Smart Money Podcast: ‘This or That’: Airbnb vs. Hotel

Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions.

This week’s episode kicks off our new series called “This or That,” where the travel team compares different ways to travel.

Check out this episode on any of these platforms:

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Our take

Airbnbs and hotels have one major thing in common: They offer travelers a place to sleep for the night. Besides that, the differences in costs, fees, amenities and service are stark. Airbnbs used to be the backpacker-friendly budget option, yet rising costs during the pandemic and add-on cleaning fees can quickly erode their value.

Hotels might be boring, but they’re reliable. And while vacation rentals might be more interesting, they can be a crapshoot. So comparing prices between hotels and Airbnbs can create an apples-to-oranges dilemma.

That’s why we recommend choosing the option that best fits your travel style and needs for any given trip. Group trips with friends will be more enjoyable (and cost-effective) in a big vacation rental home, while a trip to a city might be easier and cheaper in a hotel. If you want to use points to cover your lodging, you’ll probably want to book a hotel, but there are ways to book Airbnbs with travel rewards as well.

Our tips

• Get the full picture. To compare prices, make sure you always go to the end of the booking process to see the final price with all the fees included. Resort fees or Airbnb cleaning fees can be a good chunk of the total cost.

• Book for the trip you’re taking. Airbnbs are generally cheaper than hotels for longer stays of a week or more and group trips. However, for shorter trips with fewer people, hotels can usually provide more consistent service, no cleaning fees and loyalty program benefits.

• Avoid the worst Airbnb pitfalls. Read reviews and search for amenities you care about, like the Wi-Fi speed.

More about Airbnbs and hotels on NerdWallet:

Are Airbnbs More Cost-Effective Than Hotels?

How to Avoid Hotel Resort Fees (and Which Brands Are the Worst)

Airbnb Cleaning Fees Can Be Brutal. Here’s How to Cope

Have a money question? Text or call us at 901-730-6373. Or you can email us at [email protected]. To hear previous episodes, go to the podcast homepage.

Episode transcript

Sean Pyles: 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 Pyles. 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 faceoff 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 Kemmis is here today to tell us about the results. Sam, welcome back to Smart Money.

Sam Kemmis: Thanks, Sean. Great to be here.

Sean Pyles: 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?

Sam Kemmis: Yeah, so they vary quite a bit. 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.

Sean Pyles: OK. 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.

Sam Kemmis: 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. 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.

Sean Pyles: 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.

Sam Kemmis: Yes. And I could go on and on. 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 that 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 it."

Sean Pyles: Yeah. I've been there. Also, listeners may hear that my neighbors are doing some yardwork right now, so if you hear a sawing or buzzing or blowing, that's what's going on.

Sam Kemmis: Hey, and my toddler is screaming, so they may also hear that.

Sean Pyles: Background noise galore. All part of the fun. OK. Well, one thing that I wanted to mention is that I've stayed at Airbnbs that not only have 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.

Sam Kemmis: Yeah. That makes sense. And I share your frustration. There's like nothing worse than paying a hundred dollar cleaning fee and then being asked to empty the dishwasher before you go or whatever it is.

Sean Pyles: I begin to wonder what the cleaning fee is actually going toward.

Sam Kemmis: Yeah, exactly. And it often does go towards a professional cleaner who comes in after the fact, but it's still a little frustrating. And Airbnb has definitely heard this complaint. It was like the complaint of 2022, I feel like. People have 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.

Sean Pyles: Well, one thing that people also might know is that hotels hide fees, too. I'm thinking about resort fees here. Can you explain to listeners what resort fees are exactly?

Sam Kemmis: 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 got access to all of the 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.

Sean Pyles: Naturally. And how much did they typically cost?

Sam Kemmis: Yeah, we analyzed over a hundred hotels in the U.S., 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.

Sean Pyles: But also it seems to be part of fewer hotel bookings versus it's more common on Airbnb.

Sam Kemmis: Totally.

Sean Pyles: 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?

Sam Kemmis: Yeah, I'd say overall it's easier to avoid resort fees. 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. 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 that 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 $75 cleaning fee gets washed out across those seven nights. So it makes it a little less intrusive, whereas if you're just staying one night, you got to eat that whole thing. Right?

Sean Pyles: Yeah. Well, didn’t you also look into which is better to book for a longer trip, month-, weeklong trip, potentially Airbnbs and hotels?

Sam Kemmis: Yeah. And there, Airbnb is the clear winner. A lot of properties actually charge a discount for weeklong or monthlong 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. So almost half as expensive per night to stay for a full month rather than for just one night.

Sean Pyles: Yeah, that does make sense. I've typically found Airbnbs most useful for group trips. Does that end up panning out when you think about, "OK, 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?

Sam Kemmis: Yeah, we did an analysis of this, and it's tricky, 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. So it's hard to compare apples to apples here and say, 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.

Sean Pyles: That sounds like a very intimate experience.

Sam Kemmis: Yeah. That's the Airbnb special. Right?

Sean Pyles: 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 a 10-year-old mattress is technically a bed, but it's going to be a pretty uncomfortable one.

Sam Kemmis: Yeah. There is 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 nail that down. And you can always ask the host, too, if you have specific questions.

Sean Pyles: 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?

Sam Kemmis: 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 the most memorable was one of our co-workers 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 of the bedrooms that were connected, there was a bat that got in, and we weren't able to open the windows in the top where it was. So there was one window that we could open, and we were running around with the 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.

Sean Pyles: That's crazy.

Sam Kemmis: And 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 supposed to be 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 host all of 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.

Sean Pyles: I've thought about Airbnb-ing 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 the stress that would go into being a host.

Sam Kemmis: And I think that might be part of why you're seeing a lot more corporate management companies doing more Airbnb hosting and fewer 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.

Sean Pyles: 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 an Airbnb.

Sam Kemmis: It comes down to what you're looking for. 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 1 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 on Airbnb, or very rarely. If you called your host and said, "Hey, the heat's not working." 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.

Sean Pyles: But you're not going to be able to move into a new Airbnb the same way you can move into a hotel room.

Sam Kemmis: Exactly. Yeah, exactly. And then the other big one, since I write about hotel loyalty programs, is that Airbnb doesn't have a loyalty program. 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'll get upgrades in rooms, you'll get free amenities, and you won't get any of that with an Airbnb.

Sean Pyles: What are some other factors that travelers should keep in mind when they're debating between an Airbnb and the hotel?

Sam Kemmis: 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 what is your trip about? This is what I often think about when I'm deciding between an Airbnb or a hotel. Am I going to this place in order to hang out at the place I'm staying? 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. 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 Instagramable 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.

Sean Pyles: 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, 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 when 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, "OK, 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.

Sam Kemmis: Yeah, totally. Yeah, I'm a big fan of airport hotels for that very reason. It's like, "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."

Sean Pyles: Yeah. OK. 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?

Sam Kemmis: 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 for yourself, but it's very easy to search for standalone places on Airbnb. So that's not really a big differentiator.

Sean Pyles: It's almost like Vrbo is limiting the types of offerings that they have, or maybe no great benefit on their end.

Sam Kemmis: Yeah, I see what they're trying to do because Airbnb has this reputation of being sort of a grimier couch-surfing sort of experience. What I didn't do in my comparison was comparing the properties to each other because I would have to stay at 10,000 different properties to determine whether Airbnb or Vrbos 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 what I came out of that wondering is this question of is Airbnb really the problem when people complain or is it just this whole home-sharing industry in the same way that 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?

Sean Pyles: OK. Well, Sam, can you please share with us your takeaway tips?

Sam Kemmis: Sure. First, 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, the 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 No. 1 tip for Airbnbs, bring your own pillowcases and soap.

Sean Pyles: It seems like you're speaking from personal experience there.

Sam Kemmis: There's nothing worse than a bad pillowcase and smelly soap.

Sean Pyles: OK, well thank you so much for talking with me today.

Sam Kemmis: Thank you, Sean.

Sean Pyles: 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-NERD. You can also email us at [email protected]. Visit nerdwallet.com/podcast for more info on this episode. And remember to follow, rate and review us wherever you're getting this podcast.

This episode was produced by Meghan Coyle. We had editing help from Tess Vigeland. Kaely Monahan mixed our audio. And a big thank-you to the pros on the NerdWallet copy desk.

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.