Are direct bookings actually a negative for your business?

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Are direct bookings actually a negative for your business?

Scott K.
Member since 2020 · 223 posts · 233 votes

Hear me out... people keep talking about how they're making their own website, using direct booking software, etc. But 3 major potential negatives come to mind

1. No protection. If a guest damages something, or trashes your place, your only recourse is legal. I don't know about you, but I'm not going to chase someone down legally for $100-$300 in damages which is probably the average cost when a problem occurs. Airbnb at the very least will 'always' give you the money, as long as you have evidence. I've never had a problem recouping that.

2. Your rankings/listing will suffer on airbnb/vrbo. These platforms use algorithms that when they detect you aren't getting as many bookings/viewings through them (because your calendar is booked by other sites/direct) they will begin to push your ranking down further in the listings. This will also coincide with you getting less reviews from guests, further hurting your listing.

3. Additional work. From vetting customers, to paying taxes, to managing the direct booking software/website, to chasing people down in court.

So, what's the benefit? Not being beholden to their 3% fee? I really don't mind that. Or being beholden to their rules? Well the rules typically help me more than they hurt me. They also take care of taxes each month so I don't have to worry about that. And they do a (albeit minimal) screening of each guest, collecting info etc.

What are everyone's thoughts on this?

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Luke CarlPro Member
Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
4y

I agree with you on most points. Although there are plenty of ways to protect yourself. 

Off platform is too much time spent on properties I already own. I spend time on properties I don’t own yet! 

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  • Luke CarlPro Member
    Rental Property Investor · Tennessee Florida · Member since 2016 · 4k+ posts · 5k+ votes
    4y

    I agree with you on most points. Although there are plenty of ways to protect yourself. 

    Off platform is too much time spent on properties I already own. I spend time on properties I don’t own yet! 

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  • Dave StokleyBusiness Member
    Property Manager · Cleveland, OH · Member since 2015 · 699 posts · 799 votes
    4y

    Yep I’ve been saying this for a long time, and you haven’t even touched on how much it would cost you to do the marketing to drive a comparable amount of traffic to your own site. Tax collection and remittance is huge too… that would be an interminable amount of work with 40+ properties. 3% is a deal. 

    1Reply
  • Ken Boone
    Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes
    4y
    2Reply
  • Dave StokleyBusiness Member
    Property Manager · Cleveland, OH · Member since 2015 · 699 posts · 799 votes
    4y

    Another good point @Ken Boone

    0Reply
  • John Carbone
    Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
    4y
    0Reply
  • Paul Sandhu
    Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
    4y

    My type of tenants don't use an Airbnb type of website.  It's craigslist or direct marketing.  My tenants are refinery contractors, e.g. ruffians. 

    0Reply
  • Ken Boone
    Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes
    4y
    Quote from @John Carbone:

     Right.  That is why I said the biggest benefit is for the guests.  But again, if I already have plenty of guests paying it now with no shortages of bookings then I don't need to worry about dropping platform fees to guests to entice more guests.  

    The other problem is with a direct booking site you will never win the SEO battle to rank at the top and in my opinion probably never exceed 10% of your bookings through it compared to what you will do with the two main platforms.  So again, all that energy is not worth it for very little benefit and for 10% or less of your bookings.

    Now if you just want to have a direct booking site, where you send friends and family to, knock yourself out.  A lot of channel managers have direct booking options that can be turned on in a couple of clicks and you can turn them on and off at will.   It's just not worth my time honestly.

    0Reply
  • Ryan MoyerBusiness Member
    Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 991 posts · 1k+ votes
    4y
    Quote from @Scott K.:

    So, what's the benefit? Not being beholden to their 3% fee? I really don't mind that. Or being beholden to their rules? Well the rules typically help me more than they hurt me. They also take care of taxes each month so I don't have to worry about that. And they do a (albeit minimal) screening of each guest, collecting info etc.

    The benefit is that you're not at risk of your entire business being wiped out in an instant by an algorithm.

    Facebook superhost groups are littered with people posting about their AirBNB account being suddenly banned, for no explicable reason, with no recourse.  Superhosts with thousands of reviews suddenly having their account and all of their listings suspended.  Often times without even knowing why, and support unable to tell them why.  Sometimes knowing why but for silly reasons (a guest complained about a camera that was properly disclosed in the listing, etc).

    This is also why I don't use the same AirBNB account for my own travels as I do for my hosting.  There was a host recently that had a disagreement on some damages being assessed to them while traveling, and Airbnb ended up suspending their account, which had all of their hosted listings in it.

    I could care less about the extra 5% or whatever that I could make booking direct.  It's not worth the effort for that.  For me any move in that direction is to protect myself against having my entire business being reliant on a platform that has some unknown algorithm for suspending accounts without recourse.

    Obviously you'd still have VRBO, but a lot of people are in markets where VRBO does not have a strong presence. 

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  • Ken Boone
    Investor · Greenville, SC · Member since 2015 · 1k+ posts · 1k+ votes
    4y

    @Ryan Moyer That is a valid point - however, honestly if we were shut off by AirBNB and VRBO we would all be hosed in the long term. It would take a tremendous amount of effort to pull the same numbers of people into a direct booking website to come close to what either platform does. If AirBNB and VRBO were to drop, the next up will be the large STR management companies that have folks working on their websites daily. It would be really hard for a small operator to compete with the SEO they have. That is a legitimate fear, but I just don't think the direct booking site will generate enough to make up the difference if we were booted from one of their platforms.

    I'm sure this could vary from market to market, but in the Smokies, if I was booted from Airbnb and/or VRBO, I think my best bet would be to stop self managing and move my properties over to a management company.  I think I would do far better than if I tried to do it all through direct bookings.  That is my thinking anyway.

    1Reply
  • Trish Mccoy
    Real Estate Agent · Grass Valley, CA · Member since 2017 · 185 posts · 198 votes
    4y
    Quote from @Scott K.:

    Hear me out... people keep talking about how they're making their own website, using direct booking software, etc. But 3 major potential negatives come to mind

    1. No protection. If a guest damages something, or trashes your place, your only recourse is legal. I don't know about you, but I'm not going to chase someone down legally for $100-$300 in damages which is probably the average cost when a problem occurs. Airbnb at the very least will 'always' give you the money, as long as you have evidence. I've never had a problem recouping that.

    2. Your rankings/listing will suffer on airbnb/vrbo. These platforms use algorithms that when they detect you aren't getting as many bookings/viewings through them (because your calendar is booked by other sites/direct) they will begin to push your ranking down further in the listings. This will also coincide with you getting less reviews from guests, further hurting your listing.

    3. Additional work. From vetting customers, to paying taxes, to managing the direct booking software/website, to chasing people down in court.

    So, what's the benefit? Not being beholden to their 3% fee? I really don't mind that. Or being beholden to their rules? Well the rules typically help me more than they hurt me. They also take care of taxes each month so I don't have to worry about that. And they do a (albeit minimal) screening of each guest, collecting info etc.

    What are everyone's thoughts on this?


     If you want protection - have them sign a contract and collect a deposit.    Your rankings are not going to suffer that much because the majority of people will book through Airbnb and VRBO anyway.  If you place rents out consistently you'll still have plenty of reviews.    Yes, it will take additional work, but chances are you will never be chasing people down in court.  The benefit is not only you will avoid the fee - but your direct guests will also be avoiding their high fees and many people prefer to book direct because of this. 

    What I am saying is do it all.  When my guests are trying to book 1-4 months - they don't want to pay airbnb fees. 

    4Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y

    @Scott K. You make good points. However there are many ways to do this.

    I personally don't like being at the whim of a huge corporation, esp one like AIR. I don't find VRBO as bad (just my experience).

    Now in our second full year, we are getting many requests from repeat customers - I let people know that they can contact me directly if they would like to return in the future.....One place will be booked at almost 50% only from returning customers.

    This means I know the guest and have confidence in them. And I have commercial insurance in a large amount specifically for STRs....And I only take cash or check as payment.....no cards.

    So your 3 points do not matter if you handle it as we do (except #2 maybe). Will we ever go 100% direct booking? Probably not. Would I if I could? Absolutely! 

    [And from what I've heard, and from my experience, AIR does not 'always' pay up. For wither side.]

    2Reply
  • Paul Sandhu
    Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
    4y

    I've rented to about 2000 people in the last 10 years.  Exactly 2 bookings came from Airbnb.

    0Reply
  • Scott JohnsonBusiness Member
    Specialist · Greenville, NC · Member since 2019 · 673 posts · 408 votes
    4y

    If someone wants to run on the hampster wheel and build their own thing, more power to them! I'll stick with using the systems that are already in place.

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    1Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y
    Quote from @Scott Johnson:

    If someone wants to run on the hampster wheel and build their own thing, more power to them! I'll stick with using the systems that are already in place.


    Really pretty easy to build your own thing. It just takes a little time....

    1) Get a website, 2) Put out the word, 3) Most important - Let your guests know how to (and urge them to) reach you personally next time, 4) Carry ample insurance, 5) Have good procedures in place, 6) Only accept cash (or check) as payment.

    2Reply
  • Jerrod Johnson
    Investor · Denver, CO · Member since 2017 · 5 posts · 3 votes
    4y

    @Scott Kunz

    The only drawback is that you are a slave to one company and an unknown algorithm. They could destroy your business in a second.

    That being said, I have ten units listed on Airbnb and posted one on vrbo, as well. It only gets a couple bookings on vrbo but I feel like Airbnb know that it’s on another platform and it doesn’t get the Airbnb traffic as my Airbnb-only listings.

    1Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    4y

    @Scott K. it really depends most on how you can otherwise market the property. For example, if you had a lake cabin that had repeat customers coming the same weeks every summer, there is no reason to use AirBNB. Or in the case of @Paul Sandhu he is renting to longer term guests working jobs. He has found ways to get referrals and market to them directly and his methods are better than AirBNB without the fees. I rent to travel nurses using Furnished Finder, which is flat fee yearly versus cut of rent. If you can attract guests without a platform, there is little risk. You just need security deposit, rent agreement and method to charge people. 

    AirBNB delivers guests. That is the their main redeeming quality. Now watch my host account get shut down, haha.

    4Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y
    Quote from @Jerrod Johnson:

    It only gets a couple bookings on vrbo but I feel like Airbnb know that it’s on another platform and it doesn’t get the Airbnb traffic as my Airbnb-only listings.


     They wouldn't do that would they.....? :-)

    0Reply
  • Garrett Kroll
    Rental Property Investor · Victor, ID · Member since 2016 · 59 posts · 94 votes
    4y

    I think the biggest benefit is creating your own book of business, which you could later sell if you establish a PM company. That’s big $$.


    I think we sometimes forget we’re leasing customers from Airbnb and Vrbo.

     

    1Reply
  • John Carbone
    Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes
    4y
    Quote from @Bruce Woodruff:
    Quote from @Jerrod Johnson:

    It only gets a couple bookings on vrbo but I feel like Airbnb know that it’s on another platform and it doesn’t get the Airbnb traffic as my Airbnb-only listings.


     They wouldn't do that would they.....? :-)

    Do you charge the same amount to guests whether it’s personal or on air/vrb? In theory you could charge more and the guests would still pay less. Curious how you handle the “savings”
    0Reply
  • Don McQueen
    Real Estate Agent · West Olive, MI · Member since 2016 · 9 posts · 3 votes
    4y
    Quote from @Trish Mccoy:
    Quote from @Scott K.:

    Hear me out... people keep talking about how they're making their own website, using direct booking software, etc. But 3 major potential negatives come to mind

    1. No protection. If a guest damages something, or trashes your place, your only recourse is legal. I don't know about you, but I'm not going to chase someone down legally for $100-$300 in damages which is probably the average cost when a problem occurs. Airbnb at the very least will 'always' give you the money, as long as you have evidence. I've never had a problem recouping that.

    2. Your rankings/listing will suffer on airbnb/vrbo. These platforms use algorithms that when they detect you aren't getting as many bookings/viewings through them (because your calendar is booked by other sites/direct) they will begin to push your ranking down further in the listings. This will also coincide with you getting less reviews from guests, further hurting your listing.

    3. Additional work. From vetting customers, to paying taxes, to managing the direct booking software/website, to chasing people down in court.

    So, what's the benefit? Not being beholden to their 3% fee? I really don't mind that. Or being beholden to their rules? Well the rules typically help me more than they hurt me. They also take care of taxes each month so I don't have to worry about that. And they do a (albeit minimal) screening of each guest, collecting info etc.

    What are everyone's thoughts on this?


     If you want protection - have them sign a contract and collect a deposit.    Your rankings are not going to suffer that much because the majority of people will book through Airbnb and VRBO anyway.  If you place rents out consistently you'll still have plenty of reviews.    Yes, it will take additional work, but chances are you will never be chasing people down in court.  The benefit is not only you will avoid the fee - but your direct guests will also be avoiding their high fees and many people prefer to book direct because of this. 

    What I am saying is do it all.  When my guests are trying to book 1-4 months - they don't want to pay airbnb fees.

    Given that people are doing more mid term bookings I wonder how will play out on Vrbo/ Abnb etc.   Paying the fees for those multi month terms seems a bit out of line.   Definitely something to that I have been thinking about as I look toward investing in properties.   

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y
    Quote from @John Carbone:
    We charge just a bit less (like $10 a night less)....my thinking is that we net about the same or more and the guest gets a decent discount. I will probably up the cash rate eventually to see if I can get a little more, but for now I'm pretty happy....
    0Reply
  • Zeona McIntyrePro Member
    Real Estate Agent · Boulder, CO · Member since 2015 · 284 posts · 226 votes
    4y

    Hey @Scott K., 

    It sounds like you have a lot of great answers here, the only thing missing is that you can require your direct bookings to get a travel insurance policy that will cover damage or there are STR insurances that you can pay for by the night to cover certain bookings. Its definitely more hassle.

    I've moved to Medium-term rentals in a few of my markets so I've had to adapt to move of the direct model. 

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  • Mariel DeVito
    Member since 2022 · 115 posts · 49 votes
    4y

    @Bruce Woodruff would you be able to share how you got your STR contract? I'm interested in doing direct bookings.

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y
    Quote from @Mariel DeVito:

    @Bruce Woodruff would you be able to share how you got your STR contract? I'm interested in doing direct bookings.


     I don't use a contract. All (or most) of my direct bookings are returning guests who I know. I'm sure there are others here who could share their contract with you....

    0Reply
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