The thorny issue of extra charges is in the spotlight again. Is it always a good idea to set an attractively low base price then beef it up with added charges?
Extra charges. Everyone that pays them hates them when the check comes in. Particularly if they’ve been swept under the carpet in the original offer. We’re all familiar with the cheap airline campaigns offering unbelievably low cost flights to that alluring destination, only to find that the final price does not include airport taxes, hold luggage, in-flight refreshments etc.
There was a murmur among customers that some airlines were thinking of charging for restrooms! But even the most cost-conscious operators have drawn the line at that. For now, at least.
Vacation rental fees are exploding
Now, USA Today reports that rental fees charged by some vacation rental managers are ‘exploding’. They warn that ‘Dreaded fees come to vacation rentals’.
‘Don’t look now,’ they say, ‘but vacation rental companies are piling on the fees, many of them pure junk. Among the most common: booking fees, change fees, cleaning fees, hot tub fees, parking fees, reservation fees and — everyone’s favorite — amorphous “convenience” fees.’
And here’s a thought, if you are thinking of putting your property in the hands of a management company: ‘Rental managers only get a commission on the rental part of the transaction,’ Andrew McConnell, the chief executive of an online vacation rental marketplace, told USA Today. ‘But most negotiate that they get to keep 100% of fees. In this way, they can make owners think they are getting a great deal with a lower commission, but actually take more of the all-in revenue by shifting more of the revenue to other fees.’
Not acting in our best interest
For independent vacation rental owners such as ourselves there are two issues here. First a warning that some management companies are not acting in our best interests. They are ‘creaming off’ additional revenue from our vacation rentals with these extra charges. Secondly, and of equal importance, how far can we go in applying any extra charges?
On the second point, push those extra charges too far in order to get a competitive attractive base rental price, and we could be in danger of killing the goose that lays the golden egg. Guests, initially delighted to book at an apparently low price will be disgruntled when faced with the final bill and its tally of extra charges.
Unless, of course, those extras can be easily justified. While many guests will happily accept the need to pay a security deposit for cleaning fees, or rental for a baby cot or bicycle, some will be unhappy with paying extra charges for parking, hot tub or a booking fee.
Could repeat bookings be affected?
Consider what effect this may have on your repeat bookings.
There is a school of thought that says guests do not object to extra charges where these are outlined upfront. Some, attracted by the low initial offer are satisfied, even when they may end up paying more than the cost of choosing a competitor.
Others maintain that if you begin charging for things that are marginal you will lose potential guests. Even where these are itemized. Presumably, this is on the same premise that many people would not wish to fly with an airline that charged for rest rooms?
Help at hand for Homes and Rooms subscribers
Whichever way Homes and Rooms subscribers wish to play the extra charges issue, our service has it covered. Take a look at our earlier blog on promoting your options.
Subscribers can include any chargeable and complimentary options they wish and these can be incorporated into the automatic upfront quotes called up by prospects and guests.
The Homes and Rooms service provides automatically calculated quotes so there is no need for owners to do complex calculations allowing for options and taxes.
So far, we haven’t had an owner choose the bathroom as an extra charge!