Understanding the Role of an Airbnb Co-Host
The roles and responsibilities of a co-host on Airbnb
In Airbnb lingo, a co-host is essentially someone who helps owners manage their rentals to ensure guests have a good experience. That might mean helping the owner with occasional cleaning, showing up to meet and check in guests, responding promptly to questions from guests or helping the owner create and maintain a great profile for their listing.
Ultimately, what happens depends on the amount of assistance the owner wants to enlist from the co-host. The benefit of having a co-host is that an owner enjoys the advantages of renting out a property by only handling matters he or she feels suited to do (usually those that require a personal touch). On the downside, the owner may have to share some money from their rental income with the co-host who becomes a de-facto property manager (subject to any guidelines in local laws or HOA rules regarding short-term rentals). If the co-host is not a friend , but rather a third-party individual or company, the owner must be selective about the skills, abilities and services that person can offer to ensure that guests (and the owner) don’t have a bad experience from the get-go.
If you were going to compare a co-host to a property manager, you might say that a co-host is to a property manager as an assistant is to a manager — they do similar things, but the co-host role requires a more hands-on touch as the co-host is operating under the intermediary nature of the Airbnb platform. In other words, a property manager has much more freedom and responsibility than a co-host engaged through Airbnb. (That’s not to say one role is better than the other. They are just different.)
Components of a Co-Host Agreement
There are central elements that should make up an effective Airbnb Co-Host Agreement. First, the Agreement must be clear as to what is being contracted. In plain language, the Co-Host Agreement must specify the type of co-host services that will be provided. The particular services to be provided should be listed. For example, this section can provide that the co-host will help with guest communication, check-in and check-out and cleaning. Importantly, the agreement should mention whether the co-host has permission to list the property on their Airbnb account and how the co-host can use the listing.
Second, and equally important, the Co-Host Agreement must spell out the terms of payment for the co-host. Will the co-host:
Finally, the Co-Host Agreement should have clear termination or expiration terms. When can the agreement be terminated? What notice period is required before the Co-Host Agreement can be terminated?
Legal Implications of Co-Hosting
When entering into a co-hosting arrangement, or any contract for that matter, proper attention should be paid to the drafting of the agreement. Since the relationship between the parties starts from the moment the agreement is signed, it is vital for the written agreement to clarify the respective rights and obligations of each party.
An agreement that is prepared after a conflict arises between the parties is less likely to meet their mutual needs than one that is contemplated and negotiated before the dispute occurs. This is particularly true in the case of co-host agreements, which may concurrently amount to a partnership or other type of business venture and thus may trigger additional obligations, such as with regard to the formation of a limited liability company (LLC).
Co-host agreements should be drafted in accordance with applicable city, state, and federal laws. The laws governing the rental of property in almost all jurisdictions predate the emergence of short-term rentals, and there is often significant grey area with regard to the legality of co-hosting arrangements. It is frequently unclear whether the act of "co-hosting" constitutes conduct outside that of a traditional landlord-tenant arrangement, or whether it crosses over into the realm of property management. A thorough understanding of relevant laws may also be needed to ensure compliance with operational regulations on the local level, and to avoid liability in the event of any injuries on the property.
As part of the drafting process, the parties should also consider whether an indemnification clause should be included in the agreement to protect themselves from liability for any harm caused due to "acts of God." This could include things such as fire, earthquakes, floods, pests, or natural disasters.
An agreement should also address whether one party may owe the other party compensation for any damages to the property. This is particularly important for properties that are rented on a recurring basis. Too many Airbnb hosts have learned the hard way that there is no guarantee of perfect guests each time.
To protect against potential liability from the acts of third parties who may stay on the premises, the agreement should stipulate that the passive "owner" who is not involved in the operation of the Airbnb who engages in the arrangement is not responsible for the actions of the active party.
How to Negotiate a Co-Host Fee
As you enter into an agreement with an Airbnb co-host, you will need to determine how your co-host will be compensated for their time and services. Here are the three most common arrangements:
- Flat Rate Percentage or Hourly Rate – This is the most common way of determining co-host compensation. Simply put, the co-host will receive a flat percentage or hourly rate based on the revenue received. The most common co-host agreement will provide for a flat percentage of the revenue received from the rental. The amount of the percentage is negotiable but will typically range between 10% and 30% of the rental revenue received, depending on the number and scope of services provided. Also, regardless of the percentage, the co-host should receive any overtime or bonuses earned based on their performance as well.
- Performance Bonuses – In many cases, a co-host can offset their monthly rent by actually getting a unit rented for that month. During the term of the co-host agreement , provide the co-host the option to receive a performance bonus (based on the percentage of revenue negotiated) in lieu of rental for the entire month. By doing this, you save cash in your pocket for one month while the co-host benefits from reduced taxes (the performance bonus is given to the co-host who pays taxes on it. If they were to be paid rent, they would pay taxes on the entire rent). It’s a win-win for both parties.
- Lesser Percentage Based on the Terms of a Listing – Rather than paying the co-host a percentage of the entire rent amount, base their compensation on the number of rentals booked by the co-host. If the host agrees to only pay the co-host a percentage based on bookings of the unit, the host would not compensate their co-host for the times that the host used the unit (i.e., for personal use). Again the amount of the percentage may be negotiable but will typically range between 5% and 15% of the rental revenue received, depending on the number of services provided.
Tips for Successful Co-Hosting
Building and maintaining a positive relationship between a property owner and a designated Airbnb co-host begins with clear and open communication. Co-hosts should check in frequently with the owner, as well as individual guests, and be willing to adapt to any new or unexpected changes. If communication is kept open, it will help to foster a better working relationship—and a more enjoyable experience for both the owner and any guests.
It is also important to set clear expectations early on in the relationship so that everyone is on the same page. Be sure to discuss and agree on any codes of conduct for the co-host’s and owner’s interactions with guests, as well the terms of the co-hosting relationship. You must establish clear guidelines in both the co-host agreement and house rules.
Along with setting expectations, a co-host agreement should include a clear scope of the work that each party agrees to handle. Be honest about any limitations to your physical ability to manage the property, and make advance arrangements for issues that may arise for which you need to solicit assistance. For example, if you know that you will be out of town for a week and unable to respond to guests’ needs, it is best to outsource that week to another co-host or to make other contingencies.
In general, the best way to manage a co-hosting relationship is to utilize group messaging apps—as opposed to texting guest inquiries to one another—so that everyone involved in managing the property can remain on the same page.
Resolving Co-Host Conflict
Every rental property runs into an unexpected situation, no matter how seasoned a co-host may be. While well-prepared and proactive management have the potential to minimize issues, not all situations can be predicted. The following are some of the most common problems and their solutions:
Disagreements
For most landlords, expectations and agreements go smoothly, and every party pulls their own weight. Yet, sometimes you may come across a challenge you weren’t anticipating. In this case, you should refer back to the original agreement. This should cover the issue and how each party will manage it moving forward. Most co-host agreements, especially for short-term rentals, should be agreed upon with the understanding that things can and do happen. With a clear picture of how disagreements are handled in the co-hosting agreement, both parties should be able to resolve any misunderstandings quickly and with little disruption to their business.
Cancellations
Even when handling fewer properties, problems happen. Things fall through, and your co-host can’t make it for whatever reason. Depending on the particulars , you have a few options. If it’s merely inconvenient for everyone but nothing else is broken, you should adapt and cover your co-host for their absence. It’s possible, however, that your co-host has breached the contract or relegated their responsibility to someone else, in which case you can consider it a very serious breach of your agreement. This is a reason why having a written co-host agreement is so important! It covers how someone should handle covering a short-notice cancellation and why you shouldn’t assume that the cancellations are the other party’s responsibility.
Breach of Agreement
From miscommunication to outright dishonesty, be prepared for the possibility that someone may ignore the co-host agreement. While you could simply terminate the contract (assuming it’s not critical to your income), another option is to mediate through a third-party or simply discuss it with the other individual. This is particularly true when there are disagreements as to how the agreement is being followed. Your best solution here is to simply spell out how the agreement is or is not being followed, explain why you feel as you do and come to a solution between both of you.