How to Prepare for Direct Bookings (Without Having a Nervous Breakdown)

How to prepare for direct bookings

By The Hospitable Team

Breakups suck (especially when you’re a vacation rental host and your ex is Airbnb). 

 In 2020, Airbnb changed its cancellation policy to refund guests impacted by COVID-19 travel restrictions, while hosts took the hit financially. Thankfully, the vacation industry is speeding towards post-pandemic recovery, but you haven’t forgotten how tough those early lockdowns were for hosts.

 Even if you took Airbnb back after the 2020 split, you’d be forgiven for wanting a backup plan. Setting up your own direct booking platform is a great way to take back control of your vacation rental bookings and future-proof your business.

 But where do you start? You don’t know how to build a website and you’ve never had to worry about guest screening, insurance policies, or taxes while hosting on Airbnb. Don’t sweat! Taking direct bookings is more complicated but not impossible.

 We got input from Damian Sheridan from the Book Direct Show to put together this guide that will go through the benefits of a direct booking platform and everything you need to know before you get started. Even better, we’ll tell you about our solution for simplifying the direct booking process and making the most of your listings.

Hospitable.com automates nearly 100% of your guest messaging.

And now, we’re building an end-to-end direct booking solution so you can extend your exceptional hospitality to direct guests.

Why you need a direct booking strategy in 2022

If you like to sit back and let an online travel agency (OTA) like Airbnb take care of business, that’s understandable. But have you ever really thought about the benefits of a direct booking strategy?

Boost your profits

Hosts typically pay around 3% of every booking to Airbnb, with guests paying an extra service fee on top of that. If you’re a Vrbo host, you can expect to pay around 8% in commissions per booking. These charges help OTAs keep their platforms running, so you can only avoid the extra cost if you take bookings directly.

Pro tip: Lots of hosts take direct bookings while listing on OTAs at the same time. Why? Because sites like Airbnb are amazing for reaching bigger audiences and starting to build trust with new customers.

Once your guest has booked via Airbnb and had a great stay, you’re already on their radar. Now, you’re in the perfect position to build that relationship and get repeat bookings without commission costs.

If you don’t have a direct booking website, you’ll have to rely on past guests to share the link to your Airbnb listing when they’re raving about your property to their friends. That’s better than getting no referrals at all, but why pay Airbnb commission fees when it was your great hosting that did all the work to get your property noticed?

“I’m mainly looking to avoid Airbnb’s service fees for a booking they did nothing to get for me. I want the ability to negotiate a deal privately.” – Anonymous host comment, posted in the Airbnb Profit Club group on Facebook.

Be independent

Hosts have always been at the mercy of OTA policies, but the coronavirus pandemic showed us just how fragile that relationship could be.

At the height of the pandemic, property owners lost business so that Airbnb could refund guests who were stuck at home. It was natural for Airbnb to want to protect guests, but hosts all around the world suffered lost revenue and felt the threat of deplatforming (removal from an OTA website).

“You cannot be tethered to OTAs indefinitely. Your prices will fall and your guests will burn you out. Instead, build your online marketing strategy and book direct as much as possible.” Natasha Assa, host of two beach-side homes in NYC

A lot of hosts already list on multiple OTAs to maximize their reach. However, this doesn’t give you the independence of going direct. If you leave OTAs out of the booking process, you get to write your own terms and conditions without answering to anyone else. Yes, boss!

How to prepare for direct bookings

Being a top host is more than creating a fantastic guest experience, especially if you have a direct booking strategy. Airbnb usually takes care of the “boring bits”, like tax and payment processing, so make sure you don’t get caught out.

This section will show you exactly what you need to do to take booking into your own hands. Stay with us! Once we’re done, we’ll let you know how Hospitable.com can make taking direct bookings easier than they look.

  1. Guest screening

Airbnb can confirm your guest’s identity using a photograph of their government ID. Once the guest has been checked out, they’ll get a ‘verified’ badge on their profile. If you want that extra layer of security, you can make sure that only verified guests are able to book your properties.

As a host, you can also check out a guest’s Airbnb profile and read reviews left for them by other hosts. But, if you want to get direct bookings, you’ll have to do guest screening yourself.

Sure, you’re hospitable, but only if your guests are who they say they are! Guest screening protects you from fraud, theft, and property damage. Here’s how to manually screen your guests:

  1. Ask for their full name and age
  2. Check their social media pages, e.g. Facebook, LinkedIn, or Instagram
  3. Request photocopies of valid IDs, e.g. driver’s license or passport
  4. Ask for a security deposit, which can be returned once you’re satisfied that your property has been left in a good condition

 

If you think that sounds incredibly time-consuming, you’d be right. Manually checking out each guest’s Instagram is going to take forever and isn’t that reliable (although you might see some cute dog pics). Instead, try the automatic ID verification provided by Autohost, which is tailored to the vacation industry.

  1. Insurance

In November 2021, Airbnb launched AirCover, a shiny new policy including $1m liability insurance and damage protection for all hosts. Without the safety net of Airbnb’s “top-to-bottom” protection, you’ll need to get your own insurance for direct bookings.

Find an insurance provider like Safely or Superhog that will specifically cover short-term rental properties. Don’t assume that standard home insurance companies will pay out for accidents or damages that take place during a guest’s stay.

“Direct bookings are still a small part of our business but definitely growing. We don’t list every property as available for direct bookings. [It] depends on the insurance of the property. It is definitely worth it listing and accepting bookings on different platforms.” – Gordon Martin, property manager with 19 listings in Newfoundland, Canada.

  1. Payment processing

Airbnb is the Merchant of Record (MoR) for all bookings secured on their website, meaning that the guest pays Airbnb for the goods and services provided, while Airbnb manages credit card fees, refunds, and chargebacks. You’ll receive your funds as a payout from Airbnb, but only after the OTA has taken a cut.

If you take direct bookings, you’ll become the MoR. You’ll be responsible for:

  • Payment card security (PCI-DSS)
  • Currency exchange
  • Data compliance
  • Managing credit and debit card fees
  • Sales tax

“Direct bookings do take a lot of extra work in terms of money management. Currently I don’t have an escrow account—I do have a separate bank account on a different bank card that I use. It is still not ideal.”Gordon Martin.

Regulations around data and payment compliance and sales tax will vary depending on your customer’s location, and it is your responsibility as MoR to stay up to date with any changes. On top of that, you’ll need to have the ability to accept payments on your website using an integration like Stripe.

Managing these transactions yourself leaves you vulnerable to chargebacks, which happen when a customer disputes a payment that has been taken out of their account. Chargebacks can be a major inconvenience for merchants, which is why a lot of hosts like using OTAs that act as the MoR.

Sounds daunting, right?

It is a lot of extra responsibility, but some hosts enjoy the flexibility and control being the MoR gives them over their finances. Not only do you get to dodge the Airbnb service fee, but you can also offer payment plans and referral deals that will make your guests excited to stay again.

“Do you give the guest all the savings when they book direct? Or do you try to balance what the guest would pay on different platforms? We have made changes over the last year to recognize all these things—our guests still pay less when booking direct.”Gordon Martin.

  1. Taxes

Your guests are required to pay lodging or occupancy taxes, depending on the property location. Usually, it’s down to Airbnb to figure out how much tax to collect for each booking.

If you’re going direct, remember to find out the occupancy tax regulations for the property location. It’ll be your responsibility to collect a percentage of each booking fee as tax to pay to the government. 

One benefit of taking direct bookings is that the overall cost will appear less to your guests. They won’t feel so stung by tax costs if they’re not also paying OTA service fees.

“I’m getting more and more guests questioning why Airbnb fees are so high. They really get a shock when all the taxes and fees are added up.” – Anonymous host comment, posted in the Airbnb Profit Club group on Facebook.

  1. Rental agreement

Airbnb guests can consider things like price, house rules, and cancellation policies before they book. As a host, you get to dictate some elements of these terms but ultimately the OTA’s policies take precedence over yours—and those could change at any time.

When you take direct bookings, you get more control over terms and conditions for your stays. Draw up a rental agreement for guests to sign before they complete their booking. This will help protect you from last-minute cancellations and unwanted behavior (like parties). Here’s what to include:

  1. Property address
  2. Guest contact details
  3. Time and date of check-in and check out 
  4. Breakdown of fees, including taxes, cleaning fees, and the security deposit
  5. House rules (e.g. no smoking, no loud noises after 10 pm)
  6. Occupancy limits
  7. Cancellation policy
  8. Cleanliness and maintenance policy
  9. Emergency contact details and protocols

 Don’t forget: a good rental agreement keeps your transactions secure. It’s also reassuring for your guests, who like knowing what to expect from their booking.

  1. Direct booking website

Airbnb is totally equipped with a booking engine, maps, calendars, messaging, reviews, and more. How can your direct booking website begin to compete?

Your website doesn’t need to be as sophisticated as Airbnb, but you can make sure it’s functional and appealing to guests. If you’ve never built a website before, get a free trial with website builder software like Wix, Squarespace, or WordPress, which all have professional-looking templates and lots of in-platform support to get you up and running.

We’d recommend using other OTAs alongside taking direct bookings, so be sure to add a booking widget to your website to avoid accidentally booking a property out for the same dates twice. Alternatively, Direct by Hospitable.com is a direct booking solution where you can build your own website that’s tailored to short-term rental bookings and syncs yautomatically with all your other OTAs. We’ll talk more about this later, so keep reading.

With calendar syncing, a consolidated inbox, and personalized automatic messaging, Hospitable.com takes care of the admin or property owners while you get more time to focus on the fun stuff (like reading all those nice reviews you’re about to get).

Pro tip: For a more engaging direct booking experience, hire a professional to write your web copy (all the words that appear on your website). If your budget won’t stretch that far, at least get someone to proofread it for you to avoid embarrassing spelling errors.

Don’t forget, if you don’t use OTAs to get your property listings out there, you’ll need to have a strong marketing strategy for your direct booking website. Before you go direct, you should ask yourself if you’re ready to start building your brand.

What if there was a way to have all this taken care of?

Right now, you’re probably feeling overwhelmed by the prospect of taking direct bookings. Between understanding occupancy taxes and building a website, there’s a lot to get your head around. If that’s the case, then Direct by Hospitable.com could be your knight in shining armor.

Direct by Hospitable.com is a direct booking solution built using continuous feedback from real hosts. By developing the platform publicly, we’ve been able to get to the root of what hosts are after and create a customizable platform that will actually work for you. 

Here’s how Direct by Hospitable.com will make direct bookings simple:

  • Guest screening. Integration with Autohost means easy identity verification every time. Guests submit a selfie and an ID document, then Autohost performs a background check on your behalf. 
  • Insurance. Through a partnership with Autohost and Superhog, reservations are insured against property damage up to $1.3m. This removes the need for a security deposit too, making the initial booking cheaper for guests.
  • Payment processing. Hospitable.com can be the MoR if you choose, meaning we’ll be the ones to worry about credit card fees and data regulations. What’s more, we can support payment plans to benefit your guests, while you’ll still get paid upfront.
  • Taxes. As MoR, Hospitable collects taxes for you (on properties based in the US). Through a partnership with Avalara, taxes are calculated automatically and included in the overall booking fee.
  • Direct booking website. Direct by Hospitable can support you to build a website that’s tailored to short-term rental bookings. There’s no need to struggle with generic website builders, plus you’ll enjoy all the useful automation and booking management features of Hospitable.com.

How is Direct by Hospitable.com different from using an OTA?

Right now, Hospitable.com allows you to manually add direct bookings within your channel manager dashboard. But that’s not the same as having your own website.

Direct by Hospitable.com is designed to bridge the gap for hosts who want the simplicity of using an OTA but the freedom of a direct booking website. The tool is designed to be:

  • Simple to use. Your website is created using the information you’ve already provided to Airbnb. Automatic calendar syncing will mean no conflict between direct and OTA bookings.
  • Cost-effective. Fees will stay low to make direct bookings cheaper overall for both you and your guests.
  • Host-focused. We’ll take responsibility for trickier things like insurance and payment processing while you retain ownership over direct bookings and policies.

The verdict on creating your own direct booking strategy

Having a direct booking strategy is the only way to win your independence as a host and stop relying on OTAs like Airbnb. It can also help you build a brand, develop customer relationships, and boost your income.

Taking direct bookings does carry some risk. You’ll need to be ready to take payments, get a new insurance policy, and calculate additional taxes. That’s before you’ve even got started on designing a professional website that you and your guests will love.

So, what should you do? If you want all the perks of direct bookings but none of the stress, Direct by Hospitable.com can help you build a direct booking website, while keeping your business secure with built-in integrations with Autohost and Superhog. 

With all the features of Hospitable.com, like calendar syncing and automated messaging, you’ll be managing bookings across different platforms without breaking a sweat. 

We’ll always keep costs low for you and your guests, while offering all the protection of an OTA. We’ll take care of the fiddly stuff, but you call the shots.

Hospitable.com automates nearly 100% of your guest messaging.

And now, we’re building an end-to-end direct booking solution so you can extend your exceptional hospitality to direct guests.
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