Cottage and Holiday Home Booking Agencies
See some services to get you bookings on this page
An important issue is whether an agent is exclusive or not. This is often, but not always an issue of how many bookings but exclusive agencies justify their existence by performance and in return they insist that they are the only source for your bookings and you are not permitted to seek your own bookings or use another agency at the same time. But there are good non exclusive agencies out there, see our Booking Agents pages for more details.
The view some home owners have of how things are done can be confused because their outlook is from a different perspective.
For instance, many homeowners find the practice of booking fees charged to guests as poor practice. A good booking agent deserves booking fee payment because the guest found the cottage through them. Quite naturally, where the more competitive agencies work in parallel with homeowner private bookings, guests can feel a bit short-changed if they discover they could have paid less by going direct.
However, the point is that the agency had arranged good quality marketing and paid for it to get their interest in the first place. In addition, a good booking agent will take time and effort to make the booking process easy and informative; a good booking agent will be available for this throughout the week and not just office hours, so taking significant work away from cottage owners and taking more bookings. All this increases bookings, but it does cost money which is paid for, in part, by the booking fee.
Homeowners may be attracted to services that do not charge a booking fee, but the revenue lost to the booking agency must be raised, instead, from the homeowner. Thus, where an agent may charge between 20% and 25% commission on rental, this could easily rise to 25% – 29% if they were to abandon booking fees. Although some potential guests will be put off by a booking fee, they are few in number compared to those homeowners unwilling to pay for this out of their rental income.
As with most things, there’s a balance to be struck. Some cottage and holiday home booking agencies charge up to £30 and more for booking fees and sometimes add holiday insurance on top, where others have a lower fee. It is quite natural for guests to be fed-up finding out they could have saved money going direct, had they known… but they only found out because the agency did the work it was paid to do. See useful suppliers, national agencies & regional agencies
The two most significant factors are:
The practice raises more revenue for the agency given fully understandable resistance to high commission rates on rents
A booking fee pays towards a good booking service for the holiday guest, often out of hours
It pays towards the necessary marketing expenses and effort to bring the holiday cottage booked to the attention of the guest
It pays towards the additional information about the area and picture resources for people thinking of visiting
Types of contract between agents, owners and guests.
It is worth listing these but I shall not go into any great detail but to suggest anyone using a booking agent should be aware of them to make the best of the relationship. It can get quite complicated:
Owner / Agent. Determines the duties and responsibilities of both parties to make things work. Eg: That the Owner should ensure the property is available for letting on the dates indicated to the agent; or that The Agent is employed to work on behalf of the homeowner. A poorly instructed agent could leave the owner liable as much as an agent acting outside their remit may have to answer to the owner.
Owner / Guest. Although an agent is involved, the owner still has a normal holiday accommodation contract with guests. Hiding behind an agent is not normally an option as the agent is working on your behalf making it important to choose a good agent.
Guest / Agent The guest uses the booking system and is contracted to the agent for this use. Booking fees are usually part of this.
In this complexity there are several ‘types’ of money: Rental collected on behalf of owners. Booking Fees charged to Guests. Credit card charges to guests and at least three bank accounts. The rental collection of homeowners’ account run by the booking agent. The trading account of the booking agent and, of course, the bank account of the homeowner. Different disciplines apply. For instance: homeowners are not ‘paid’ the rent by the agent; they receive transfers of rental balances; this is, strictly, a logistical exercise. Any commission charges to homeowners (another ‘type’ of money) should not be removed from the homeowner’s account until the relevant rental transfer to the owner is assured and, ideally, completed.
VAT on Holiday Cottage Rents and Agents’ Booking Fees.
This item refers to UK activity. Similar taxes exist elsewhere and so it could prompt readers to check how their own tax practices and laws stack up.
It is worth noting that VAT usually applies to rental commission charges and credit card charges but does not necessarily apply to rental, unless the cottage owner is registered for VAT. If a guest wishes to receive an invoice for their stay, it should come directly from the homeowner or be raised on behalf of the homeowner by their agent with full homeowner details on that invoice. This means that if a guest reclaims vat, they will have a vat invoice from the homeowner with the vat number of the homeowner on it. A guest should never reclaim vat on rental from an agent’s invoice. However, if a guest wishes to reclaim vat on an agent’s booking fee, they need an invoice from the agent with their vat number to do so.
It is important to be clear about these distinctions, they are not niceties. If a guest claims back vat incorrectly, it is an offence. Although it may be an administrative trial, if a guest stays at a holiday cottage and books through an agent they will need two separate invoices with two separate vat numbers, one from the owner and the other from the agent, to cover the vat on rental and the vat on the agent’s booking fee.
Owners who not registered for vat cannot reclaim it and must not charge it. It is, normally, a good idea not to register for vat, if you can, because vat on rental usually far exceeds any benefit in reclaim, even in the early days of operation and it can easily make your rents uncompetitive. If your turnover exceeds the legal maximum, there is no choice but to register. Do not confuse the limited legal provisions to set costs against revenue for the purposes of income or corporation tax, with vat rules. This should all be part of your accounting arrangements.
This information is provided by way of contrast and to prompt further investigation before acting. As ever, seek relevant professional or competent people to check before taking any decisions. Where applicable, all contents of this website are copyright Country Holiday Lets Ltd. See useful suppliers, national agencies & regional agencies