nights booked. If they cancel within seven days of check-in, you will be fully compensated. Plus, if a guest cancels within 48 hours of booking, they can receive a full refund if canceled at least 14 days prior to check-in.
- Harsh: If guests cancel within 48 hours of booking, they can receive a full refund if canceled at least 14 days prior to check-in. If a guest cancels between seven and 14 days prior to check-in, you will be compensated 50% for all booked nights. If they cancel within seven days of check-in, you will be fully compensated.
Airbnb hosts can also set long-term “firm” and “strict” policies, “extremely strict” policies, and a non-refundable option.
VRBO Cancellation Policies
- No Refunds: All bookings are non-refundable.
- 60 Day Policy: Guests are fully refunded up to 60 days prior to check-in. Bookings made within 60 days of check-in time are non-refundable.
- 60/30-Day Policy: Guests are fully refunded up to 60 days prior to check-in and receive a 50% refund (minus service charges) if they cancel between 30 and 60 days from check-in time. Bookings made within 30 days of check-in time are non-refundable.
- 30/14-day policy: Guests are fully refunded up to 30 days prior to check-in and receive a 50% refund (less service charge) if they cancel between 14 and 30 days after check-in time. Bookings made within 14 days of check-in time are non-refundable.
- 14/7-day policy: Guests are fully refunded up to 14 days prior to check-in and receive a 50% refund (minus service charge) if they cancel between seven and 14 days prior to check-in time. Bookings made within seven days of check-in time are non-refundable.
- Custom Policy: Hosts can set the terms of their cancellation policy.
Which platform is best for me?
Airbnb is more flexible simply because you can offer all types of spaces, while VRBOs require the entire space to be rented out. However, Airbnb and VRBO are great platforms for investors and homeowners looking to enter the short-term rental space.
Many real estate investors have turned hosting into full-time jobs by operating multiple vacation rentals at once, and with enough experience and know-how, you can too!
Create long term wealth with short term rent
Vacation rentals can be an extremely lucrative way to boost your monthly income – but only if you acquire and manage your properties correctly. This ultimate guide to analyzing, buying and managing vacation rental properties will set you up for immediate success and long-term wealth.
Note by BiggerPockets: These are the views expressed by the author and do not necessarily represent the views of BigPockets.
