HOW TO CREATE A PROFITABLE AIRBNB BUSINESS
PROFITABLE AIRBNB BUSINESS:Get tips on starting and running a profitable Airbnb business, and learn the keys to hosting success.
Tips for becoming an effective Airbnb host
Popular short-term home rental website Airbnb offers unique opportunities for hosts and guests. The company, which started in 2007, has since grown to include almost every country. As of September 2020, the platform had over 4 million hosts, 5.6 million active listings, and over 800 million guest stays.
The site acts as an online marketplace for accommodations, allowing hosts to list spaces for rent ranging from private rooms to entire homes. If you have space available, Airbnb could be an opportunity for you to bring in extra income, or even make it a full-time business.
HOW TO CREATE A PROFITABLE AIRBNB BUSINESS
Airbnb’s popularity
The diverse hosting options, competitive pricing, and easy-to-use platform all contribute to the company’s success – apparent through its rapid growth. According to Airbnb, there are 100,000 cities with active listings, located in over 220 countries and regions (as of September 2020). Interest in short-term rentals and home sharing also increased in 2021 with the need to work from home and more people becoming “digital nomads” as many offices were closed.
Airbnb allows travelers to experience an area like a local, and often grants more privacy than hotels can offer. Many guests are drawn to the unique accommodations available, such as tiny houses, boats, castles, yurts, and treehouses. Airbnb is often a cost-effective option, as accommodation costs can be split between groups, and kitchen access helps reduce meal costs.
The Airbnb Hosting Opportunity
According to data from Airbnb, hosts have earned more than €110 billion in total from the platform, as of October 2020. The company estimates that the average annual income of a host is €7,900.
Data from lending company Earnest puts the average monthly income of an Airbnb host at €924, and the median monthly income at €440. The company reported a wide range of income for hosts, with some bringing in more than €10,000 per month, others less than €200.
Being an Airbnb host can also open up other possibilities, such as encouraging your own travel through the connections you make with hosts, or the ability to buy and rent other properties.
How Airbnb Hosting Works
Creating a listing is the first step to getting started on Airbnb. We’ll get to how to make your listing stand out later, but you’ll need to include all the basic information, have nice, well-lit photos that showcase the space, and emphasize what makes your place unique.
You decide the amount of your ad, and you can vary your rates depending on the day of the week or the time of year. The platform offers an optional smart pricing tool that automatically adjusts your listing prices based on demand in your area, seasonality, and other factors. While posting a listing on Airbnb is free, once the booking is made, the company charges hosts a 3-5% service fee.
Airbnb offers a Host Guarantee that can provide up to €1 million in property damage protection, as well as Host Protection Insurance – a liability insurance program that can provide up to 1 million euros of liability coverage. Some countries and programs are exempt from coverage. You may want to purchase additional insurance.
Rate the degree of your engagement in an Airbnb activity
Before you register as a host on Airbnb, familiarize yourself with the challenges that can come with hosting. There are logistical issues to consider, as well as the time it takes to provide excellent customer service to your guests.
1. Do you have time to devote to this activity?
Building a successful Airbnb hosting business takes effort: In addition to responding quickly to booking requests, you’ll need to be available to answer any questions hosts may have during their stay. Cleaning the space between reservations and necessary repairs can also take a long time.
You can always outsource cleaning and maintenance tasks if the extra cost is worth it to lighten up some of your hosting duties.
2. Make sure you can rent your space
Whether it’s municipal laws, rental limits, or neighborhood expectations, make sure you clear all potential lodging hurdles before you start posting on Airbnb.
Depending on where you live, there may be country, state, city or property level requirements. Registration, permits or licenses, as well as additional security certifications and insurance may be required. Airbnb provides resources to help hosts become familiar with regulations specific to where they live, and encourages host clubs to connect local hosts who can share information.
3. Have you counted all the costs?
Be sure to approach your hosting with an entrepreneurial spirit. Create a business plan before you start, and set realistic financial projections and expectations. Decide in advance how much time and energy you want to invest in the business.
You’ll need to factor in additional costs, such as increased utilities, additional laundry costs, and any welcome touches you offer, such as coffee or snacks. The price of obtaining a business license, any necessary certifications or additional insurance will also add up. Track your lodging expenses with a budget and keep receipts for taxes.
Taxes on Airbnb income must be collected from hosts in certain regions. The types of taxes, and how they are collected, depend on the location. It’s a good idea to include details about taxes to be paid by hosts in the listing description.
The steps to launch a successful Airbnb business
We’ll take a look at what you can do as a host to make your Airbnb business more successful. An attractive description, well-staged photos, and a high host rating can help make your listing more appealing to potential hosts.
1. Prepare your Airbnb listing
A good listing includes accurate descriptions and basic details about all the important information about the space – how many bedrooms and bathrooms there are, what amenities will be available to guests, and what’s nearby of the property.
Be specific about things that will affect guests, like stairs and parking, and be upfront and honest about the specifics of your listing. Think about what sets your ad apart from others and include it in your ad title. Is the unit within walking distance of the town center or does it have a large garden?
You’ll want high-quality photos of your listing, so make sure your space is clean before you photograph it, and include photos of each area. Try using natural lighting, or add professional lighting if the space is darker, and shoot in landscape orientation.
2. Improve your host’s ranking
Positive reviews improve your host rating and search ranking on the Airbnb site, and can help you get more bookings in the future. Airbnb cites the following as important factors in getting good reviews: cleanliness, provision of essential amenities, accuracy of listing details, a smooth check-in process, and proactive communication.
3. Grow your business
Once you get familiar with hosting on Airbnb and find a routine that fits your lifestyle, you can grow your full-time hosting business. Depending on your goals, you can even continue to grow your business by adding more properties, adjusting your approach to hosting to meet each individual listing.
Hosting on Airbnb offers the opportunity to create additional income on your own terms with space that would otherwise sit empty. The platform allows hosts to customize the situation with terms that best meet their needs and expectations. It’s up to each host to take ownership of growing their business, whether it’s a part-time business or a bigger business to make more money.