What is the Airbnb security deposit
The Airbnb security deposit protects hosts against damage to their space. Two types of security deposits exist, the Airbnb-required security deposits and host-required security deposits.
- Airbnb-required security deposits are applied based on a listing’s features or timing of the reservation. Airbnb determines when to use them. An authorization hold is put on the guest’s payment method for the security deposit. The funds are released after the stay if there is no claim.
- Host-required security deposits are optional, and the host determines the amount. Authorization holds are not placed on host-required security deposits. Guests are only charged if a host places a claim to the resolution center.
Host-required security deposits are set between $100 and $5000 USD. To collect against it, a host must place a claim through the resolution center within 14 days of checkout or before the next guest checks in. Not all damage is eligible to be claimed using the security deposit. Source: Airbnb.
Airbnb security deposit vs host guarantee
Airbnb offers a policy to all hosts on the platform called the host guarantee. This policy covers certain damage up to $1 million. If a host does not have a security deposit, the host guarantee provides them with the same recourse to recover damages. For hosts that do have a security deposit, damages in excess of the security deposit can be claimed using the host guarantee. Critically, both the security deposit and host guarantee use the same terms and conditions. Therefore, the host-required security deposit and host guarantee are effectively the same thing.
Why have a host-required security deposit
If the host-required security deposit and host guarantee are the effectively the same, why have one? Having a host-required security deposit can provide the following benefits
- It may be easier to recover damages since the guest is paying rather than Airbnb (as with the host guarantee)
- Encourages guests to take better care of your space
- Discourages the wrong kind of guest from booking
Introduction to the analysis
For this analysis we’ll use US listing data from April 2020. Data was sourced from Inside Airbnb, an activist project with the objective to provide data that quantifies the impact of short-term rentals on housing and residential communities.
First we’ll look the full set of 250k listings to determine how many listings have a security deposit. Next we’ll have a closer look at how hosts set the security deposit fee. To do this, we’ll limit the data set to listings with a security deposit of at least $1 and a maximum of $5,000. Similarly we’ll cap nightly price at $5,000 to remove outliers. This brings the number of listings to 95k.
How many Airbnb listings have no security deposit
Not all listings have a security deposit. Because the security deposit is optional and doesn’t provide much more protection than the host guarantee, many hosts choose not to have one. 47% of listings analyzed had a security deposit. 53% of Airbnb listings had no security deposit.
What is a typical security deposit
The average security deposit in the US is $430. However, as with cleaning fees we can check the skewness of the data by using a histogram. A histogram chart shows data grouped into ranges making it easier to visualize distribution. Below we can see the data skews to the right. Some expensive security deposits push the average up. In cases of skewed data, the median can better describe the data. The median is the number exactly in the middle of the data set. For this data set, the median security deposit is $250. We can use these two data points to make the following generalized statement. The typical Airbnb security deposit in the United States is between $250 and $430.
Key Takeaways
- The security deposit and host guarantee provide effectively the same protection for hosts
- 47% of Airbnb listings in the US have a security deposit
- The typical security deposit is between $250 – $430
