Airbnb For Dummies book cover

Airbnb For Dummies

By: Symon He and James Svetec Published: 08-04-2020

Make extra money—and your guests extra happy—with Airbnb! 

You’ve got that spare tower, mansion, apartment, couch, or perhaps even treehouse (really—there are more than 2,400 treehouses listed on Airbnb). You’re a polite, clean, and tolerant host. And you want to make some money. Congratulations, you’re fully qualified to become part of the Airbnb revolution! Whether you’re looking to break into the business, or have already started and are researching ways of making your guests feel even more pampered as you grow your reputation and income, Airbnb for Dummies is the perfect venue for you. And this applies whether you currently own property or not! 

Sit back in your lounge recliner and let the owners and founders of Learnairbnb.com show you the ins and outs of the short-term rental boom that connects hosts with travelers looking for more economical and personal travel experiences across the world. Sip a refreshing drink as you learn how to manage the day-to-day—from maintaining listings to keeping things clean for your guests—and how to maximize and increase your profits.

  • Make an attractive listing
  • Perfect your pricing
  • Profit without a property
  • Create amazing guest experiences

So, get hold of a copy, read it in your favorite spot, and watch as the money and excited guests beat a path to your door!

Articles From Airbnb For Dummies

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Baseline Pricing for Your Airbnb

Article / Updated 03-17-2022

Determining a baseline pricing is finding the optimal amount you charge for your Airbnb listing under typical market conditions with average demand. Any adjustments you make to your pricing start from this baseline level. To establish the baseline pricing, you analyze comparable listings on Airbnb to create a pricing strategy that works for you. The following sections help you start pricing your listing so it’s competitive wherever you live. Study your competition: Gather comparable market data The best way to establish your baseline pricing is by looking at what your competition is charging in your market. You can think of your market as the tightest geographic radius that allows you to gather data for at least a dozen comparable and competitive listings. For example, in an ultrahigh-density urban market, this could be just a one block or even a minute walking radius. In the sparse country side, it could mean more than 10 miles or a 30-minute drive radius. In a typical suburban neighborhood, a safe starting point is three blocks or a 15-minute walking radius. You’ll need to adjust as needed for your specific area. Your competition includes the most similar Airbnb listings in your market — those similar in size (beds, bedrooms, bathrooms), amenities, and overall positioning in terms of pricing and target audience. For example, if your Airbnb listing is a one-bedroom unit targeting the budget-friendly traveler who doesn’t mind being a bit farther out from the main attractions, then your competition is similar, economy-focused one-bedroom Airbnb listings. However, if your Airbnb listing is a two-bedroom luxury condominium in a downtown luxury high-rise residence, your competition includes other two-bedroom luxury Airbnb listings. When studying the competition, gather at least a six (preferable a dozen or more) similar Airbnb listings and record the following information: Weekday rates: For each comparable Airbnb listing and hotel listing, collect the average weekday rates (Sundays to Thursdays) for four weeks, eight weeks, and 12 weeks into the future. Take the average of those five days for each of the three weeks for each comparable listing. Weekend rates: For each comparable Airbnb listing and hotel listing, collect the average weekend rates (Fridays and Saturdays only) for four weeks, eight weeks, and 12 weeks into the future. Take the average of those two days for each of the three weeks for each comparable listing. If you’re unable to find enough (at least six) comparable Airbnb listings in your market for your baseline pricing analysis, you can substitute with comparable hotel listings. For most Airbnb hosts, comparing to economy and midrange hotel offerings make the most sense. Identify the nearest two- and three-star hotels to your property and compare your studio or one-bedroom listing to their lowest priced offering. For larger properties of two- or three-bedrooms, compare to the lowest priced hotel suites. However, you may need to adjust your findings down by 15 to 30 percent because average hotel listings are often priced higher than their Airbnb counterparts in the same market. When you’re done collecting this information, you’ll have six data points for each of the listings you’ve identified for your comparison — three weekday averages and three weekend averages — resulting from 21 daily prices for each of the comps. Taking the average again of the average weekday and weekend rates for these similar listings gives you a good baseline pricing for your Airbnb listing in your market. The following figure shows an example with 12 comparable Airbnb listings and their corresponding data points for their weekday and weekend pricing. Tracking additional information for the comparable listings can help you understand the pricing dynamic in your market even better. Tracking additional information such as the listing URLs, property type, number of bedrooms, number of bedrooms, and number of bathrooms can assist you to fine-tune your baseline pricing analysis. Choose a baseline pricing strategy After you gather your data and have a baseline weekday and weekend pricing rate that you feel comfortable with, you need to figure out how to use that information. Here are three primary pricing strategies you can consider adopting to price your listing: Match market offering and charge less. If you intend to match the amenities and overall offering of your competition, you can gain an edge by charging slightly less than your competition. By offering the same amenities at a discount, you’ll be able to secure more bookings. Beat market offering and charge the same. If you intend to clearly beat the offering of your competition, you can gain an edge by charging the same overall pricing as your competition. By offering better amenities at the same price, you’ll also be able to secure more bookings. Make unique offering and charge premium. If your Airbnb listing offers something unique that guests value and the competition in your market can’t match, then you may be able to charge a premium. By offering something unique and valuable, you’ll be able to charge more than your competition. Depending on which strategy you find most fitting for your Airbnb listing, your baseline pricing will be lower than, about the same, or greater than the baseline pricing you found from the comparable listings. However, settling on your baseline pricing doesn’t mean you just set your pricing to these levels for the entire availability of your listing. At various times you want to purposely price lower or higher than your baseline pricing. We explore each of moments in the following discussions. Ramping Up to Baseline Pricing The first such scenario where you price differently from your baseline pricing is during your ramping-up period, typically the first two to four months after an Airbnb listing first goes live on the platform. During these first months on the platform, your objective is to build momentum for your listing as quickly as possible, not to maximize the profits of any individual bookings. To do so, get as many bookings and as many 5-star guest reviews as fast as possible. When a listing is fresh on the platform, it has no bookings and no reviews. All things equal, potential guests almost always book with listings that have more reviews than similar listings with no reviews. During your ramping-up period, follow this pricing schedule to build momentum for your listing: Start at 20 percent lower than your baseline pricing. Doing so underprices your listing relative to your competition right out of the gate. Wait for one week and check to see if your listing is mostly booked two weeks out. If mostly booked for the next two weeks, then stay the course until your listing is mostly booked four weeks out — aim for 80 percent plus occupancy. If not booked out, drop pricing by another 10 percent every week until you’re booked four weeks out. If more than four weeks are booked within the first week, then raise prices by 10 percent every week until you’re fully booked for the next four weeks or until reaching baseline pricing. After you reach the baseline pricing, sign up for third-party dynamic pricing software to monitor and adjust pricing going forward automatically. Be sure to note in your listing profile title and description that your listing is “NEW.” Doing so can help potential guests get comfortable with your lack of reviews and help them understand why your listing is priced so favorably versus competition — that it’s due to your newness and not some defect. Adjusting for seasonality When setting your pricing, sometimes you need to adjust for seasonality. Seasonality means the overall Airbnb demand — the occupancy and average nightly rates for Airbnb listings in the market — may be much higher or lower than their typical rates when travel is correspondingly much higher or lower than average. For example, Airbnb cabins by a popular ski resort may be booked almost every evening, even at much higher than average nightly rates during the high demand skiing season. However, these same cabins may have a hard time booking nights even at significantly discounted rates during low season when the snow has melted and far fewer guests want to spend their hot summer on these dry barren ski slopes. For some Airbnb markets with well-defined seasonal attractions, you can easily know whether there is seasonality in the market. But for many markets without obvious seasonal factors for travel demand, you can verify seasonality by obtaining the relevant market data for the prior 12 months (a full calendar year). The seasonality of your Airbnb market falls into one of these four categories: Flat seasonality: If the demand is the same all year around, then there is flat seasonality. In these rare markets, you can expect the occupancy and average nightly rates to stay about the same throughout the year. Often, flat seasonality is associated with low overall Airbnb travel demand for the market. High season only: If the demand spikes high for a part of the year but stays flat the rest of the year, then the seasonality is said to have a high season. In these markets, you can expect the occupancy and average nightly rates to spike higher only during the high season but stay relatively flat the rest of the time. Low season only: If the demand drops lower for a part of the year but stays flat the rest of the year, then the seasonality is said to have a low season. In these markets, you can expect the occupancy and average nightly rates to fall noticeably lower only during the low season but stay relatively flat the rest of the time. High low seasons: If the demand drops lower for a part of the year and spikes higher for a different part of the year compared to a middle level the rest of the year, then the seasonality has both a high and low season. In these markets, you can expect occupancy and average night rates both to drop during low season and spike during high season. The following figure shows what each of these four seasonality scenarios may look like if you plotted the average occupancy rates in these markets by month where 100 represents the annualized average occupancy rate. When you obtain the market data for a full calendar year for your market, you can notice that the average occupancy or nightly rates in your market will look like one of these scenarios. Fig. A shows a flat seasonality market, Fig. B a high season only seasonality market, Fig. C a low season only seasonality market, and Fig. D a high and low seasonality market. For all examples, the average occupancy rate during normal season is at 70 percent.

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Airbnb For Dummies Cheat Sheet

Cheat Sheet / Updated 02-25-2022

Becoming an Airbnb host can sometimes feel overwhelming with too much to do and too little time to do everything. But you don’t need to do everything all at once or at all to succeed. Often, in the mist of the mad dash to launch their listings and take on guests, new Airbnb hosts forget to take care of the basics. Focus on getting the basics right and you’ll be well on your way to Airbnb hosting success.

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10 Ways to Increase Your Airbnb Revenue

Article / Updated 12-23-2021

If you’re already putting in the time and energy to hosting on Airbnb, why not get the most from your hosting efforts? This list has ten strategies that have helped hosts to earn more while hosting. Put your best listing forward Most new hosts who complain about not earning as much as they want have low hanging fruits with their property listing, which can include having photos taken from their phones from the wrong angles with poor lighting at the wrong time of day. Or they have poorly written descriptions and boring titles. Unless you have the best listing profile you can have for your property, you won’t come close to earning your full potential as a host. Ask guests to leave reviews Although Airbnb will send an email to guests, reminding them to leave a review after their check-outs, hosts who reach out to guests with a friendly reminder will get more guest reviews. Having more reviews, especially from happy guests raving about their wonderful stays, will lead to more bookings and profits by making your Airbnb listing more appealing to future guests. However, asking for more reviews when you’re not meeting guest expectations consistently is just asking for trouble. Tailor amenities to your audience Understanding who your guests are can help you better cater to their specific needs. For instance, business travelers have very different needs than families with young children. Pay attention to the type of guests who stay at your listing and look for ways to add relevant amenities. For example, having family-friendly games can help attract family travelers while having a dedicated work station can appeal to the business travelers. The more you can make your listing an easy decision for your target traveler audience, the more bookings you’ll get. Offer add-on goods and services After your guests book with you, you’ll have a captured audience during the length of their stay. Why do hotels offer minibars? Some guests want to drink. You can do the same by offering a menu of extras like alcohol or breakfast to earn extra income. Hosts can also provide services like pickup and drop-off, guided tours, home-cooked meals, or equipment rental to increase earning potential. Use appropriate pricing Charge too much and you risk having more unoccupied nights. Charge too little and you miss out on profits you could have earned from guests who already chose your listing. Figuring out the right price to charge for your listing for any given night requires that you account for many factors that affect pricing, including your competitors’ pricing and availability, seasonality, and special events. Successful hosts understand they can’t do that manually and instead use a third-party pricing tool to set the ideal pricing for your listing automatically. Host more listings You can earn only so much from a single listing. After you’ve reached maximum occupancy charging the highest rates your market can support, there is little you can do to increase your earnings from that listing. But add another listing or two, and you can quickly grow your earnings on Airbnb. One of the best ways to do that is to offer your hosting services to a property owner who doesn’t want to host themselves. Doing so creates a win-win — hands-off profits for the owners and more earnings for you as a host without having the risk of buying or leasing another property. List an Airbnb experience Renting a property is not the only way to earn money on Airbnb. A recent but fast-growing opportunity on the platform is for hosts to list an activity rather than a property. Hosting an Experience over a property has many benefits and can help you grow your earnings substantially on the platform. Think long term Would you take $10 more now to lose $100 later? Probably not. Yet many new hosts make a similar trade-off by taking small short-term gains for bigger long-term losses. Yes, providing an extra supply of incidentals will mean higher costs per stay as guests use more of those items, but this small investment now prevents negative guest reviews that later lead to long-term losses from lost bookings. Similarly, hosts in hot or cold areas where energy costs can be very high for extended air conditioning or heater usage, can earn more in the long term by investing in solar panels that cut energy costs to zero while potentially adding value to their property. Although Airbnb is by far the most prominent example of the growth of sharing economy, it isn’t the only model. If you find that your listing isn’t getting enough bookings on Airbnb, you can look at alternatives like VRBO, HomeAway, FlipKey, and Bookings.com to just name a few. Putting your listing on multiple platforms requires the use of vacation rental management tools to help you manage the multiple listings and calendars to avoid double bookings and scheduling confusion. These tools can be costly so the option isn’t ideal for properties in low demand markets. Rent something else If you search online, you’ll quickly find Airbnb-like platforms targeting some other underutilized asset. Have a rarely used car you can rent? There’s an Airbnb for cars. A boat, backyard, garage, tools, gear, office, you name it. There’s an Airbnb for whatever that is. Some platforms could complement your hosting operation while others are an entirely separate operation. Avoid catastrophic losses Getting a huge fine from the city or having to make a costly replacement due to damage can wipe out an entire year’s worth of earnings. To avoid potential big losses, be sure to check and comply with local laws, keep all receipts and documentation if you need to make an insurance claim, and make timely repairs of all safety-related issues to limit liability risk. If you have assets greater than one million dollars, you should purchase additional insurance coverage on top of Airbnb’s insurance policy.

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10 Tips for Being a Better Airbnb Host

Article / Updated 12-23-2021

Even though both launching and maintaining a successful Airbnb listing takes planning and effort, as a host, doing some simple things can help you earn more, stress less, or both. Here are ten helpful tips for happy hosting. Research your market before hosting Smart hosts research their market before hosting to know exactly what to expect in their market. Some would-be hosts choose not to become Airbnb hosts after finding out that a traditional rental of their unit would perform better. Become a guest first The best hosts know what it’s like to be guests first. So, before you jump into hosting with both feet, book your stays on Airbnb for your next trips. Experience the entire process from start to finish as a guest — from searching on the platform and booking to checking in and checking out. Note all the moments you felt confused, irritated, relaxed, or elated. These moments can point to both things to replicate or avoid in your practice as a host. Even better, enjoy a few “staycations” by booking reservations at existing local listings in your city. Invite but never impose Guests traveling from different places come stay at your listing for different reasons. Some come to relax. Some want to meet and hang out with strangers. Some want quiet time. Never assume you know the preference of any guests unless they tell you explicitly. For example, if you’re hosting a dinner party with friends and family and want to extend an invitation to your guests, make sure they know it’s an open invitation with zero expectations. Come if they want. If not, no biggie. The more you host, the more you’ll develop intuition for how and whether to extend invitations with each specific guest. Offer more than promised Promise the stars and deliver the moon? Disappointment. Successful hosts who wow their guests consistently know to properly manage expectations with their listing profile and their communications with potential guests. This means having great but honest photos and descriptions and then offering little but unexpected extras for the guests. Offering killer home-baked cookies? A bottle of wine from a local vineyard? Fresh roasted coffee beans from a local roastery? Let your guests discover them as surprises when they arrive. Touch base with your guests regularly For every guest who reached out to you directly with a question or complaint, there probably were a few more with the same question or complaint who didn’t reach out to you. Some people are shy. Some don’t want to feel bothersome. Send a short and inviting message to your guests like, “Good morning! Just wanted to see if you had any questions or requests. Call/text me anytime. Here for you,” the day after check-in and at least once every three days. Doing so lets the guests know it’s more than okay to reach out to you if they need something. Use tiny helpful labels Checking into a stranger’s home after a long day of travel, many guests will want to settle in and relax before the next day’s adventures. But that can be tough if they don’t even know which switch works for which light or if they have to open all the cabinets just to find the extra trash bags. One simple way to show your guests you’re thinking of them is to place small but conspicuous labels next to switches, cabinets, drawers, or doors in the house. Keep these small and visible only up close so they don’t show up on normal photos. Use a color scheme and a font that fits your overall decor, and they will look as intentional as they are useful. Always have extra supply Not having an extra supply of essentials like toilet paper, paper towels, soap, and all linens will ruin an otherwise great Airbnb experience for your guests. No one will enjoy having to make a trip out to the local store to get toilet paper because the host provided only a starter roll. Being penny-wise and pound foolish may save you a few bucks in the short run, but unhappy guests will leave you scathing reviews that cost you bookings in the long run. Keep the extra supply out of sight to encourage more frugal use of supplies and provide it to guests happily when asked. Use action shots in your photos Showing guests what they could be doing in your listing is much better than telling. Yes, well-composed photos help, but putting people in some of the photos enjoying the space or showing the action will make for a more compelling pitch and result in more bookings. Have a hot tub in the backyard overlooking a picturesque sunset? Put a couple of friends in there and silhouette them against that sunset. Have a firepit in the back ideal for making marshmallow s’more sandwiches? Show the marshmallows roasting on the open fire. Have a billiards table for guests to enjoy? Don’t show an empty table but take a photo with the blurry moving cue ball just about to collide with another ball. Disclose and highlight potential negatives up front Getting long-term success for your listing is as much about avoiding the wrong kind of guests as it is attracting as many guests as possible. Have an extra friendly cat that likes to greet guests? Talk about Waffles and his nosy manners in the descriptions and add a photo. Yes, doing so will turn off many guests who don’t want to share their stay with a cat, however friendly. But it also will make your listing more appealing to guests who love cats. Honest disclosure enables you to both attract the right guests who would appreciate the listing as it is and discourage those who wouldn’t enjoy it from booking in the first place. Measure return on time Could earning more from your listing ever hurt? Yes, if it means having to put in a disproportionate amount of extra work. Would you rather earn $1,000 a month from two guest stays or $1,200 from 15 guest stays? Many will choose the more relaxed two guest stay with far less turnover work. As you host, instead of only seeking ways to squeeze every dollar out of your listing, look instead on how you can free up your time by using automation tools to simplify pricing and communications or using smart locks to eliminate time-consuming in-person check-ins. Sometimes, profit per hour of input is more important than total profits.

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What to Do After Airbnb Guests Leave

Article / Updated 12-23-2021

After your guest checks out, your work as their Airbnb host still isn’t complete. The hours and days afterward are an opportunity for you to put the finishing touches to a successful reservation. After checkout is a great time to follow up with your guests and provide some incentives to encourage potential future bookings. You should also check the condition of your property, especially if you suspect any potential for damage or theft. Assessing the state of your property Whether you’re doing the turnover yourself or hiring a cleaner to do it for you, make sure you or the cleaner accesses the state of your property after your guest checks out. A simple checklist to account for the both the presence and condition of all major appliances and furniture will do. Filing a claim with Airbnb If you find damage or missing items, take good photos for documentation and file a claim with Airbnb against the security deposit and/or Airbnb Host Guarantee right away. Include any written communications between you and the guest that corroborates or supports your claim, especially for any retaliatory damages. You have until your next guest check-in or up to 14 days to file a claim, whichever occurs sooner. In most cases, your window for filing a claim is just the few hours from the prior guest’s checkout to the next guest’s check-in, typically between 11 a.m. and 4 p.m., making it a smart move for you to assess your property during each turnover. After your next guest checks in, you can’t make a successful claim because the damage or theft could now be due to the next guest. For minor claims that can be made on the security deposit, you can follow these steps: Go to www.airbnb.com/resolutions. Click on “Request money.” Select the appropriate reservation to make your claim. From the “Select a reason” options, chose “Request compensation for damages.” Click on “Continue.” Type in details of specific damages or reasons for the claim and requested compensation amount. Submit to complete your request. Your guest will have 72 hours to accept your request, which would then be paid out to you in approximately five to seven business days. However, if your guest doesn’t respond or refuses to accept within 72 hours, you can log back into your Airbnb account, go to the Resolution Center, and choose the “Involve Airbnb” option to bring Airbnb in to help resolve the claim. Airbnb may ask for additional information, such as receipts or proof of the condition of the damaged item prior to the reservation in question, which you must provide within 72 hours. According to Airbnb, most claims on security deposits are resolved within a week. Following up with your guests With guests receiving so many notifications from just about everywhere, many hosts are hesitant to add one more message to their guests’ inboxes. But sending a follow-up thank you note can make the all the difference for your performance. Send a thank you note within 12 to 24 hours after their checkout and include these three important items: Expressing sincere appreciation Share your sincere appreciation with your guests for choosing to stay with you. They could have chosen any other Airbnb listing in your area, but they chose to stay with you. Thank them for being great guests if they left your property in good condition and were otherwise pleasant for you to host. Not only will this prime your guests to be in a better mood when reading your note, it may also encourage them to look back at their stay through a more positive lens. Asking your guests for a review From our own survey of hosts, the percentage of their guests that leave reviews can range from as low as 30 percent to as high as 100 percent. Even though Airbnb now automatically sends emails to remind guests to leave reviews after checkout, these messages can get lost in their inboxes or guests may simply ignore them. Asking your guests to consider leaving you a review can drastically increase the percentage of your guests who end up leaving reviews. Asking is especially crucial if your listing is new with little to no reviews. Notify your guests that you’re quite new to hosting and that every review helps tremendously. Guests who’ve otherwise enjoyed their stay with you are typically eager to oblige. In addition, Airbnb has many requirements when evaluating a host for Superhost status. One is that at least 50 percent of the guests who stay with the host end up leaving a review. By not asking your guests to leave a review, you risk falling below on this metric right from the start. Providing incentives for future stays A good way to end your thank you note to your guests is to offer them an incentive to book a future stay with you. Many hosts offer a discount of 5 to 15 percent to former guests and their family and friends. The sample note above hits on all three points: expressing sincere appreciation, asking for reviews, and offering value. Use the template to create your own. For guests traveling to visit family for on an annual trip, they may well take you up on the offer. During low season periods, getting referrals can help you fill up some nights that otherwise would stay vacant. Blocking out a day or two before and after reservations for preparation time In rare situations, you may need to block a day or two in between reservations to have enough time to turn around and prepare the property for the next guests. Consider blocking off a day or two before and after each reservation if your property needs extra time for a proper turnaround. For example, if you have a listing within a large building and many amenities on a vast property where you and your cleaners require more than four to five hours to properly clean and turn, add the extra day or two in between reservations. If you’re not seeking to maximize your profits and would prefer a more relaxed hosting experience, adding the extra day or two between reservations reduces the hectic chaos that could ensue for same-day turnarounds. However, adding this extra buffer means giving up those days of potential revenue because you’d be blocking those days off with each reservation that comes through. If your typical reservation lengths are short, say on average three days, then blocking off one day before and after takes your available days for booking down by 25 percent. The impact is less severe if your guests typically book long stays, such as losing a day or two for a three-week average stay length. To block off one of two days between reservations, follow these steps: Log into your Airbnb account. Select “Availability settings” from your Calendar Select the dropdown menu under the “Preparation time” label with the coffee cup icon Select either “Block 1 night before and after each reservation” or “Block 2 nights before and after each reservation.” Select Save. Choose the one-day option first to see if that’s enough time for you. You don’t need to block off more days than necessary unless you prefer the extra break between guests.

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Research Your Airbnb Market: Earning Statistics

Article / Updated 12-23-2021

The best way to estimate your profit potential on Airbnb is to find out what similar listings in your neighborhood are already earning on the platform. But how do you find out? You gather performance statistics — the occupancy rates and nightly rates—for existing listings in your market with which you’ll be competing. Picture yourself running a nice one-bedroom Airbnb listing in your city. After all the operating expenses that include supplies, utilities, and cleaning, say you’re able to pocket a tidy $1,000 per month in profits. Should you be happy with your performance? Are you doing well as a host? What if we told you that the other one-bedroom Airbnb listings in your market are making only $500 per month in profits on average? That would mean you’re earning twice as much as your competition! You should feel good about that because that means you’re executing well as an Airbnb host. But what if, instead, your competition is earning $3,000 per month in profits on average? You wouldn’t be feeling too good about that information. If hosts with similar listings in the same market are earning three times as much as you are, you’re doing some things wrong as a host. In the early years, you would have to gather and estimate these statistics manually, a painfully laborious and inaccurate exercise that took hours to complete only to be outdated immediately. However, the growth and maturation of short-term rental data providers in recent years have provided fast, accurate, and up-to-date statistics to aspiring hosts for a nominal starting at just $20 to access local market reports. Some providers offer free limited reports or free trials occasionally, so make sure to search the web for a recent offer before making a purchase. Get the free reports and trials to see which one you like and then get a one-month subscription for full access to the market data in your market. You can’t get the statistics on your own, and even if you tried, doing so would take you many painful hours to days to put together an inaccurate data set. Don’t waste your time! You can always cancel your subscription after the first month. However, we recommend ordering the reports at least once a year to keep a pulse on your market and to gauge how your listing is faring against your competition in the market. You need to look beyond the published asking nightly rates of similar properties on Airbnb — just because a few listings ask for $250 per night doesn’t mean guests are paying that much, nor does it mean that these listings are able to fill their availabilities at this rate. And what the performance is like during one part of the calendar may look entirely different during other parts of the calendar. So, in addition to understanding the nightly rates, you need to look at other market metrics and considerations to access your profit potential accurately. Finding the crucial market statistics Regardless of which data provider you ultimately go with, you want to pay attention to a few key statistics when assessing the viability of hosting your property in your market. Here are the statistics to get and why pay attention to each: Daily rates: The best way to know what you’ll be able to charge is to find out what identical or similar listings in your market can currently charge guests. Although obtaining market averages is better than having nothing, getting a range of daily rates is more useful because a few very high performing or very low performing listings can artificially inflate or deflate the average figures in the market. For example, AirDNA market reports will also give you the 25th, 50th, 75th, and 90th percentile figures. Most hosts should use the 50th percentile figure (median) for their initial estimate unless they have reason to place their listing as more or less attractive than competitors to use the 75th or 25th percentile figures instead. The chart above shows the average monthly rental revenue for one-bedroom listings in a select city in Los Angeles, shown at the 25th, 50th, 75th, and 90th percentiles. For example, to achieve rental revenue rates at the 90th percentile line, your listing would need to be among the top 10 percent of listings in the market. Occupancy rates: Occupancy rates are the percentage of available nights that are booked. For example, an Airbnb listing that is made available for rental for 100 days out of the year and is booked 65 days has an occupancy rate of 65 percent (65 divided by 100). Just knowing the daily occupancy rate isn’t enough if you don’t know how many nights are being booked in the market. Similarly, obtaining a range of occupancy rates rather than just an average is more useful. Take an honest assessment of your listing compared to the existing listings on the platform that are your competitors. Compare your listing to this entire set of direct competitor listings, ideally at least ten. Is your listing in a more attractive location versus the others? Does your listing look newer, more modern, or luxurious? Does your listing have more appealing amenities? Where does your listing place among this set? For an older property farther away from points of interest than competition, you may need to use the 25th percentile figure for your estimate because your listing will likely attract fewer guests. Alternatively, for an attractive new listing located immediately adjacent to the top performing listings in the market, you may use the 75th or 90th percentile figures instead because you can reasonably expect similar levels of performance to the top performers. Rental revenue: The top data providers will calculate the rental revenue figures for you and often present them in the same way they’ve presented the daily rates and occupancy rates data. Again, looking at the range is more helpful than the simple average. Brace yourself when you look at these figures the first time because many prospective hosts often have mismatched expectations from reality. For example, a prospective host whose expectations are colored by the news articles covering the new breed of six figure Airbnb hosts might be sorely disappointed to discover he’ll likely earn far less than six figures in his market. Better to know the truth early even if disappointing than to find out later after investing significant time and resources. Although getting annualized figures are useful to understanding where your average daily rates, occupancy rates, and annual rental revenues may fall, you’ll want to look at the monthly figures as well for the prior 12 months. Why? Some markets may have pronounced seasonality where the demand is much higher or lower during some months than others. Having this knowledge can better help you prepare for both the high and low travel seasons in your market. Understanding the market deeper Each data provider will provide the three basic statistics for their users that we mention in the previous section. However, to stand out from their competition and to further entice their potential customers to choose them over others, the top listing data providers offer many additional statistics about the market. Here are some other useful things you may find: Market mix: The market mix is basically a relative ratio of different types of Airbnb listings in a given market. For example, the market mix for Airbnb listings by a large lake may skew toward cabins whereas in a downtown urban market it may skew toward one- and two-bedroom apartments. This information lets you determine what the current composition of active Airbnb listings is, including whether more studio and one-bedroom units are being reserved compared to larger units with three or more bedrooms. Knowing the respective performance of the different subsets of listings can tell you what the travelers to this market are demanding. For example, if the top performing listings are all private room and studio listings whereas the few large big house listings are mostly unoccupied, you may want to explore turning your five-bedroom house into multiple private room listings instead — you can’t rent what people don’t want. Long-term trends: Understanding recent statistics tell you where the market is today, but those stats doesn’t tell you how the market got where it is. Is the market growing or shrinking? Only by looking at several years of data can you spot this trend. With Airbnb increasing in popularity, more listings are coming online in more markets. However, in some markets, the influx of supply without a complementary growth in demand means more hosts competing for the same number of guests, leading to higher competition, lower pricing and occupancy, and ultimately lower profits for hosts. Amenities statistics: To understand how your property stacks up against your competition you need to know what your competition is offering. By looking at the amenities that everyone else provides and what only the top performing listings offer, you can determine exactly what amenities you need to compete and what you can aim to have to stand out. Future statistics: Some data providers have a direct data feed of hundreds of thousands of listings that allow them to know future occupancy and rates of competing listings. With this information you can price your future available dates to remain competitive. Top listings: Being able to see the performance of the top listings in your market based on actual performance data provides a target to aim your performance. With this information you can scrutinize every aspect of these top listings from their photos and title to their descriptions, pricing, and policies. You can’t emulate the best without first being able to identify the best. Rating statistics: How guest ratings are distributed across property types and among your direct competitors can tell you how competitive your market is. The higher the ratings for existing hosts, the more competitive the market and the less margin for you to make hosting errors with your guests. Granular seasonality: Even though monthly figures help you spot broad seasonality trends in your market during the calendar year, having access to market performance for each day can help you spot and prepare for unusual spikes in travel demand. For example, an annual conference that brings in thousands of travelers can lead to overbooking during those specific dates. Refer to the figure for an example to see the full year seasonality for a market. In some markets, Airbnb travel demand is seasonal and varies significantly depending on the month of year. In addition, certain recurring special events can also create unusually high demand during specific days of the year. Knowing when they occur and how much impact they have on demand allows you, the host, to price your listings appropriately. Traditional rental statistics: For investors who wish to purchase property for renting them on a short-term basis on Airbnb, comparing the traditional rental market statistics in that market to short-term rental statistics is crucial to making a sound investment decision. Other statistics: If it’s an attribute you must decide on for your listing, chances are the data providers are tracking and sharing the results to their users. This information includes how others are handling minimum stays, security deposits, cleaning fee rates, cancellation policies, and more. From our experience and those of our readers and students, hosts in different cities and countries find different data providers to be more or less accurate for them individually, so it’s worth first exploring several options to see which will work best for you.

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10 Best Purchases for Airbnb Hosts

Article / Updated 05-12-2021

We asked the thousands of hosts through our blog and online courses, “What was the best purchase you’ve made as an Airbnb host?” Some were obvious, and some were surprising. Here are ten that you should consider when hosting on Airbnb. Futon couch or sofa bed If you have enough space for a traditional couch, you’ll likely have enough space for a sofa bed or futon couch instead, which increases your Airbnb listing’s occupancy capacity to sleep an additional guest and permanently increase your earning potential. Be sure to provide a quality set of pillows, linens, and a bed topper to improve the comfort of these notoriously uncomfortable sleeping options. Don’t overdo it by adding a sofa bed in every common area or turning every bed into a bunk bed just to add capacity. Local fire codes still apply. Be sure to check with your city to determine the maximum allowable occupancy for your listing. Floor mats for every entrance For those hosting near the beach or the outdoors, guests can bring in a lot of sand and dirt, making for a longer and more difficult cleaning during turnarounds. Just by having floor mats at every entrance can encourage guests to wipe their shoes before entering. Adding fun messages like “Please wipe paws before entering” with paw prints can serve as gentle reminders for the guests. Shoe racks To decrease the amount of dirt and grime from getting inside the house and on the furniture, invest in a shoe rack for guests. A conspicuously placed shoe rack inside the main entrance offers an easy and accessible way for guests to take off and store their dirty shoes. Put another one in the backyard or offer slippers and sandals guests can use outside. Universal phone chargers for every room Assume your guests will travel with their smart phones and devices. Most will bring their own chargers, but many will occasionally forget to pack them. To save your guests the hassle and headache of going to a store, keep a set of universal all-in-one charger and cable in each bedroom available for guests to use. Even if they do bring their own cables, the extra option comes in handy when charging multiple devices at the same time. An alternative is to include USB plug adapters in each room, allowing for easy USB usage in addition to being a regular plugin. If you’re in a location that attracts a good number of international guests, we also suggest you invest in an international converter plug. Large capacity appliances If you must buy a new dishwasher or washer and dryer combo anyway, opt for the largest capacity unit you can afford and that can fit in your unit. The one-time extra cost more than pays for the continuous savings in fewer loads and washes, resulting in lower utility bills and faster, less stressful turnaround times between guests. Storage lockers with locks Flights can get delayed. Rides can get stuck in traffic. Plans can change. As you host more guests, you’ll receive requests from guests to check in earlier or check out later. Accommodating the requests can lead to rushed turnarounds, but simply refusing when guests are in need can lead to a bad start or ending to their stay. Having storage lockers that are large enough to stow large luggage bags paired with combination locks can fix the problem; it allows guests to put their luggage in a safe place while they move about town before the unit is ready or before they need to head to the airport for their delayed flight. If you are a host who resides on the property or nearby, you can offer to keep the luggage until the guests can pick it up later that day. High quality mattress and linens Investing a little extra upfront on a comfortable mattress and the softer, higher thread count bedsheets and pillow cases can lead to better sleep experiences for the guests. Well-rested guests equal happy guests. And happy guests mean happy guest ratings. Scroll through the raving reviews from the most popular listings or the scathing reviews of the struggling listings in any city to read about a “super comfy bed” or “the worst sleep ever.” Smart locks Most guests prefer the ease of checking in themselves whenever they show up, whether at the designated check-in time or late in the evening. One of the best ways to do is by using a smart lock that allows the host to remotely change the access codes, for example, to the last four digits of the guest’s phone number. It’s more convenient and less stressful for both host and guest. Automation tools Hosting a profitable listing on Airbnb doesn’t work with a “set it and forget it” strategy. It requires continuous monitoring and updating of prices and availability for your listing and timely communications with potential guests. Even though you can do this manually, you’ll get better results with less stress by using automation tools to automate your pricing, most of your guest communications, and scheduling. Explore the many choices available, test some out through free trials, and then choose one. The small nominal fee often pays back many folds. Better coffee options Many guests enjoy coffee, and although most hosts now provide some options to make coffee, most aren’t taking advantage of an easy way to wow their guests. Instead of just providing a coffee pot and stale store-bought pre-ground coffee beans, provide some alternatives like whole roasted beans with a hand grinder for a pour over or a French press to show the coffee-addicted guests you’re looking out for them. Be sure to showcase it in your descriptions and photos. All things equal, the coffee-drinking travelers will choose your listing over your competition for better coffee. Not all guests are coffee aficionados. For the tea lovers, keep a couple of options available in case they want a cup. Another favorite to have on hand are hot chocolate options.

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Communicating Check-In Information with Airbnb Guests

Article / Updated 05-12-2021

To create a smooth and seamless check-in for your Airbnb guests, you must first understand what guests want and don’t want to experience during their check-ins. Only then can you make the necessary preparations for a smooth and painless check-in for all of your guests. Just as you were responsive and timely in your communications with prospective guests before they made their bookings, you must communicate with your guests after they book and before they check in. In this section, we discuss the ins and outs of communicating check-in details with your guests. Sending messages to guests before check-in A common mistake we see rookie hosts make is sending too much information too soon. No guest wants to read a whole essay in your booking confirmation message, especially if they’re weeks or months from their trip. Keep it on a need-to-know basis in the booking confirmation message. Aside from responding to questions from guests before their arrival, here are the two messages that you must send to all guests and what to include in each: Welcome message Send a warm welcoming message to all your guests after they complete a booking with you to thank them and confirm their reservation with you. Because guests are often booking their trips weeks in advance, you don’t need to share too much information at this point. Here’s the formula for a solid welcome message: Keep it casual. Start with a “Hi” or “Hey” instead of a cold and informal greeting like “To Whom It May Concern.” Guests choosing to book their stays on Airbnb instead of hotels are seeking a more relaxed and casual stay experience. Thank them for choosing you. Show a little appreciation to your guests. They didn’t have to book with you. They could have chosen any of the other alternatives in your area. Tell them what you’ll tell them: Even though Airbnb has many more repeat travelers, the platform is still adding many new travelers who are booking their first Airbnb stay and don’t know what to expect. With your welcome message, you can tell them. Let them know you’ll send important check-in instructions and other details when it’s closer to their arrival. Welcome questions: By letting them know that they can reach out to you in the meantime if they have questions, you’ll help reduce potential anxiety, particularly if they’re new to Airbnb. The following figure is a simple template for the welcome message you can send to all of your guests. Note that you don’t need to follow it verbatim. Adjust as necessary to fit your personality and tone. Just keep it short and simple. Check-in instructions message The message you send with the check-in instructions is the most important message you send to your guests. Done correctly, it can prevent many headaches for you and your guests. Done poorly, it can create unnecessary stress for you and your guests. Share check-in information prior to your guests departing for their travels — so, typically, the day before check-in. Some Airbnb hosts choose to send check-in information to guests the morning of check-in to avoid the rare scenario of having unwanted early arrivals while another guest is still in the unit. But sending check-in information the day of just causes unnecessary stress and anxiety for their guests. For example, international travelers may not have data access until arrival and thus will worry about checking in during their travels. Eliminate their stress by getting the information to them before their departures. However, for hosts remotely resetting access codes for each guest using smart locks or those who change their lockbox combinations between each guest, they can and should send check-in information 48 hours before check-in. Doing so gives guests, especially international travelers, ample time to process the information and plan accordingly before their hectic travels. Here are the minimum details to include in your check-in instructions message: Confirmation of booking details: Your guests may have multiple future Airbnb reservations so reminding them of the date and address of their reservation is useful. Check-in time: Include the time and a short message on why you can’t accommodate early check-ins if they’ve requested one. Directions to your property: Include detailed instructions to your property from airports, train stations, or other transit stops. Include any special instructions for parts of the commute that could confuse most guests or their drivers. Parking instructions: Even if you have obvious parking options on premises, lay out the instructions in your message. For anything else, be as specific as possible with location, payment, and restrictions if any. Check-in instructions: Here, include all relevant details and steps guests needed to gain access to your property. Start from where they’ll park their car or get dropped off. Wi-Fi details: Include them here and let your guests know they can access it outside if needed. Include network name and password that matches your Airbnb listing title. For example, instead of using generic network names that come with the router, such as “LinkSys1283,” you can have “Jane’s Downtown City Loft.” Your contact information: Include both an email address that you check frequently and a direct phone number that your guests can text. Additional questions: We recommend asking guests for their flight number and their intended check-in time, especially for hosts doing in-person check-ins; this info allows you to check if their flight is delayed and to avoid finding yourself waiting for your guests to arrive while they’re stuck on a delayed flight unable to notify you. The following figure is a check-in instructions message template you can use as a starting point for yours. Replace sample information with yours and adjust as necessary. As an added resource for our readers, we provide additional templates for other common messages you should prepare in advance. Go to our online resources page at learnbnb.com to locate the message templates you can download and adjust to your needs. Preventing potential issues before check-in To best identify potential issues that may arise before your guests check in, ask yourself, “What hurdles can I eliminate or minimize to help my guest get from the airport (or from wherever they’re coming) to my door and into my unit?” Thinking of everything possible can help you anticipate and mitigate potential issues for your guests. Here are some common issues that frequently frustrate Airbnb travelers before their check-in and what you can do as their host to help: Going off the wrong address: Although rare, but it does happen. For hosts who manage multiple listings in the same area with similar addresses, they can easily mix things up in their communications with guests. Double-check the full address before sending it in any guest messages. Navigation maps to wrong location: A bad way to start off with your guests is for them to arrive at the location on the map using the address you provided, only to discover they’re not at the right location. Many navigation tools rely on Google Maps, so ensuring that Google has correctly marked your property on its maps can prevent this problem for practically all guests. Search your address on Google Maps and check that the red map marker is in the right location. If the red marker is marking your property at a different location instead, find the “Report a problem on [YOUR ADDRESS]” option on the screen and report the issue to have it fixed. Difficulty in finding the property: Guests can be frustrated thinking they can finally check in and relax after their long day of travel to find themselves lugging heavy bags around unable to find their Airbnb instead. If your property isn’t immediately visible upon parking or a taxi drop-off, provide detailed instructions for your guests. Unclear building instructions: If your property is in a multi-floor building, provide specific details to avoid any confusion due to different floor conventions used around the world. For example, in North America, the ground floor is the first floor whereas in Europe, the ground floor is floor level zero. Provide information such as, “After entering the main door, go up two flights of stairs and then turn left.” Unexpected road closures: Whether because of weather, construction, or even a parade, road, or public transit closures near the property or anywhere that affects their commute to the property could cause stressful delays. If you know of any closures or delays in advance, be sure to notify your guests and recommend alternative routes or solutions in the check-in instructions message so they can plan accordingly. Access code or keys not working: Even though we recommend that you use smart locks to simplify the check-in process, technology can malfunction. Having a backup solution is crucial in preventing an angry guest during check-in. Keep a spare manual key with a trusted neighbor or in a nearby lockbox that you can have the guest access. Along with the spare key, include a small token of apology for their inconvenience, such as a $10 Starbucks card. Unable to reach the host: Having trouble checking in is frustrating enough. Not being able to reach the host on top of having trouble checking in is a recipe for an angry guest and a low rating. Be sure you don’t accidentally set your phone on silent that day, but especially in the three hours before and after their scheduled check-in when issues are most likely to arise. Putting in the extra effort to help your guests from the moment they arrive in your city or town until they get inside your property can help them avoid unnecessary headaches before they check-in. Frequent travelers will notice and appreciate your effort.

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The Fundamentals of Airbnb Guest Satisfaction

Article / Updated 05-12-2021

The secret to receiving consistent 5-star guest ratings from happy guests on Airbnb is simple. Set proper guest expectations and then exceed them during their actual stay. Yes, we realize the concept may be simple to understand but it’s sometimes challenging to execute with consistency. Recognizing the factors that can affect guest satisfaction Many factors can help guests form their expectations of your property and you as the host — from the moment when your Airbnb listing catches their eye in the search results all the way to when they confirm and pay to secure the booking with you. The following factors help set guest expectations: Listing photos: By far the photos are the most important factor in setting guest expectations. Many guests often make a reservation based purely on what they see in your photos. Show what you can deliver consistently. Listing description: Even though not all guests will read your entire description, let alone remember the details, guests will refer to it if they feel anything isn’t meeting their expectations. “Well, you mentioned air conditioning in your description when you only have a large fan” or “You didn’t disclose the fact that your building had no elevators to get to your unit on the 20th floor.” Upset guests will look for ammunition in your listing description to support refund requests or scathing reviews. Initial guest communications: Although more and more guests are booking their reservations sending no inquiries to Airbnb hosts as listings increasingly turn on Instant Book, any early interactions will set the tone in how guests expect to communicate with you. Being courteous and responsive encourages guests to be the same. Being realistic There is a fine line between showcasing your listing in the best light and exaggerating — you want your photos, description, and communication to encourage bookings but not set you up for failure by setting unrealistic guest expectations. Your listing and your initial communications with guests will set expectations that will be too low, too high, or just right. After the guest makes a reservation, meeting or exceeding her expectations will require you to Provide a painless check-in process: Nothing gets a stay off to a bad start more quickly than a frustrating check-in process. Making the guests wait on you for in-person check-ins, sending confusing or incomplete information, or sending them check-in details too late can all add additional stress to what is typically already a stressful part of traveling — just getting to and settling in to their booked property. Create a seamless guest stay: From well before their painless check-in to well after their painless checkout, everything you provide and do in between determines the quality of the stay for your guests and whether you meet or exceed their expectations. You can set guest expectations too low, just right, or too high, and then the actual guest stay could fall short, meet, or exceed those expectations. The following figure shows the different scenarios between how you can set and meet guest expectations. Here we look at the combinations and why there’s only one place you should aim to be — setting just right guest expectations and exceeding them. Sandbagging guest expectations — setting them too low “Underpromise and overdeliver!” This common advice given as a sure-fire way to obtain happy customers misses on one very important point — underpromising your offer will also undersell your offer. Taking this approach on Airbnb means not showcasing your listing in its best light. And with more listings coming online daily, your listing needs every advantage it must shine among the ever more intense competition. Underselling to sandbag guest expectations will result in fewer bookings for your listing than you deserve. Overpromising guest expectations — setting them too high The opposite of underselling is to overpromise, which can be just as bad but for a different reason. Taking this strategy could cause more initial bookings, but it raises guest expectations to levels that are unreasonable and unsustainable. The outcome is that you either underdeliver against these unrealistically high expectations, leading to poor guest ratings and thus poor long-term performance for your listing, or you’ll have to keep going above and beyond just trying to meet these expectations. Feeling overworked and underappreciated is a great way to achieve hosting burnout. Getting into the Goldilocks zone — setting them just right To neither handicap your listings ability to win bookings nor set yourself up for burnout, you must set realistic guest expectations by only promising what you can deliver for all guests for all bookings. Meeting guest expectations will be easy, but exceeding them will be possible and your efforts appreciated. Here you get the best outcome — receive glowing reviews from happy guests and all without unsustainable overworking on your part. Although setting unreasonably low or high guest expectations each has enticing incentives, both come with costs regardless of the actual guest stay you deliver. The best place to be is to set just right guest expectations and then exceed them.

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How to Increase Airbnb Booking Revenue for Your Airbnb

Article / Updated 05-12-2021

After you start to optimize your costs, you’ll quickly discover a limit to how much you can cut. Your next best option to boost profits is to increase your booking revenue for your Airbnb listing. You can do that by increasing your occupancy rate, your average nightly rate, listing availability, or all the above. The following sections examine each in greater detail. Boosting occupancy rate You can boost revenue by increasing the number of days your listing is booked versus the number of days that your listing is available for booking. For example, if your listing is available 365 days a year, then increasing the number of days booked from say 182 days booked to 274 days booked would roughly increase your occupancy rate from about 50 to 75 percent. All things the same, boosting your occupancy rate will increase your booking revenue. Raising average nightly rate (ANR) You can also boost revenue by increasing the average price of each night booked. For example, if your listing currently books 200 days out of the year at an average nightly rate of $100 per night, then the gross booking revenue are 200 days booked times $100 per night equals $20,000. However, if you could increase your average nightly rate to $120 per night, even without increasing the number of days booked, your gross booking revenue would now become 200 days booked times $120 per night for $24,000. Raising your ANR will increase your booking revenue. Expanding listing availability You can increase revenue by having your listing available for booking for more days out of the year if it’s only available for a fraction of the calendar year. For example, if your listing is only available for booking during the summer months from June to August, then making it available for booking from September through November would double the number of days available for booking. Doing so may not double revenues or profits; more than likely it’ll mean more bookings. Expanding your listing availability will increase your booking revenue. Doing all three: Yes or no? Couldn’t you just maximize your revenue potential by maximizing all three factors — your occupancy rate, your average nightly rate, and listing availability? Not so fast. Just because you want to increase each of these factors doesn’t mean you can just magically make that happen. You may find that your local city regulations limit the number of days you can make your listing available for rent on a short-term basis and thus choose to only host during the busiest parts of the year to maximize earnings. In addition, you’ll often have to make a tradeoff between increasing your occupancy rate or your average nightly rate the two metrics an inversely correlated — when one goes up, the other goes down. That’s because Airbnb travelers are price sensitive. All things equal, an increase in price for a listing will reduce the demand for the listing because some potential guests will become priced out and look to cheaper alternatives. The following figure illustrates the inverse relationship between the occupancy rate and the average nightly rate. As you can see, the point at which profits are maximized is when neither the occupancy rate nor the average nightly rate is at its maximum values. The implication here is that these two metrics are inversely correlated — go higher on one and the other will fall. For either metrics, going to too high may lead to lower profits. The optimal point for your Airbnb listing will depend on how it’s positioned relative to its competition and the underlying Airbnb demand in the market. If local Airbnb demand is low and your listing is inferior to its competition, the optimal occupancy and average nightly rates will settle below the average rates in your market. If local Airbnb demand is high and your listing is superior to its competition, the optimal occupancy and average nightly rates will be higher. To understand your listing’s performance and how it compares to that of its competition, you must obtain the following information: The average occupancy rate for similar listings in your market: Preferably over the prior 12-month period, by month. The average nightly rate for similar listings in your market: Preferably over the prior 12-month period, by month The stabilized occupancy rate and average nightly rate for your listing: This must be at least three months after your ramp-up pricing period. But for best results, having a full 12 months of stabilized data will allow you to know with certainty how your listing is performing in your market versus competition. We recommend getting that data from a third-party market data provider like AirDNA, rather than attempting to gather the numbers on your own. At best, the data will be incomplete and quickly outdated. At worst, you’ll have inaccurate information from which to base your decisions. After you have that data, you can compare your listing’s performance on occupancy rate and average nightly rate versus your market averages. If you don’t have monthly data, you can just use the full year figures. Having monthly data lets you to make this comparison on a month-to-month basis, allowing you to spot potential opportunities during different parts of the season. Considering the four scenarios of Airbnb listing performance What you can discover with the data is that your listing’s performance versus its direct competition falls into one of these four scenarios (as shown) in terms of how your occupancy rate and average nightly rate compares to the market optimal point. The following sections look at these four scenarios and how your listing’s occupancy rate and average nightly rate compare to those of its competition in the market. In addition, you find out how to adjust your pricing accordingly if you find that your listing falls into either of the two of the sneaky scenarios. Clearly underachieving listings The clearly underachieving listings are in the lower left corner that have both their occupancy rates and their average nightly rates lower than what their market suggests they should be able to achieve. When a listing is underachieving in its market versus competition, it almost always has low hanging fruit. These listings often have poorly executed and incomplete listing profiles, with poor quality photos, inadequate or difficult-to-read descriptions, poor pricing, and subpar amenities. And their hosts aren’t delivering consistently great guest experiences with one too many low star guest reviews on the profile. These Airbnb hosts likely began hosting before they, their property, or their listing profile were ready for guests. These listings are leaving the most money on the table and have the most opportunity to increase profits. Clearly overachieving listings The clearly overachieving listings in the opposite quadrant command both above-market occupancy rates and above-market average nightly rates. Not only are these listings booking more nights, their guests are willing to pay a premium to book those listings. These listings will almost always have professionally executed listing profiles with perfect photos, catchy titles, detailed and easy-to-read descriptions, attractive amenities, and great guest reviews. These listings have no opportunities for low hanging fruit. The hosts for these listings were ready from day one and have consistently delivered 5-star guest experiences and received 5-star guest reviews. These listings are leaving little to no money on the table. To increase profits, hosts for these listings must think creatively outside of direct bookings to increase their revenue and profits. Price-dominated listings Inexperienced hosts often fixate on an arbitrary minimum nightly rate for their listing that is well above the market average nightly rates, leading them to overprice their listings. These hosts may say to themselves, “I’d rather have my listing sit empty than to list it for lower than [insert arbitrary daily rate not based in reality].” The result is that they will enjoy an arbitrarily high average nightly rate but suffer a much lower occupancy rate as potential guests opt for more reasonably priced alternatives in the same market. Hosts with these listings could end up leaving thousands in profits on the table by having their listing sit empty when they could easily fill it with guests at lower rates. The following figure looks at a hypothetical price-dominated one-bedroom listing in downtown Los Angeles and how much money it’s leaving on the table by underachieving on occupancy due to its fixation on a high nightly rate. By overpricing the listing and thus achieving a much lower occupancy rate, the host left more than $500 of money on the table each month. If you find yourself in the price-dominated listings quadrant, order a market report from a company like AirDNA and reset your pricing expectations for your listing. Choose a price for your listing that the market demand will accept, not just what feels good to ask for. Occupancy-dominated listings The final quadrant is the other sneaky scenario where the Airbnb listings have much higher occupancy rates than their competitive listings in the market, often in the 90 to 100 percent range. These listings are booked almost every day. However, most can only do so by undercharging guests. This scenario is arguably the most problematic and the most difficult to diagnose because the high occupancy rates of these listings can give the hosts a false sense of performance. “I’m completely booked up. I must be doing great!” And if the listings are also profitable, the hosts may never have the impetus to find out how much money they are leaving on the table. Hosts of profitable and fully occupied listings often never realize that they’re leaving money on the table. The following figure examines a hypothetical occupancy-dominated one-bedroom listing in downtown Los Angeles and how much money it’s leaving on the table by listing at below-market nightly rates to achieve above-market occupancy rates. Notice that the high occupancy rate comes at the expense of a lower average nightly rate. By undercharging the market to achieve a perfect occupancy rate, this host is leaving $488 on the table every month! Another incentive, besides increased profits, for raising prices when your occupancy rate is well above-market rates, is that you can achieve the same profits with fewer bookings. If, for example, you can make the same profits but go down from eight bookings to six bookings per month, those two fewer bookings mean two fewer cleanings, check-ins, and checkouts. Especially if you’re doing the turnovers, achieving the same revenue with fewer bookings can free up hours of your time without lowering your profits. Getting the same profit with less effort is always a good deal. If you find yourself in this scenario, you’ll need to adjust your pricing to increase your profits. Remember that the point at which you maximize your profits won’t be at full occupancy. For high demand markets in or near urban cores, the ideal occupancy rate typically falls in the 70 to 90 percent range. In suburban or rural markets, it will be lower, and the range is wide. But the only way to know for certain is to obtain a market report from a third-party data provider to compare your listing’s performance to those of its most direct competition. When you’re ready to adjust your pricing, we recommend increasing your price up 5 percent every four weeks until you start to see your profits start to drop again. For example, if you’re at 100 percent occupancy charging $100 per night when the market is at 80 percent charging $150 per night, raise your prices by $5 until your occupancy falls to 80 percent. Charging a premium over competition Unless your listing has a rare offering that can justify a market premium over its competition, start at similar rates to those of the most similar listings in your market. You can justify charging a premium with these following reasons: Your listing is closer to desirable attractions (for instance, a minute walk to the beach). Your listing has rare and appealing amenities (such as indoor movie theater or an arcade). Your listing is a premium property with premium amenities catering to high-end travelers (such as a luxury condo in an exclusive luxury high rise). If your listing is charging well above the average market rates and you’re concerned about making a drastic price reduction, you can start slow. Adjust your pricing down 5 percent at a time every four weeks until your occupancy rate rises and you’re happy with the improved profits. For example, if you were charging $200 per night at a 50 percent occupancy when the market average is $150 per night at an 80 percent occupancy, then start by reducing your price by $10 every four weeks until profits drop again. During these price adjustments, your profit will go up as your occupancy rate moves toward the market rate. Stop the pricing adjustments or reverse the most recent change should you find that profits fell with the most recent price change. For example, if the change from $160 per night down to $150 per night didn’t improve occupancy or profits, revert to $160 per night and then monitor going forward. Using dynamic pricing to take out the guesswork The previous pricing adjustment recommendations for the two sneaky scenarios assume you’re setting your pricing manually. However, we highly recommend that all hosts go with a third-party dynamic pricing provider to automatically set the proper pricing for their listing. Only with a dynamic pricing tool that automatically adjusts the pricing of your listing in real time to account changes in the supply and demand of competitive spaces, including hotels, and their changing daily rates, can you truly maximize for your listing. It is impossible to do this manually.

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