We’re all hoteliers now – at what cost?
Hosts made a total of £850m renting out property on Airbnb last year, but how well protected are their homes? Sam Meadows reports
The boom in short-term holiday lets has created a handy moneymaking opportunity for those with space to spare. The average Airbnb host in Britain earned £3,100 last year from letting out their home or spare room, according to the company’s annual report, and that was on an occupancy rate of just four nights a month.
For the uninitiated, Airbnb is a website that allows ordinary people to list their unused rooms as if they are hotels. Guests can search for a spare room in someone’s home, an entire apartment or house – or even a unique or luxurious destination such as a treehouse, a yurt or a castle.
In its report the company said its British hosts made £854m in the year to July, entertaining well over eight million guests.
Since Airbnb began a decade ago, a huge number of competitors have burst on to the scene, with traditional hotel-booking websites also trying to get in on the act.
But that rosy picture ignores the horror stories. In one well-publicised incident in 2015, two Londoners who let their flat on Airbnb returned to find the place littered with condom wrappers and laughing gas canisters. Not only that, but a cherished print by enigmatic street artist Banksy, valued at £8,000, had been stolen.
Airbnb says that just one in 25,000 bookings results in a claim for damages, but if you’re letting strangers into your home it pays to be prepared.
Humphrey Bowles of Guardhog, an insurer, warned that most home insurance policies would not cover Airbnb-style lets, classing them as commercial activity.
“Home sharers don’t understand the extent of the risk with peer-to-peer platforms, resulting in them often being uninsured or underinsured,” he said.
“At the very least hosts should tell their insurer that they’re home-sharing and take the necessary steps to fill any gaps in protection.”
How do the various platforms compare on fees and, crucially, on protection for hosts?
Airbnb, the biggest player in the market, appears to offer some of the most comprehensive protection to hosts, despite the horror stories.
The company says property damage is covered up to a maximum value of $1m (£758,000). Host protection insurance is also provided “in the unlikely event someone files a lawsuit or claim against you”.
It would not offer more information on precisely what is covered or whether there is an excess payable. Loss or wear and tear damage is not covered.
Airbnb charges a service fee to both hosts and guests. Hosts usually pay 3pc, but could pay more, depending on factors including how strict their cancellation policies are. Guests are charged a service fee of between 0pc and 20pc, determined by factors including the length of stay and the type of listing.
A lesser-known function of the booking giant is that it allows hosts to list their own apartments or spare rooms.
It is a little more expensive than its rivals, charging hosts an average commission of 15pc on bookings, but offers access to a huge market as a first port of call for many holidaymakers.
The company said it had 8,000 customer service staff should anything go wrong. It does not include any insurance for hosts as standard. However, hosts can request a security deposit from guests.
This website offers hosts a choice of an annual subscription fee of £249 (not including VAT) or a commission fee of 8pc per booking. Those who use the company’s payment system can charge a security deposit to cover minor damage.
Like Airbnb, HomeAway offers liability insurance to a maximum value of $1m. This works in conjunction with any existing home cover.
This high-end specialist does not have a straightforward charging structure and instead calculates what it calls a “unique revenue share”.
A spokesman said: “Instead of a standardised fee structure, our model is based on a unique revenue share with each individual homeowner, which entirely depends on the individual home.” It does provide insurance for hosts, which works in conjunction with any existing home or contents insurance.
The firm said it also took “proactive steps” to minimise risks to hosts, including a “diligent vetting process for all stays”.
Homestay.com, a site for hosts who will be present during their guests’ stay, says it is completely free for hosts but charges a fee to guests. The fee is 15pc, capped at £199 (or €199) for stays of more than 30 nights.
It says it offers no insurance as standard and hosts need to make sure they are adequately covered. Like others, the company does offer a mediation service. Hosts can also opt for a deposit model whereby, in the event of a failure to show up or late cancellation, guests will be charged 25pc of the booking fee.
A spokesman stressed that guests would never be staying in a property on their own.
The Plum Guide
Another specialist in luxury rentals, Plum Guide says it provides a guarantee in the form of identification that allows all guests to be traced should anything go wrong.
It also offers mediation between the parties, but says the incident rate is “extremely low”.
Each host has a dedicated account manager, who is usually responsible for around 100 clients, and 80pc of bookings are assisted by a member of the matchmaking team.
It does not offer insurance as standard but has insurance partners that it recommends. Hosts are charged booking fees of 3pc and guests are charged up to 14.4pc.