Why Is Airbnb So Expensive? (11 Reasons Why)

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Morgan Stephens

Morgan Stephens has been to 43 countries and counting, and he's never content to stay in one place for too long. Right now, he's living in South Korea, but he's always on the lookout for his next adventure.

Airbnb has become a tremendously popular alternative to hotels among travelers. Most of the time, it’s less expensive, but that’s not always the case.

You may have gone through the experience of booking Airbnb accommodations only to find that the final cost is much higher than the listed price. Many other people have also wondered why Airbnb is expensive, so I looked into it. Read on to see what I found!

Why Is Airbnb So Expensive?

Airbnb is expensive because the rates are set by individual owners, who can charge any amount they like. Further, clients have to pay cleaning costs, service fees, and taxes on top of the introductory price. Rates are higher in some locations and for more luxurious accommodations. Prices can increase with higher demand.

Carry on reading to find out why Airbnb rentals are becoming more expensive and whether it’s a good use of your money to choose their accommodations.

1. Prices Are Decided By Individual Hosts

Airbnb does not own the properties listed on the site and does not decide on the prices.

Instead, the properties are listed and priced by individual owners, which is why they can be pretty high since there are no standardized guidelines for pricing.

Owners, for their part, will charge the highest prices they can get based on their experience.

Therefore, since each accommodation is unique, there isn’t much by way of competition to regulate prices.

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2. Cleaning Costs Are Added To The Total

During the checkout process, a few extra costs get added to the total, making it quite a bit higher than the listed price for the rental.

That said, Airbnb rentals charge cleaning costs over and above the listed price for the room, apartment, or house.

Further, cleaning costs can be quite high, sometimes as much as 50% of the rental prices.

On the other hand, hotels do not charge a separate cleaning fee, so the price you end up paying for your stay is closer to what you first see listed.

3. Airbnb Charges A Service Fee

Another expense added to every reservation is a service fee that Airbnb charges both the host and guest. That said, both fees ultimately come out of the rental cost, adding to the total price.

4. Some Locations Have Extra Taxes

Depending on the location, you may also have to pay taxes imposed by local or state authorities.

Likewise, some locations may also have mandatory property insurance, and the costs will be passed on to the guests.

5. Prices Vary By Location

5. Prices Vary By Location

Like all holiday rentals, the cost of accommodations also depends on the location.

Therefore, popular and in-demand destinations like California and Florida will have higher prices for Airbnb accommodations.

6. Airbnb Uses Dynamic Pricing

Dynamic pricing is a technique that raises prices when demand increases, which may seem counterintuitive, but when demand for Airbnb accommodations rises, so do prices.

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Conversely, when demand decreases, prices for Airbnb rentals also fall, making prices much higher than hotel prices at certain times, seasons, and locations.

7. Higher Prices Deter Unwelcome Guests

Another reason why Airbnb costs tend to be high is to price out unwelcome guests who might cause problems.

Unlike hotels, most Airbnb rentals are private homes or privately-owned spaces, meaning that they don’t have any on-site security and must use different methods to ensure safety.

8. Airbnb Has More Luxurious Offerings Now

Airbnb started as a way of renting out a space in a private home, as a low-cost way of traveling and the equivalent of crashing on someone’s couch.

However, over time the rentals have become more luxurious and include service flats and villas, often owned by hoteliers and management companies rather than individuals.

Therefore, the changing nature of Airbnb rentals is also reflected in higher prices.

9. Hosts Offer Niche Accommodations

Another reason Airbnb rentals have become so popular is that they offer a personalized touch compared to cookie-cutter hotel stays.

For example, many Airbnb accommodations offer niche features such as rustic and secluded locations, unique architecture, and connections to local events.

That said, these extra features allow hosts to increase prices for the rentals.

10. Airbnb Does Not Offer Discounts

Most hotels offer special discounts for seniors, military personnel, or AAA members, which can help reduce costs. However, Airbnb rentals do not have any such regular discounts.

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11. The Market Sets The Rates

Finally, Airbnb prices are based on the rates that the market can support.

Therefore, Airbnb can charge higher rates because people are willing to pay more for unique and personalized lodgings while traveling.

To learn more, you can also read our posts on why Boulder is so expensive, why Vancouver is so expensive, and why Toronto is so expensive.

Conclusion

Airbnb is expensive because rental prices depend on several factors, most of which are beyond the company’s control.

For example, individual property owners set prices, and guests have to pay several fees in addition to the basic rental cost.

Further, Airbnb does not offer any regular discounts, unlike most hotels. In many locations, taxes and insurance costs are added to the rental prices.

Also, Airbnb rentals are becoming more luxurious and can charge premium fees for unique locations and features.

Finally, rental costs vary by location and season, and dynamic pricing increases rates when demand for accommodations is higher.

Author

  • Morgan Stephens has been to 43 countries and counting, and he's never content to stay in one place for too long. Right now, he's living in South Korea, but he's always on the lookout for his next adventure.

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