Paying cash for renewal bookings

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Hello everyone,

My first guests just left, my second guests just arrived. Both were couples. So far, so good. No catastrophes yet.

My first guests stayed a total of 15 nights and left today. My current guests who just checked in will be staying a total of 3 nights, and checking out Sunday 29th May.

My first guests want to rebook on Sunday 29th May, for 11 nights, checking out on the 9th of June. However, they wanted to pay in cash, because, as they put it “we have to pay a lot in taxes and it doesn’t benefit either of us”. Actually, the chap put cash in my hand without discussing it first, which I thought a little odd.

Since this would be a new booking, there would be nothing wrong per se with doing it outside Airbnb. I’m not obliged to rent via Airbnb.

However, I didn’t feel comfortable going outside Airbnb. As I told them, I don’t know what I am doing, have no experience, and no real backup. It’s not like I’m super enthused about Airbnb (they don’t even have a local India number I could call), and I’m not sure what level of protection they would actually give in practice (I haven’t had occasion to ask for help, yet), but they seem better, at least for now, than going it alone.

They said to me that Airbnb hosts locally were happy taking cash. I’m not sure whether they meant for repeat bookings done outside Airbnb, or for a booking that was made via Airbnb. The latter is perfectly possible. After all, it’s India.

Anyway, I told them that I would prefer to go via Airbnb, but that I could give them a discount. So I made them a special offer for 11 days, discounting my daily rate from Rs 2300 for a couple to my single occupancy rate of Rs. 1950. That’s an approximately 15% discount. They seemed satisfied with that, but they haven’t accepted it yet.

I know there has been discussion of this topic before, e.g.

but every case is different.

The problem with cash is that you are throwing away what protection Airbnb provides. Airbnb keep a deposit. I would have no deposit unless I arranged for it separately. I would also not get any help if there were other kinds of problems, nor could I give them a bad review. Etc. etc. The couple in question have seemed fine during their time here, but I obviously don’t know them, and why take chances?

Anyway, practically everyone on this forum has more experience in these matters than me. In some cases, a lot more experience. So, what are your thoughts on the matter? Thanks.

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Sounds like you handled this really well - I’d definitely have done the same. Sometimes newer hosts are targeted for operating outside the framework (be it booking outside the platform, requesting to visit properties prior to making a booking, or otherwise pushing house rules. ) Well done for standing firm. I’ve had some repeat guests who’ve exceptionally made a direct booking, but only on their third trip or more, when they’ve been fab guests and when I understand their reasons for returning to Lancaster - eg they’ve been people on a course with sessions spread across the year, or parents visiting their university-student sons/daughters. We advertise elsewhere, but I am always somewhat relieved when a guest comes via airbnb…the controls are not perfect, but I know of no other platform with even this level of assurance. Good luck with your hosting :slight_smile:

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Dissuade yourself of thinking too much of the Host Guarantee or that airbnb “keeps” a deposit. There is no actual deposit paid by a guest, it’s more of a promise of how much they can be liable for IF they agree that they were in fact liable. It’s not automatic.

I have been hosting for six years, and I take cash for repeat guests all the time. You’ve already hosted them, you know whether they were good guests or not. Having said that, every host has to find their own comfort and if yours is to book only through Airbnb, then follow that path.

For me, as a new host I would want the second booking to be on airbnb in order to get the review which is an important consideration when starting our. Personally I don’t worry about that now as I have a lot of reviews so it’s really what’s best for me first, and what’s good for the guest (in this case, a small savings to pay cash).

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Hi @Caiti,

Thanks for the reassurance. :slight_smile:

Have you ever had problems dealing directly in cash with people? Conversely, has Airbnb ever helped you when you have had problems? Just curious.

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Hi @superhostnyc,

True. Though I thought that a shadow charge was applied to a credit card or something. So they would have to have the money available, at least. The way I think of it, a security deposit is a disincentive to bad behavior. Even if one rarely invokes it.

So you have never had a problem taking cash from repeat guests?

If the same guest has two different bookings, can they/do they typically write two reviews?

Thanks for the thoughts.

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As I read, it’s not necessary easy to use the security deposit of air bnb.

We are not doing security deposit as no competitors are doing it our city…

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@faheem - there’s another option. Tell the repeat guests who want to pay directly that you’d prefer to go through Airbnb but give them (via ‘special offer’) a lower nightly rate that makes it the same price as the cash price (taking into account the Airbnb fee).

That way, they get the price they want and you both get Airbnb protection (for what it’s worth). You could always say that your accountant suggests this for the sake of keeping bookings all in one place, making them easy to manage.

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It just depends how comfortable you felt. I have a women who now pays me in cash - it works out well for me as its always on a workday as she’s here for work and I normally don’t get a lot of weekend bookings. She’s stayed about ten times now normally once a week. There right about the taxes though it is quite steep like 13% or something guests have to pay.

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Hi @jaquo,

Ok. I didn’t think of exactly matching it, but as I mentioned above, I did give them my lower (single person rate) which I think is roughly the same price as the cash price would be, taking into account what Airbnb adds on the top. I should check and see how much that is. I do know they pay some money in taxes directly on my behalf, but how and to who, I haven’t the foggiest. If I paid in cash, that would be one more thing to worry about.

Yes, that’s certainly a good point.

Thanks for the thoughts.

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My situation is a little different.

I already run an official B&B so I have insurance etc, so I even tell guests that for their next booking they should contact me outside AirBnB.

It saves us both the extra fee.

If you not run a business, I strongly advice not to go outside AirBnB. The problem is not the host protection, you should worry about liability. What happens if a guest gets injured or even worse…

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Hi @Chris,

I was not aware that Airbnb protected against liability. What protection do they offer?

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But being the smart math professor you are, you just figured it all out yourself! :slight_smile: I would only add that because Air only costs you the host 3% there is very little incentive to take the guest cash offer. And once you go offline, as you mentioned, anything could happen and you wouldn’t have their backing…

One other thing I would think about is that if the guest had no plans and could readily offer you cash and want to renew their stay, could they possibly end up overstaying? If you do allow them to stay get it in writing what the terms are! Never leave a business transaction to chance!

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These are great questions.

While some say the ‘host guarantee’ and liability coverage doesn’t help the host, well, try getting a claim settled if you DON’T have that protection.

My take on it is this - “why bite the hand that feeds me?” Right now airbnb is making my business possible - I have no desire to cut them out.

And what taxes? Sales and occupancy? Truth is those taxes are to be collected and paid on or off the grid. Airbnb does not collect them in my area, so like @konacoconutz I have to collect and submit them myself.

Good things to think through. My first guest extended their stay paying cash but I hadn’t had time to think it over. Now I just send them to the site to book.

Let us know how it goes!

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Hi @konacoconutz,

Thank you for the kind words, but what did I figure out myself? :slight_smile:

Well, the host does have the incentive to get a reservation. If he/she already has reservations coming out of his/her ears, then indeed there is little such incentive.

Oh, yes, there are all sorts of fun possibilities, unless you are properly prepared. Which I am not.

I notice that the people on this thread have quite mixed/divided views on this topic. I’m not exactly sure why.

However, I think that if you have a lot of experience and know what you are doing, then dealing in cash may be Ok. But it’s a risky move for a beginner like myself.

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Congratulations Faheem! You just received your first direct booking and you don’t even have your website up yet…lol!

I accept cash all the time. This is for guests who are currently staying and then ask if it’s possible to stay an extra night. There is no way I will send them through Air or FK or anywhere else to pay those sites a booking fee.

Now I will not hold the dates to wait for someone to pay cash. They would need to pay cash ahead of time. Such as in your situation, the guest put the cash in your hand. So you have their money regardless if they show up or not.

I can bet most Americans do not charge their guests lodging tax on the cash payments…which would save the guest a lot of money. Between the Air booking fee and avoided lodging tax, that can easily save the guest 25% that can typically be added to the booking - of course I would never allow the guest to not cough up the lodging tax :grimacing:

EDITED: I also only accept cash for a full night if the guest offers. For example, my guests a couple of weeks ago wanted an extra night and I billed them through PayPal and they paid immediately online. But if they would have asked for a couple of relatives to stay the night - I would have said the cost is $12.50 per person and they can just leave the cash in the kitchen in a bread box. Then I ask them to text me when it’s there.

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Hi @dcmooney,

Indeed. Also, having Airbnb in the loop may be a disincentive for bad behavior, like I said already.

Good point. Though repeat bookings off Airbnb I think are legal. It just may not be a good idea.

I’m not exactly sure what the taxes are. But I do know that in India Airbnb submits taxes on the host’s behalf. This is mentioned on the site. There is some reference to a rebate, suggesting they may have made some kind of special arrangement. I wouldn’t have a clue how to do that myself.

Thanks. I’m sure I’ll be back with more questions. :slight_smile:

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Faheem,

Be sure Air collects your full sales/occupancy tax for you. In many areas in the U.S. they only have arrangements at the state level, and owners are responsible for collecting tax directly from the guest at the county level. Not sure how it works in India, but it’s best to make sure they are collecting 100% - so a year later you don’t discover you owe back taxes with penalties (that’s how it works here)

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Yes, those are very good points. To start with, I should write to Airbnb and ask them the details of the taxes they are collecting. I don’t have proper information about this. If they reply, I’ll start a thread here, just in case the information is useful to someone else. One big problem with India is that it’s hard to get good information about such things - the government is extremely dysfunctional, and is quite capable of giving misinformation about its own rules and policies.

For the kind of money they make, Airbnb really should be taking care of all this, but of course they don’t.

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Doesn’t this kind of arrangement make accounting much more complicated, though? At least if it is coming from one source it’s easier to keep track.

Also, a related question. My first guests referred to in my initial post extended their stay several times. Did Airbnb charge them a separate booking fee each time? I hope not, that would be terrible.

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Nope - fortunately no problems so far, as I said, these bookings are the exception and only when I’m pretty happy with the guest.

I send them a written agreement via email, confirming dates, price, numbers of guest etc, and advise them that the dates will be blocked to them when their money is transferred to my bank. When they do that I acknowledge receipt. I require a cash damage deposit, returned to them at the end of their stay assuming no damage and that they abide by the house rules which are the same regardless of how guests reach me.

So far, so good. :slight_smile: