Airbnb Retains Strong Customer Loyalty Despite Its Hidden Fees

Instead of itemizing additional fees at the time of checkout, Airbnb (ABNB 2.21%) customers are voicing their preference to have all inclusive fees shown from the start. In this clip from "Ask Us Anything" on Motley Fool Live, recorded on March 23, Motley Fool contributors Jon Quast and Matt Frankel discuss why the popular booking platform should address the issue of separated, surprise fees for customers.

Jon Quast: Jose, I believe that this is the most likely risk that takes down Airbnb right here. First and foremost, we've talked about how this is a top-of-mind brand. If you lose your brand image, you lose the top-of-mind presence and, all of a sudden, what was a competitive advantage is no longer there. Unless they have updated in the last couple of weeks, what this question is referring to is, when you use the Airbnb app and you're scrolling through looking for a place to book, there is a nightly rate posted on the posting. When you actually go to book it, all of a sudden, things are tacked on, such as cleaning fees, taxes and, all of a sudden, the price that you saw when you started this process is no longer what the price is. Now, I think that there is an aspect that, if it was close, nobody would care. But some times, maybe even most times, the price is wildly divergent, sometimes double the price that you originally saw because the cleaning fees are so high. Airbnb does not have a policy on what a person can charge for cleaning fees. In many ways, it reminds me of an old problem that eBay (EBAY 0.61%) used to have. On eBay, people with listings for a penny would then charge $200 shipping or something ridiculous. You're going in there on eBay, you're finding something, "Oh wow, a penny," and you go to buy it and, all of a sudden, they make it up in shipping. Part of the reason that they would do this too, was to circumvent eBay's take rate. But there was also an issue of, you're this far along in the buying process, now you're going to go through with it. It feels like you're being nickel-ed and dime-d. It feels like you are not getting good value. It creates an experience where, in the end, the user is no longer content. What they thought they were getting and what they actually end up paying is wildly different and it creates a souring among the consumer in my opinion. Jamie just referenced earlier when Brian Chesky went on social media and said, if we could do anything in 2022, tell me what we should do as a company. Of the 6,000 responses that he got, in the top six, No. 2 was clear pricing displays. No. 4 was updated cleaning fees. This is something that is very much on people's minds. But fortunately, Brian Chesky, the CEO, and the company are listening and they are actually working to address this. I think they really do need to address it. It's a big deal in my opinion. I think that Airbnb needs to standardize a policy when it comes to cleaning fees or [laughs] this is extreme. Don't even allow cleaning fees. You just need to figure this out as a host, like what is it going to cost to run your Airbnb, put that in your nightly rate, and you're just going to have to calculate this. If you wanted to charge $100 and $20 for the cleaning fee, just charge $120 for your nightly rate. Nickel and dime is what it feels like.

Matt Frankel: Real quick. This is how I feel about resort fees at hotels. It's the same thing. If the room costs $100 a night, don't charge me $50 and then a $50 resort fee. Charge me $100. I don't mind paying the cleaning fee. I think most of us would agree that Airbnb are still generally a good value, including the cleaning fee. But if something's worth $500 and you're going to sell it to me for $200, don't tell me it's $400 when I go to checkout. You're still getting value, but you got to be upfront about it. They do offer our host-only fee structure. The problem is very few hosts opt into that, where all their cleaning fees and stuff are deducted right from what the host gets. I think it is a problem they need to address.