Understanding Booking Earnings

Understanding Booking Earnings

This can be a little bit complicated, but please don't feel we are anything but transparent – it's just (potentially) confusing!

As per our communication before joining our group, we know from experience and lots of data, that the Annual Return to owners (paid monthly), is an average of 65% - 70% of the sum of Gross Rental for all stays at your home. For more details of example expenses, see Expected Running Costs. 

Definitions

Expected Running Cost

The regular costs associated with having a Holiday Rental

3rd Party Website

Airbnb, VRBO/Stayz, Booking.com, etc. --> Not our own website

Nightly Rate

The rate entered in our Booking System to stay one night at your home

Gross Rental

The sum of the Nightly Rates for a Booking

Annual Rental

The sum of the Gross Rental of all Bookings in a year

Service Fee (Guest)

The Service Fee charged to Guests, added on top of the Gross Rental. For Direct Bookings, we have structured this to offset costs (by having Guests pay them) and means we are not looking to increase the commission rate we charge existing owners.

Service Fee (Owner)

The Service Fee charged to Owners (by the 3rd Party Websites), deducted from the Gross Rental (see Expected Running Cost)

Booking Fee

A one-off fee charged to Guests, added on top of the Gross Rental

Govt Levy

A 7.5% Govt Fee charged to Guests (by the Govt), added to the Gross Rental (from 1 Jan 2025)

Our Commission

The management fee that is deducted (by us) from the Gross Rental (see Expected Running Cost). This ranges from 14 – 16% + GST (depending on when you joined our group)

Total Cost

What the Guest pays (and what you will see if you search online for a stay at your home). The sum of the Gross Rental, Service Fee (Guest), Booking Fee and Govt Levy

Some further explanations of how this all works is included below.

3rd Party Websites

The business model of these websites is that they add a Service Fee (Guest) to the Gross Rental, of between 12-18%, which is charged to the Guest. They also deduct a Service Fee (Owner) from the Gross Rental before issuing a payout to owners (of between 3-5% + GST). When you see a booking (in the Portal or in an email) that was taken via a 3rd Party Website, the Gross Rental figure will be:



Rental (displayed on email/portal) = Gross Rental - Service Fee (Owner)


The Total Cost to a Guest on 3rd Party Websites

The Nightly Rates feed into our Booking System from the Dynamic Pricing Tool we use, then ‘pushed’ through to the 3rd Party Websites where the relevant Service Fee’s, Booking Fee, Govt Levy, etc. are added, and become the Total Cost that a Guest pays. I.e.:
Gross Rental
+ Service Fee (Guest)
+ Booking Fee
+ Govt Levy  
= Total Cost

What is the Booking Fee & Direct Service Fee?

When a Guest books on our website, on top of tthe Gross Rental, they pay a Service Fee (that we set intentionally to be less than the 3rd party Website Service Fees), a Booking Fee, Govt Levy, etc. These bookings are of course still subject to all the Expected Running Costs (including our Commission). As mentioned above, the Service fee we charge on direct bookings (and the Booking Fee) has been structured to offset the increasing costs of improving our offering to Guests (and thereby driving bookings). We have decided to take this approach rather than looking to pass those costs on to owners (by increasing the commission rate we charge existing owners). Specifically, the Direct Booking Service Fee and Booking Fee go towards:
  1. Orana Stay digital guidebook
  2. HomHero software
  3. Dynamic Pricing Tool
  4. Costs of eDM (Electronic Direct Marketing)
  5. Costs of SEO Marketing to drive bookings
  6. Goodwill gifts (at times we provide guests with hampers, etc to build goodwill)
  7. Merchant Fees for Credit Card Payments (most payments from 3rd party websites are paid by International Credit Card which attracts a 3%+ service fee)

Gross Rental – the number that really matters!

The Gross Rental (sum of the Nightly Rates) is the number that matters to you, and us. Our commission is calculated on the Gross Rental, and we’ve indicated to you, that your Annual Return (i.e. payment to your bank account) will be a monthly payment that is an average of 65-70% of the sum of Gross Rental for stays at your home.


 

Annual Return = Σ (Gross Rental – Expected Running Costs)


Expected Running Costs are deducted from Gross Rental, and can be classified as either:

  1. Direct Running Costs - related to a specific booking (Commission, Cleaning & 3rd Party Website Fees that are applicable to Owners), and;
  1. Indirect Running Costs - not related to a specific booking (Rubbish removal, lawn mowing, etc)
Each month, the payment to the Owner would be:



Monthly Return = Σ (Owner Income – Indirect Running Costs)


For more information, please see Expected Running Costs. Some examples to illustrate how this all works are below.


There may be adjustments to these fees & charges over time, but these scenarios are intended to illustrate the different costs & income for various booking methods to assist owners with understanding how the Short-Term Rental industry works. 

Booking Case Study 1

The scenario: Your home has a fixed cleaning fee of $100, you pay 14% + GST commission, a guest books your home for 3 nights when the Nightly Rate is $500/night, on Airbnb, staying in February.

The Guest will pay:



You will receive:



Gross Rental

$1,500


Gross Rental

$1,500


plus Service Fee (Guest)

$285


less Service Fee (Owner)

$50


plus Booking Fee

$105


less Commission (@14%)

$223


plus Govt Levy

$139


less Cleaning

$100


Total Cost

$2,029


Owner Income

$1,127

75.13%

Booking Case Study 2

The scenario: Your home has a fixed cleaning fee of $120, you pay 16% + GST commission, a guest books your home for 7 nights when the Nightly Rate is $600/night, on our website, staying in January.


The Guest will pay:



You will receive:



Gross Rental

$4,200


Gross Rental

$4,200


plus Service Fee (Guest)

$508


less Service Fee (Owner)

$0


plus Booking Fee

$125


less Commission (@16%)

$739


plus Govt Levy

$324


less Cleaning

$120


Total Cost

$5,153


Owner Income

$3,341

79.55%


Booking Case Study 3

The scenario: Your home has a fixed cleaning fee of $90, you pay 14% + GST commission, a guest books your home for 2 nights when the Nightly Rate is $350/night, on Booking.com, staying in May.


The Guest will pay:



You will receive:



Gross Rental

$700


Gross Rental

$700


plus Service Fee (Guest)

$91


less Service Fee (Owner)

$23


plus Booking Fee

$66


less Commission (@14%)

$104


plus Govt Levy

$64


less Cleaning

$90


Total Cost

$921


Owner Income

$483

69.00%


Am I earning what you told me I would?

To determine this, take the previous 12 months of Income and Expenses (from the monthly/annual Statements, remembering to remove any costs for setup, cleaning after owner bookings, etc) and determine the % return. 

Clear as mud?

Please ask us if you have any questions





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