In this article, we explain how to create the Strategies for your Recipients. This way you will indicate the system how much money each person/entity involved in your Business needs to earn.
Tipically, Recipients could be:
The Rental Manager or Vacation Rental Agency
Cleaning Staff or External Cleaning Companies
Mantainence Companies / staff
*Consider Creating a Recipient dedicated to “Clients with Incidences or Damages”, leaving a blank setup strategy. And then when a damage occurs, you’ll assign the expense of it (that is an extra not stated in the booking reservation) to this Recipient’s Payout, and then balance it out by adding the “earning/cost to cover” of the damage to whomever Recipient shall earn it (typically the rental owner or the Agency/Manager).
To know more about Clients with Incidences check this article:
First, things to keep in mind before creating your Strategies:
A Recipient is a Person and/or Company that should earn money from any given reservation of any Rental managed within the account. You will need to create a Strategy for each one of them to indicate to the system how much each of them earns from the earnings of each of the Reservations/Fees/Services/Taxes.. This is a one time set-up only.
Typically, the revenue is split among different people/entities (Recipients), meaning that each Recipient will earn a different amount from the different concepts. These amounts/percentages will need to be indicated in the Strategy of each Recipient for the system to know which calculations to apply, and give you the split of Revenue in the Payments you will create.
As said before, in the Strategies you define how much money each of your Recipients earn. This is generally done with percentages, but can also be done with fixed amounts. This entirely depends on how your business operates.
The TOTAL amount of the Money Received from a reservation (after detracting OTA commissions) stands for 100% of the earnings from the booking.
Following the logic of the channel manager, the revenue generated for any booking is separated into different concepts: Rental Price, Services & Fees, and Taxes. Each of these concepts has its own total of 100%.
You cannot leave 5% without assigning to anyone, because then money will get “lost”. But, you also cannot assign (to all recipients together) more than 100%, because then the system will say that more money will be “paid” to the recipients than there has been received.
Note; We recommend you to start by creating the Strategy of you as a Manager or Rental Agency. Usually, this is THE Recipient that earns money from ALL reservations and Services from any Rental managed within the Account.
To best explain how to set up your Strategies, we will do it with the use of an example:
The Rental Agency charges 20% commission on the Rental Price (after detracting the Booking Channel’s Commissions) to its Rentals Owners.
The cleaning services are completely managed by the Rental Agency. (The cleaning costs are charged to the guests on top of the rental price and entirely paid to the Agency.)
Tourism/city Tax is managed and paid by the Rental Owner.
Taxes (VAT) are managed by the Rental Agency
Now, let’s create the strategy for the Rental Agency step by step using the example.
1. Rental Price.
As previously mentioned, the Rental Agency’s Strategy should be the Default one. This means it will be the ONLY Recipient with a “Percentage of XX amount” and “CAN Earn Money From Bookings (Rental Price)”. All the other Recipients need to have the Rental Price Strategy as follows: “CAN Earn Money From Bookings (Rental Price)”. You will choose the option of Percentage/Fixed amount and leave it on “0”.
In the case of the example, for the Strategy for the Rental Agency:
(Still within the Strategy of the Rental Agency)
If you earn a different percentage on just a few of your Rentals, you will add exceptions to the Rental Price Strategy by clicking on the “Add New Exception” button. You will select the Rentals that need a different amount and put the Commission Percentage/amount you charge on the reservations of these Rentals. See below:
Once done, the result should be similar to the following:
If you put in the “CANNOT earn Money from Bookings (Rental Price)”, you will not be able to add any Exceptions. This means that NO money can be earned at all from this section. This can be chosen when creating the Strategy for the Cleaning Company or Rental Owner, for example.
2. Fees & Services.
This section includes all fees and services as shown in the reservation. You should be able to see them in the Booking Breakdown of the reservations.
If you have fees that are not charged to the guest (and thus not shown in the details of the reservation) it should not be included in this section.
Here we work with keywords in order to be able to include ALL Fees and Services, even though they might have different names in the different Booking Channels (Airbnb-Booking.com etc), or are set up in different languages. This means that if your Cleaning Fee is detailed in different languages in your reservations, you will Add an Exception for each language used.
The languages are NOT related to the language you use in your Rental Ninja Account, but to the language in which you announce your Listing on the different Booking Channels, and to the language each guest is using the website when she/he books.
Most common Fees:
Tourism Tax (City Tax/Municipality Tax/Tasa Municipal/Tasa Turística/Taxe de Séjour)
Extra Guest Fee
To proceed with the setup of the Rental Manager/Agency’s Strategy, we advise you to assign 100% of the Fees to the Rental Agency as it is the Default Strategy. This way, you will make sure that no fees are left out if you ever add new Fees in the future, and that those, will be added to the Manager of the Rental Rental Ninja Account.
It is very important that you put the Tourism Tax in the Fees and Services as most Booking Channels consider these Taxes as “Fees”!
If you need to collect Check-in Fees, they will be covered in the Recurring Expenses section, as this is a Fee that is usually not charged (separately) to the guest and therefore cannot be “separated” in the Booking Breakdown.
According to the example above, 100% of the cleaning fees are managed by the Rental Agency.
In this case, you will put, in the Default of the Fees/Services Strategy: “CAN EARN Money from Fees” - Percentage 100%.
However, the Tourism Tax is managed and paid by the Rental Owner as said in the example. This means 100% of it goes to the Rental Owner.
In this case, as you will have set up the Default Strategy of the Rental Agency with 100% of the Fees assigned to them, you’ll need to create an EXCEPTION on the Strategy of the Rental Agency, setting a 0% on the Fees/Services that Contain the word “Tourism Tax” in the different languages you have the fee set up in.
As said, you will need to keep in mind the different languages in which your guests book their stays.
The result will be as follows (depending on the languages):
If you select “CANNOT earn Money from Fees”, you will not be able to add any Exceptions. This means that NO money can be earned at all from this section.
IF AFTER creating the Statements and Payments later on, something seems to be missing or numbers seem wrong, make sure to check the Fees in the Booking Breakdown (button you’ll find in every Statement) and compare it with the Payment documents to your Recipients. Make sure that all Fees and Taxes have been fully assigned to the corresponding Recipient/s and nothing is left out, duplicated or exceeds the 100%.
Most common error is that not all languages have been included in the Exceptions in Strategies within the “Fees and Services” section.
This section includes the Taxes you have set up in your Channel Manager/Platforms’ Set-up. With this we are referring to the VAT charges on your Rental Price only.
In the case of the example, the Taxes are managed by the Rental Agency. This means that, for the Strategy of the Agency’s Recipient, you will select: “CAN EARN Money from Taxes” at percentage 100%, see below:
For all the other Recipients, you will select the “CANNOT EARN Money from Taxes” option.
In most companies the Tax Section is not used, because no VAT is applied on the Rental Price. In most countries only the Fees and Services need to include VAT, but not the Rental Price. However, this depends on the location of your business.
On a side note, even if you do not charge Taxes (except for Tourism Tax = considered a Fee), we recommend that you leave it set up with the 100% “CAN EARN Money from Taxes” for the Rental Agency, just in case. For all the other Recipients, you can set it up as “CANNOT EARN Money from Taxes”.
4. Recurring Items.
Definition: Recurring Items are any items that need to be paid/received on a current basis. This can be set up either per Statement or per Booking. The value indicated in this section as an EXPENSE has to be NEGATIVE as it is a COST. All the other Items have to a POSITIVE amounts since they are recurring incomes.
Examples: Gardening Services - Netflix Subscriptions - Fixed Monthly Cleaning costs.
Keep in mind that when you create a Recurring Item, this is a cost/income for the Recipient that does NOT come directly from a reservation. Therefore, you will need to assign the exact same amount as a cost/income to another Recipient to balance it out.
In other words, all costs that are paid to someone, need to be received as an income for someone else. This way, no money gets “lost or left out”.
To explain this, let me give you another example.
Fixed Monthly Cleaning Costs for the Rental Agency. Let’s say they pay a fixed per Rental per Month of 200€ to the Cleaning Agency, and these cleanings are not related to the reservations directly, so there are also cleanings despite not having any Bookings.
In this case, you will do the following with the Strategies:
In the Strategy of the Rental Agency, add a Recurring Expense of -200€ as a Fixed per Statement.
In the Strategy of the Cleaning Agency add a Recurring Fee of 200€ as a Fixed per Statement.
The Check-in Fee of 20€ is paid by the Rental Owner, meaning it is not directly charged to the guest as a separate Fee so it’s NOT included in the Reservation/Booking Breakdown.
So, all in all, this Fee is earned by the Check-in Agent and paid by the Rental Owner.
In this case, you will do the following:
In the Strategy of the Rental Owner, add a Recurring Expense of -20€ as a Fixed per Booking (select the Rentals to which this applies).
In the Strategy of the Check-in Agent, add a Recurring Fee (or Rental Price element) of 20€ as a Fixed per Booking (select the Rentals to which this applies).
Done, you have created your Recipients!
Click here to access the step by step Tour in Rental Ninja on how to set up your Strategies.
Side note: As a Recipient can have already created Statements and Payments linked to them, for legal reasons it is not possible to delete a Recipient. This way no legal information will be lost.
Strategies allow a high level of customization. As said, you only need to set up the Strategies once. However, you can modify them at any time if needed.
Feel free to consult us on any strategy you want to apply depending on your business accounting.