How Much Do Vacation Rentals Cost to Book in the U.S?

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Vacation Rentals
The Evening Star at Indian Wells is a single level home with a backyard that is beautifully lit at night with automatic landscape lighting. Turn on the colorful pool lights for a magical nighttime swim experience.

The vacation rental industry has seen a significant increase over the past several years. In fact, the industry’s projected revenue is expected to exceed $19.9 billion by 2025. That’s up from $9.5 billion in 2020. Based on these numbers, it’s safe to say that the vacation rental business is doing well. It also means that people are looking to rent these homes across the United States more often than they’ve ever done in the past. But how much do vacation rentals cost these days?

Statistically speaking, the average 7-day trip in the United States will cost a solo traveler around $1,705, some $1,842 per couple, and $3,652 for a family of four. In terms of lodgings, the average night stay at a hotel is around $99, ranging from $63 to $289. Vacation rentals will cost somewhere between $190 to $630 per night for the entire house.

And while finding rental homes is straightforward enough, choosing one that also has a good price for value is more challenging. For example, you may be looking at a rental property that seems quite affordable, but you may later find out that it doesn’t provide you with all the services and/or amenities that you were first expecting. Therefore, you must understand how pricing works in the vacation rental industry so that, when you calculate your expenses, you will have a more realistic idea of what you need to pay to get what you were looking for. Below are some of the highest costs that go into a vacation rental’s total pricing.

Taxes and Insurance

It should come as no surprise to anyone that taxes and property insurance are something that all vacation homeowners need to pay. And similarly, these costs will be added to your own bill, in one form or another. It’s also important to point out that short term vacation rentals have a higher insurance rate than a full-time residence. Another factor that might also increase their insurance costs will be the property location, like, for example, if it is near water. In addition to a vacation rental property insurance that also covers short term rentals, many property owners will also have an add-in liability policy, as well as flood insurance, for example.

In terms of taxes, vacation rental owners will usually have to deal with:

  • Annual county property tax
  • Annual town property tax
  • Quarterly county transient occupancy tax
  • Monthly town transient occupancy tax
  • Monthly state & local sales tax

While taxes and insurance rates will differ from one state to another, as well as depending on the size and exact location of the vacation rental property, the combined yearly taxes and insurance costs for a duplex is somewhere around $14,000.

Booking Site Fees

When booking vacation rentals, you’ll most likely use a vacation rental website. But for the owner to have their property listed on those sites, they will also have to pay a booking fee. Depending on the exact vacation rental website, this booking fee can be anywhere between 3 to 15% or can come in the form of several hundred dollar subscriptions.

Credit Card Processing Fees

Unless you are planning to pay in cash and will most likely use a credit card, consider the additional 3% fee associated with that transaction that the owner will have to pay. To compensate for this unavoidable expense, the majority of vacation property owners will include this cost into their vacation rental budget as an additional expense.

Management Services

If the property owner is working with a rental management company, they will also be charged between 30 and 50% per booking. So, for example, if you were to pay $1000 for a vacation rental, the property management company that handles the operation will receive between $300 and $500 for their services. This is a considerable sum and one that will, at least, in part, be added to your own bill

Property Maintenance and Management

Aside from the cleaning fee, various other maintenance costs can and will be added to each guest’s overall cost. Among these, we can include everything from lawn care, pool, and hot tub service, landscaping, snow-blowing, and other such types of maintenance.

Cleaning Fees

Cleaning fees are something very common that property owners will offer to their guests. Depending on the exact services they provide, these services can apply to only the cleaning that takes place after you’ve left or can have a team of cleaning professionals come around during your stay. It’s also important to keep in mind that during the current COVID-19 pandemic, some vacation rental owners will charge extra for their cleaning.

This is because they have adopted more enhanced and thorough cleaning procedures, as well as stricter rules when it comes to the maximum number of guests they will allow. Others may even take it a step further and allow for a longer period of time between rentals. All of these extra procedures will have a negative on the owner’s bottom line, which will translate to higher overall costs for the renter. If the typical cleaning costs would have been around $200, at present, that sum could be even closer to double.

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Heating and Air Conditioning

Heating and/or air conditioning costs can often be quite high during a rental vacation stay. Guests will need to factor these costs into their budget if they are not already integrated into the rent price. Depending on the climate, the monthly heating bill can range anywhere between $100 and $300 during winter.Air conditioning costs can reach as high as $100 during the spring, summer, and early fall months in hotter climates. One good way to save on energy and cut down on the heating and air conditioning costs is by using a programmable thermostat. It will regulate the temperature, making sure that these devices will not run when they are not needed.

Linens, Toiletries, and Other Consumables

Vacation rental linens will have to stand up to a lot of use. Guests will be using them on a regular basis and will have to be thoroughly laundered after each stay. Replacing any stained towels or worn-out sheets can become a significant expense for owners. For example, a quality set of 12 towels can cost upwards of $170, while a set of sheets can be around $70 per bed. While these don’t have to be replaced after each guest, vacation rental owners will still need to consider these costs if they wish to turn a profit.

In terms of toiletries and other consumables, such as bars of soap, bottles of shampoo and conditioner, spare toothbrushes, or toothpaste, owners will have to pay as much as $25 per booking. Then, there are other consumables such as coffee, tea, sugar, salt, pepper, olive oil, laundry detergent, trash bags, tissues, napkins, paper towels, toilet paper, and more, that will also need to be replenished continuously. And while none of them cost too much individually their cumulative costs do add up rather quickly.

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Stay Away From Hidden Fees

Because of the current COVID-19 pandemic, many property owners have adopted enhanced cleaning procedures and stricter house rules regarding the total number of guests they will allow. This could allow for additional fees and overall higher prices. However, additional fees have started popping up among vacation rentals across the country over the past several years. 

These charges can range from familiar to the absurd. In many cases, they will be tied to a similar hotel fee. These can include everything from a resort fee, an occupancy fee, or a security fee, among others. There have been cases in some condo complexes where the owner will also be charged if there is someone in the office and hands out the keys during changeover days. 

In addition, some units will have steep surcharges for extra guests beyond two, even if the property is perfectly able to accommodate more guests. And to make matters worse, these additional fees are not revealed until the last page of the booking process. This is done because it’s assumed that the guest will become emotionally invested in the purchase. They start with a low base rate, but additional taxes and fees are added as guests go through the reservation process. 

Vacation rental owners who use these tactics will often justify their actions by saying that running a vacation rental is expensive. Not all the fees that go into the final price will actually go to the owner. Others say that it is partially because booking sites, such as Airbnb, encourage them to add these fees. They say that vacation rental owners do not control how these extra fees are presented on the platforms’ format.

To avoid these types of situations and discourage the industry from normalizing this practice, it’s good to avoid vacation rentals with such hidden fees or deceptive prices. Instead, look for properties that advertise themselves with something along the lines of “all-inclusive, no hidden fees and taxes.” In other words, you should always try to walk away from a vacation rental property that isn’t honest and upfront with you. 

Together with A Greater Town, you will be sure to find a dream vacation home, where you can spend a wonderful time with friends and family at an affordable and fair price. 

Drew Knapp

Drew Knapp

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