NerdWallet's Smart Money Podcast - ‘This or That’: Airbnb vs. Hotel

Episode Date: March 1, 2023

Airbnb used to be a go-to option for fun, one-of-a-kind lodging. Then the cleaning fees started stacking up. Are Airbnbs worth it anymore, or are hotels the better route to go? In this episode, host Sean Pyles talks with travel Nerd Sam Kemmis about how to decide between an Airbnb and a hotel. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend.

Welcome to the NerdWallet Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Piles. This week, we are kicking off a new travel series that we're calling This or That. Basically, we boil down some of the most common questions about booking travel into head-to-head comparisons. First up is a face-off of Airbnb versus hotels. Booking Airbnbs used to be one of the go-to ways to save on lodging, but these days cleaning fees have skyrocketed and guests aren't getting the same hospitality that they used to. NerdWallet's travel team did an analysis of over 1,000 Airbnb reservations to see how much people can really expect to spend on Airbnbs. NerdWallet travel writer Sam Chemis is here today to tell us about the results.

Sam, welcome back to Smart Money. Thanks, Sean. Great to be here. So when people are traveling, one of the main concerns for booking accommodations is cost, and it's a bit hard to compare whether a hotel or an Airbnb is cheaper because that varies so much based on each property. But Airbnb cleaning fees are an easy cost to compare. You have to pay them when you book an Airbnb, and you don't have to pay them when you book a hotel. According to the data your team collected, how much are Airbnb cleaning fees on average? Yeah, so they vary quite a bit. You know, there are properties with no cleaning fees, and then there are properties with several hundred dollar cleaning fees. What we found was

that the median cleaning fee on a listing on a one night stay was $75. Okay, what strikes me is that that could be almost the cost of a night staying at a kind of cheap hotel. It seems expensive to me. Yeah, totally. And that's the thing about Airbnb is if you're staying just one night, you're going to get hit with that cleaning fee on top of whatever the rate is. That's sort of baked into the price. And it can be a huge part of the price. I mean, we found that that was about 20% to 30% of the listed price, meaning that the cheaper the Airbnb, the cheaper the cleaning fee, but there are some big exceptions. If I was a cynical person, I would say that people and Airbnb

are using cleaning fees to disguise the true cost of one of these rentals. Yes. And I could go on and on. You know, it's this thing that's been going on in the travel industry over the last decade or so called drip pricing. And it's this idea that prices are dripped out throughout the checkout flow. And then by the time you check out, you're basically so exhausted mentally from all of these add-on fees. They just say, oh, whatever, I'll just pay. Yeah, I've been there. Also, listeners may hear that my neighbors are doing some yard work right now. So if you hear a sawing or buzzing or blowing, that's what's going on. And my toddler is screaming, so they may also hear that.

Background noise galore. All part of the fun. Okay. Well, one thing that I wanted to mention is that I've stayed at Airbnb is that not only at cleaning fees, but all these instructions what I'm supposed to do before I check out things like taking out the trash and taking the sheets off the bed. And I find that a little bit annoying, honestly, because I'm trying to be on vacation not have to clean. But when you add on the cleaning fee on top of all these things that I have to do, I start to wonder whether it's really worth it to pay more for a hotel that doesn't have a cleaning fee. Yeah, that makes sense. And I share your frustration. There's like nothing worse than paying $100 cleaning fee and then being asked to, you know,

empty the dishwasher before you go or whatever it is. I begin to wonder what the cleaning fee is actually going toward. Yeah, exactly. And I mean, you know, it often does go towards a professional cleaner who comes in after the fact, but it's still a little frustrating. And, you know, Airbnb has definitely heard this complaint. It was like the complaint of 2022. I feel like people finally got fed up with cleaning fees and having to clean up after themselves. And they have made some improvements. So for most people, when you're searching on Airbnb, you can now toggle to see cleaning fees in the search results. So you see the total cost instead of just the base cost.

So you don't have to click all the way through to see that cleaning fee. Well, one thing that people also might know is that hotels hide fees too. I'm thinking about resort fees here. Explain to listeners what resort fees are exactly. Yeah, I could go into the long sordid history of resort fees, which started at resorts, where they were basically add-on fees for using things like the stand-up paddleboard or whatever. You know, you got access to all of this stuff by paying the resort fee. But what hotels realized was, oh, we can just add this on as a required fee at any hotel. So you see them all over the place.

Now, they're not always called resort fees. Sometimes they're called destination fees or amenity fees. But the idea is it's not an optional fee. You're not paying for a particular thing. It's included in the price, but it doesn't show up until that final checkout screen usually. Naturally. And how much did they typically cost? Yeah, we analyzed over 100 hotels in the US. And among those that charged a resort fee, the average fee was about 42 bucks. And that was 11% of the overall cost. So lower than the Airbnb cleaning fees, but still pretty major.

But also it seems to be part of fewer hotel bookings versus it's more common on Airbnb. Totally. All right. Well, it seems like in the Airbnb versus hotel debate, fees are maybe easier to avoid at hotels or what do you think? Yeah, I'd say overall, it's easier to avoid resort fees. I mean, for one thing, you can just find hotels that don't charge resort fees and it's very hard to find Airbnbs that don't charge them, as you said. The other thing is that there are some tricks like if you have elite status and you book with points at Hyatt, for example, they don't charge you the resort fee, which can save you quite a bit. And there's no

equivalent at Airbnb, right? And Airbnb cleaning fees are just really hard to avoid because they're just so pervasive. So the best thing to do there is to stay longer and i mean may not fit your travel plans but that's where this hotel versus airbnb trade-off really comes in if you're staying seven nights well then that you know 75 cleaning fee gets washed out across those seven nights uh so it makes it a little less intrusive. Whereas if you're just staying one night, you got to eat that whole thing, right? Yeah. Well, didn't you also look into which is better to book for a longer trip, month, week long trip, potentially Airbnbs and hotels? Yeah. And there, Airbnb is the clear winner. A lot of properties actually charge a discount for week-long or month-long stays.

So in addition to that cleaning fee getting diluted, you also get an actual amount knocked off the rate. So the nightly rate for an average seven-night Airbnb stay was 32% cheaper than a one-night stay. And for a 30-night stay, it was 46% cheaper than a one night stay. And for a 30 night stay, it was 46% cheaper than a one night stay. So almost half as expensive per night to stay for a full month rather than for just one night. Yeah, that does make sense. I've typically found Airbnb is most useful for group trips. Does that end up panning out when you think about, okay, I have five friends,

we all want to go on vacation. If we stay at a hotel, we'll have to get either a very fancy large room that could be expensive versus perhaps a moderately affordable Airbnb. How does that shake out? Yeah, we did an analysis of this and it's tricky, right? But you can do something to say, well, if you have a group of eight people, you're going to need at least two hotel rooms. And so we compared sort of large Airbnbs versus how much it would cost to get multiple rooms in a hotel. What we found was that an Airbnb for six people was about 33% cheaper than booking, say, three hotel rooms. But the average hotel was 29% cheaper than booking an Airbnb for two. But a big caveat there, which is Airbnbs and hotels are really different, right? So it's hard to compare apples to apples here and say, you know, this Airbnb was just as nice as this hotel.

And you want to be super careful with reading the Airbnb listing to make sure it has all the amenities you need. I booked one recently for a group of people and it said it had five bedrooms, I think. But really, it was just this weird labyrinth of connected bedrooms where there were no doors between any of them. And so we were basically all just sleeping in one big room. And it sounds like a very intimate experience. Yeah. That's the Airbnb special, right? Or you can reach out and hold hands in the middle of the night if you want to, potentially. But I've also had a similar experience where it seems like some hosts on Airbnb have very generous definitions of what they call a bedroom or even a bed.

I personally don't think that a futon is actually a bed because it's just not comfortable enough. Or maybe like a 10-year-old mattress is technically a bed, but it's going to be a pretty uncomfortable one. enough or maybe like a 10 year old mattress is technically a bed but it's going to be a pretty uncomfortable one yeah there is a you know a part of the airbnb listing where they've tried to make this clear where it breaks it down by bedroom which beds are in each room but it's not always totally clear i recommend also searching through the reviews and maybe specifically searching bed or mattress or whatever the thing is that you're looking for to see if you can sort of nail that down. And you can always ask the host too, if you have specific questions. Yeah. Well, that makes me think about how the quality of renting an Airbnb can vary so greatly. And I know you have some horror stories around Airbnb, right?

Oh yeah. I've got plenty personally. And then because I've been writing about this, I get all these great emails from readers with their own horror stories and horror stories from hosts and the whole thing. But one, the most memorable was one of our coworkers woke up with a bullet hole in her window that was not there the night before. So she didn't hear the shot,

but yeah, a bullet passed through her Airbnb. They never found the bullet which is also interesting and then i had at that same one that had all the bedrooms that were connected there was a bat in that got in and uh we weren't able to open the windows in the top where it was so we just had to there was like one window that we could open and we were running around with brooms trying to get it out. We couldn't get it out. So we just ended up all sleeping basically

in the basement with the window open up there, just hoping that the bat would leave. And we think it did, but we're still not totally sure. And then I've heard, I've heard tons of horror stories from hosts, a lot of parties. That's the big thing for hosts parties and animals that were not there and several hosts have told me that guests have used silly string at their properties which apparently can stain the walls and carpet

so i guess that's a horror story if you're a host and honestly it's been helpful for me to hear from the hosts all these horror stories because it kind of gives me a sense of why they have so many rules and why they have such high cleaning fees because honestly they have to clean up after a lot of parties yeah I mean I've thought about Airbnb being my place in the past and the thought of cleaning up after strangers who are treating my house as a party pad has made me not want to do that. So I totally understand the difficulty and stress that would go into being a host. And I think that might be part of why you're seeing a lot more corporate management companies doing more Airbnb hosting and fewer sort of mom and pops is because it's just really hard as a mom and pop. And if something goes wrong and someone destroys something, that's your house. So it's

just a very different sort of emotional experience. Yeah. Well, now we want to talk about when you think a hotel might be a better bet versus an Airbnb, even if a hotel might be slightly more expensive than Airbnb. It comes down to what you're looking for, right? And I think if you're looking for 24-7 service, then a hotel is clearly the winner. I just stayed at a hotel two weeks ago where the heat wasn't working in the room, which I discovered at one in the morning when it was absolutely freezing. And my toddler was in the room freezing with us. And so I called the front desk and they were super helpful. And they immediately moved us into another room where the heat worked. And it was great.

But that would never happen in Airbnb or very rarely, right? If you called your host and said, hey, the heat's not working. You know, maybe they come and try to fix it at 1 a.m. If you're super lucky. Otherwise, you're just going to be cold all night. You're not going to be able to move into a new Airbnb the same way you can move. Right. Yeah, exactly. And then the other big one, since I write about hotel loyalty programs, is that Airbnb doesn't have a loyalty program, right? So if you're going to be traveling a lot

and want to earn points and miles and get elite status, then hotels can really become worth it. You know, you'll get upgrades and rooms, you'll get free amenities, and you won't get any of that with an Airbnb. What are some other factors that travelers should keep in mind when they're debating between an Airbnb and a hotel? What amenities you're looking for. If you want to cook for a bunch of your friends, a hotel probably isn't a good choice. And then also just this idea of, you know, what is your trip about? This is what I often think about when I'm deciding between an Airbnb or a hotel. Like, am I going to this place in order to hang out at the place I'm

staying? Like, if I'm going out into the woods and I want to get a cabin, well, then I probably want to stay at the cabin and play board games or whatever it is, right? But if I want to get a cabin, well, then I probably want to stay at the cabin and play board games or whatever it is, right? But if I'm going to a city where really the reason I'm going there is because I want to get out into the city and go to restaurants and go to museums, well, then I don't really care where I'm staying. I don't really care if it's Instagrammable or not. I just want somewhere to sleep. So in that case, I'll often just choose a hotel. And then finally, cancellations are something that a lot of us thought about a lot during the pandemic. And generally, hotels have better cancellation policies than Airbnbs because the Airbnb hosts themselves set the policy. It's not a blanket policy across all of Airbnb.

Got it. Going back to your point around the purpose of your trip and which might be better, I think sometimes it can also depend on what phase of a trip you might be in. I'm thinking about a vacation that I took with my friends last year where we all met up in LA and then we went out to Joshua Tree. And when we first got to LA, we had a quick Airbnb for a night, drove out to Joshua Tree. And when we first got to LA, we had a quick Airbnb for a night, drove out to Joshua Tree, stayed at a beautiful Airbnb there for a few days that had a great kitchen, it had a hot tub, an incredible view of the area. And we were heading back to LA, we stayed at a hotel for a single night. And at that point, we weren't really in luxuriate and chill mode. We were more like, okay, let's have one final night in LA.

We'll go out and get a good meal. Next day, we all have to catch flights back home. So it was more about the sheer efficiency of getting a hotel versus hanging out at an Airbnb. Yeah, totally. Yeah, I'm a big fan of airport hotels for that very reason. I just want to crash and get up and catch the shuttle to my flight. And yeah,

I don't care how fancy it is. Yeah. Okay. Well, I have one last question for you. We've talked a lot about Airbnb specifically this episode, but there are other options like VRBO. Are they typically plagued by the same issues that Airbnb has or does it vary platform to platform? It definitely varies platform to platform and there are pros and cons. I was interested in this last year and so I did a direct comparison between Airbnb and Vrbo,

which is how they like us to pronounce it now. And I was looking for some ways in which Vrbo was better than Airbnb and honestly, I had a hard time finding any. Airbnb, the website just works better. They've got more options. It's just a little bit slicker. Vrbo sort of positions itself as being family friendly because all of the properties are

standalone. They're not shared. So you always have the place to yourself. But it's very easy to search for standalone places on Airbnb. So that's not really a big differentiator. It's almost like Verbo is limiting the types of offerings they have, or maybe no great benefit on their end. Yeah, I see what they're trying to do, because Airbnb has this reputation of being sort of, you know, a grimier, you know,

couch surfing sort of experience. You know, what I didn't do in my comparison was comparing the properties to each other, because I would have to stay at, you know, 10,000 different properties to determine whether Airbnb or Verbose are generally better. But my gut tells me that there's actually not a big difference in part because a lot of properties are actually listed on both platforms. And like, kind of what I came out of that wondering is this question of, you know, is Airbnb really the problem when people complain? Or is it just this whole, you know, home sharing industry in the same way that, you know, is Uber really a problem? Or is it that the business model of ride sharing has some kinks to it that no one's ever going to work

out. Okay, well, Sam, can you please share with us your takeaway tips? Sure. First, you know, get the full picture on price. So to compare price, make sure you always get to the end of the booking process to see the final price with all the fees included, cleaning fees, resort fees, all of that, and then compare those final prices rather than the initial prices. Then book for the trip you're taking. Airbnbs are generally cheaper than hotels for longer stays or for with groups of friends, but for shorter trips or with fewer people, hotels can usually provide more consistent service, no cleaning fees, and all those benefits of a loyalty program. And finally, avoid the worst

Airbnb pitfalls. Read the reviews to make sure the amenities you're looking for are there. Check for the Wi-Fi speed, that sort of thing. And then finally, my number one tip for Airbnbs, bring your own pillowcases and soap. It seems like you're speaking from personal experience there. There's nothing worse than a bad pillowcase and always okay well thank you so much for talking with me today thank you sean and that is all we have for this episode do you have a money question of your own turn to the nerds and call or text us your questions at 901-730-6373 that's 901-730-NER373. That's 901-730-NERD. You can also email us at podcast at nerdwallet.com. This episode was produced by Megan Coyle. We had editing help from Tess Vigeland.

Kaylee Monahan mixed our audio and a big thank you to the pros on the NerdWallet copy desk. Visit nerdwallet.com slash podcast for more info on this episode. And remember to follow, rate and review us wherever you're getting this podcast. Here is our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances.

And with that said, until next time, turn to the nerds.