How Much Commission Should I Pay a Holiday Letting Agent?

Are you thinking about signing up to a holiday home letting agency? Not sure of the commission fees?

There are so many costs to take into consideration when running a holiday let, so commission fees on top of everything else can seem off-putting. However, they are for the most part a necessary evil when signing up with a holiday letting agency.

You may have already discovered that hardly any of the agencies mention these rates on their websites. Below are the average commission costs you can expect to pay, how commission costs are worked out, and ways you can save on your budget.  

How is commission worked out? 

Commission fees via holiday letting agencies are usually worked out based on a percentage of the booking cost. Most agencies work out their costs this way, although some larger holiday letting websites (such as Home Away) have a paid listing amount starting at around £350+. This is a good option if it turns out that they book up most of your available seasons. At first this is hard to know.

If you’re also paying for services such as property management (cleaning, laundry and maintenance) then these costs can be charged on top of your booking commission.

The average commission fees

For an average holiday let, the fees you can expect to pay are roughly 20% – 25% for bookings only. However, some of the smaller agencies may offer more competitive rates – for instance, we were charged 15% during our first year, which is highly competitive for the market. Note that they will charge VAT on the commission you pay to them.

Unfortunately, for most holiday letting agencies, the only way to really know how much commission you can expect to pay is to actually call them up and ask. This is because, like I said above, not many agencies will display these costs up front on their website.

Determining your costs

To figure out your costs, the best thing to do is to call up a few different agencies and work out exactly how much commission each will charge – as well as everything that’s included for that fee, such as:

• Marketing
• Administration
• Property management
• Changeovers
• Cleaning/laundry
• Waste disposal
• Professional photos

Once you have an idea of all you can expect to pay, you can factor this into your weekly costs and figure out your overall budget – Choose an agency that a) you’re happy with and b) makes financial sense. A balance of the two is usually the safest bet.

Ways to save on budget

If you are switching from another agency you may find you have some bargaining power since you are already established and may have your other services in place, such as cleaning.  You may or may not require a photo service either.

Some agencies are able to offer holiday let owners a bespoke service tailored to fit their needs, and this can be a great way to save on costs if you don’t want to pay for a full property management service. So, all you need to do is pick the services you need, and do the rest yourself!

The trick here is to pick a holiday letting agency that is happy to let you do that, but also be around to offer support and advice if and when you need it. Consider also whether they expect you to be exclusive to them or if they are happy for you to also be with other agencies.

Take your time when choosing and ensure you’re 100% confident it’s the right agency for you. Understand their payment structure - when do they release payments to you, what is their cancellation policy and if they operate a damage deposit policy, how does that work.

In summary

If you’re in the market for a holiday letting agency, one of the first things you’re going to want to learn is how much commission you can expect to pay, and exactly what you’re getting for your money – yet hardly any agencies actually display detailed costs on their website!

It’s usually worked out as a percentage of the overall booking cost, and the average you can expect to pay is around 20 – 25%. However, for full property management services, fees can be even higher, so I’d recommend talking to a few different agencies and getting some quotes to give you a rough idea.

You can save on your budget by choosing a bespoke service, and taking on some of the responsibilities yourself – however, I’d recommend finding an agency who will be there to offer support and advice when needed.

Should we charge for extras?

Charging for extra services in your holiday home may prove to have a negative effect on the total annual bookings. It may well be more beneficial to be seen to be adding extras for free. These days most people are asking for 24 hr free internet connection during their stay. It has become the norm and the annual cost to you as the home owner is coming down all the time. For example I discovered that this offer is available: Online Exclusive - Plusnet Fixed Price Unlimited Broadband & line rental £19.99
You may feel that you would like to ask a small fee for this, but perhaps it is better to include it in your overall rental fee, or absorb it. The same could be true of adding Netflix or Sky. This way your guests will see immediately what the holiday will cost instead of having to add all the extras to find out what the actual final cost would be.
You could argue that by not advertising your hidden extras allows you to display lower prices... personally I do not like the 'starting from' prices, which are there to entice you further.

Try also adding "what's included in your stay" to illustrate the extras you are not charging for such as free towel and linen service, free cleaning service, free logs for the fire, free baby high chair, welcome goodies and soaps.

The one extra that we decided to add to the overall price was a flat rate refundable damage deposit. Since guests have no intention of damaging your property they will happily pay this as they know they will get it back at the end of their stay. You can read more about why we decided to have a damage deposit in a previous article: Are there bad holiday guests?

Holiday home statistics

It's not only important to keep a record of all your guest details but also of all your overheads, net and gross income. Using this information will help you improve your holiday home business for the following year.

Compiling records 

I even calculate costs of water, gas and electricity per booking by taking meter readings on each changeover. Do families with infants create more costs or less? What percentage of guests come from outside of the UK and do they provide a higher or lower percentage of income per head? What about the difference in costs per booking from clients from the various booking sources? Which of those booking sources takes the highest fees from your advertised rates? How many last minute bookings do you get? How many queries have you had for short breaks and were they profitable enough or did they make a loss?

Maintenance costs will vary from year to year 

Perhaps it is wise to make notes of which bookings created damage above and beyond normal wear and tear. Consider how to make changes to avoid the cost happening again.

Annual costs

The overall general costs of utilities, mortgages, services, insurances, fire and safety reports, taxes etc., can be divided by 52 weeks per year, by the amount of weekly booking, or perhaps more accurately per booked night. Doing this I worked out the average number of weeks required to break even and to decide how many weeks we should aim for to make a profitable income. This gives savings to use for rainy days or perhaps to make a bigger dent in any outstanding mortgage.

These are all things that you can use to target your marketing for future seasons, decide on your minimum nights stay, the lowest rate you are able to accept after giving discounts, which type of guest group to avoid or deter.

Services and supplies 

Many service providers and suppliers will increase prices year on year. Using these records you should also be able to find areas where costs can be reduced such as finding cheaper deals on insurance, switching to new energy providers and telephone/ internet providers such as this: Online Exclusive - Plusnet Fixed Price Unlimited Broadband & line rental £19.99 for 12 months plus £50 Reward Card and £5 activation fee
also
Plusnet Fixed Price Unlimited Fibre & line rental £23.99 for 18 months with £9.95 activation fee

Switch your energy provider to Octopus, and you'll probably save. We've always switched so we are already on a good deal, but this one will save us another £60. Use this link to sign and up split £100 with us.

Split £100 | Octopus Energy

Join Octopus for cheaper, greener energy & £50 credit

Pet friendly, yes or no?

Making your property available to pets as well as people is a great way to increase bookings. If you’re happy to do this, ensure that you have the necessary facilities within the property such as water and food bowls as well as an enclosed garden or courtyard.

One of the fastest-growing sectors of the UK holiday market is in pet-friendly holidays. More and more people want to take their beloved pets away with them - not just because they enjoy the company of their pets, but because leaving them at kennels can be expensive.

Some advise that by not catering to the demand for pet-friendly cottages, you could be missing out on a lot of bookings. About a quarter of holidaymakers take their pets with them on breaks - and by not catering to this demand for pet-friendly cottages, you could be missing out on a lot of bookings. This could be turned on its head, by opening up to that extra 25% you may equally lose out on a similar percentage of people who select property based upon there being a no-pets policy.

From the outset I decided on a no pets policy, since I myself suffer with mild allergies and seasonal asthma. For others this can be quite accute and they have a hard time finding suitable accommodation, especially since 'allergy-free' is something not often posted in accommodation details.

Even if you made a spring clean every week you cannot guarentee to remove all potential allergic reactions.  We have many holidaymakers booking our cottage because they feel secure in the knowledge that we have done our best to create allergy-free accommodation. No pets, no smoking, HEPA filtered fresh air using a heat recovery system, vaccuum cleaner with HEPA filter and no carpets.

The loss of income from not accepting pets is debatable since we would have lost out on a percentage of bookings made by allergy sufferers and would have an increase of extra cleaning and repair costs. After all, pets can cause damage - some are poorly trained and others may become disorientated by new surroundings - and this can leave owners facing substantial cleaning and/or repair costs.

Dog and cat allergy (extracts from allergyuk.org)

Dog and cat allergen is found in the animals' saliva, sweat and urine. Animals frequently groom themselves so the allergens coat the hair and skin cells (dander), which, when shed, spread throughout the home. Once the saliva dries, it becomes airborne very easily.

These allergens can be very persistent in the environment, with detectable levels found in homes where no pets have lived for many years, and dog allergen can be found in schools, having been brought there on the clothing and shoes of pupils and teachers. Cat allergen in particular is very 'sticky' in this way.

Despite popular belief, all dogs possess the allergenic material known to produce allergic reactions in humans, and therefore reported differences of sensitivity to different breeds probably relates more to level of exposure. Even breeds that are described as 'hairless' still have allergens found in dander from skin sources. It is possible that longer hair may harbour other allergens such as dust mite, pollens and moulds, to which an individual may also be sensitive. Other persons may be sensitive to substances found on the dog, such as flea powder or soaps.

Also, many dogs (and cats) have skin problems such as eczema, so because of their dry skin and irritation, spread larger amounts of dander.

Exposure to cats during a child's first year of life is an important factor in the development of sensitisation to this allergen. Some studies have shown that children who grow up in homes with pets have more severe symptoms than those in homes without pets; other studies have shown that there may be a protective effect from growing up with pets. However, for those who have eczema, hay fever or asthma, removing pets is the best advice, even if there is no obvious allergy to them at present.

Asthma (extract from allergyuk.org)

Asthma is a common and long term lung condition that requires ongoing management. In asthmatics the airways are sensitive and become inflamed and narrow on exposure to certain triggers, leading to difficulty in breathing. Asthma commonly starts in childhood but it is possible to develop asthma at any age. The causes of asthma are not fully understood, but what we do know is that both the environment and genetics have a role to play in who develops asthma.

4 simple improvements

Try leaving some personalised postcards for your guests to send to friends and family

There are many improvements you can make to increase customer satisfaction and gain new and repeat bookings, here are 4 simple ones:

• Remember that cleanliness really is the big issue. Keeping your property spotless and well maintained is vital so if you’re unable to do it yourself, make sure you find someone you can trust. A dirty bathroom or fridge makes for bad reviews, which could deter future customers from booking.

• Consider installing a hot-tub if you have space. Adding one to your holiday home is likely to increase its desirability. We did not have the space however we fitted a large wide bath with a luxury overhead rain shower, it gets most of the glowing comments in our guest book.

• Providing a welcome pack including locally sourced fresh products, a bottle of wine and the local paper (with a 'what's on' guide) is a nice touch. We also leave a few postcards. Since the cottage is in Cornwall, guests also receive a Cornish Cream Tea of scones, clotted cream and jam which helps make guests' arrival more welcoming, easier and creates a lasting impression. If you can accommodate guest dietary preferences in this that will also illustrate your willingness to understand their needs. It's amazing how much thoughtful touches like these can increase the likelihood of your guests re-booking or recommending your property to others.

• Most holiday makers expect the same mod cons they'd use at home, so a washing machine, dishwasher, microwave and free Wi-Fi are pretty essential, and a tumble dryer a bonus. You may also want to consider a coffee machine, sandwich toaster, slow cooker and other technology such as a DVD/Bluray player and Xbox.

I bought a Sony Blu-Ray and DVD player which has been perfect, no complaints from the guests, easy to use and takes up little space. I bought it from Amazon and this link takes you to the newer release of the same model. You may find something here more suitable, I just went for the simpler less expensive model.
We don't provide a sandwich toaster but the toaster makes 4 slices at once, we've had it since 2010 and it's still working fine, looks new, just remember to empty the crumb trays every week.
For coffee, we provide two types of coffee percolators rather than a larger machine with capsules. The most popular which works best on gas or induction hobs is this Giannini caffettiera or this one by Bialletti, if you want to know why, you can read another of my blogs at "So you want to live in Italy".