It’s February in London and apart from a small dash of snow it’s been a rather mild winter. Unlike last winter I have not been forced by Airbnb to refund my guests because their train or plane was cancelled due to the snow ‘force majeur’. This may seem fair to the guests but for me it was a real loss.
Should you be accepting one night bookings?
One of the reasons for my success (if I may say so) at airbnb is that I am willing to take 1 night only guests. It’s very tempting not to take single night guests because of the trouble re-setting the room and checking in and out new guests. But if so many other people are not taking one night guests you may find a more steady stream of guests if you do. Plus you won’t have single night gaps in your calendar.
It’s my current strategy to make sure i’m full – ALL THE TIME. If that means taking single night guests then I will. If it means I have to drop my price to super low then I will. I’m currently charging the lowest price I have ever charged in 5 years of airbnb. I have to do this to stick with my ‘be full’ strategy.
Why do I think the ‘be full’ strategy is a good idea? First I believe it’s better to have some money than no money. Cash flow is important. Second even a booking which may have little or no profit can get you yet another review to add to your numbers. Third I believe Airbnb giving a search ranking boost to those listing which are getting bookings. So to keep your listing in Airbnb’s good books then your listing needs to be getting booked (if that makes sense).
How much should you discount to get a booking?
To be honest with you in my opinion I am willing to accept 50% off my asking price if it means I don’t have an empty listing. But usually I drop my price by about 10% if I see an empty listing less than 7 days away. But it does also depend on which day of the week we are talking about. Sundays and Mondays tend to be my least popular days (especially Sunday) so I will reduce my price more aggressively on these days.
I do use the airbnb smart pricing tool on all my listings. I have had concerns about using the smart pricing tool in the past because it seemed to only ever offer my set minimum price, no matter what the day of the week etc. More recently I have noticed that the prices do seem to be higher but only about 3 months away. It’s as if the airbnb smart pricing system assumes that if your not booked out 3 months ahead then you need to discount immediately.
I find that most of my guests book about 2 weeks in advance. Most of my guests are here to see a little bit of London or see friends. It’s even not unusual to get bookings same day. When I stay in another airbnb it’s often part of my annual family holiday planned 6 months previously. This is very different to the type of trips most of my single night guests are making. The smart pricing tool does not seem to suit my type of guest’s booking pattern.
The heatwave that has engulfed London this summer has finally ended (we think). After some of my guests complained the rooms were too hot to sleep in I ordered some fans for the bedrooms, however these did not arrive before the hot weather ended! I suppose they might come in handy next year.
Is Airbnb trying to make me lower my prices?
When I first started being a airbnb host in 2014 I charged a basic £20 per night for a single person. Today I charge about the same. I assumed as time went on my prices would steadily increase. I figured this not only because of inflation but the general improvement of my area and it’s transport links into central London would push up prices. So why am I still charging the same?
I was slowly increasing my prices every year by about £1 per night. I thought this was reasonably fair and certainly no more than the natural rate of inflation. However this plan was abruptly ended on January 1st this year 2018. As 2017 came to a close i noticed that my calendar for 2018 was looking suspiciously empty. I certainly wasn’t doing anything differently and saw no other reason why this would happen, if anything I was expecting the lower value of sterling GBP to increase bookings. Also the fact that this was suddenly happening on 1st January made me very suspicious that it was Airbnb deliberately not pushing my listings. The reason why was immediately obvious to me – I wasn’t using the Airbnb Smart Pricing Tool.
Our tools help you set a competitive price and get more bookings when demand is low, which can mean suggestions to lower your price. But we’re launching improvements that better consider your market during periods of high demand. Soon we’re going to equip you with more data, not just pricing suggestions, to help you set your price. As for comparisons, we look at successfully booked listings in your area with similar numbers of guests and amenities (listings you won’t see if you’re searching dates they’ve booked). We also look at what guests click before and after visiting your listing.
Should you be using the Airbnb Smart Pricing Tool?
I started using the Airbnb Smart Pricing Tool as soon as i realised what the problem was. As soon as I activated this tool in my calendar bookings suddenly flooded in. However I am now using lower prices than before. The Airbnb suggested price was lower that I was previously using and almost made me think twice about wether I should stop using Airbnb altogether.
I would prefer to be fully booked with a lower price than empty as its all a question of cashflow. It’s hard to go bankrupt sitting on a pile of cash. But on the other hand growth is a measure of success and when your not getting it you so ask yourself what is going wrong. I can only say what I see and I see Airbnb bringing in the punters for me so that’s great. For the guests themselves cheaper prices are obviously a good thing. To be honest some hosts do charge hotel prices for basically nothing special so pushing down their prices might not be a bad thing; before Airbnb gets a reputation for being a general rip-off.
It’s the end of the year and New Years Eve is only days away. I had a last minute guest cancellation for NYE. I took this as an opportunity to increase my price for the night. It was booked again within an hour for a 50% higher price. Clearly there is a last minute rush to find a room and that is when you can really get that extra profit.
Reducing your prices can start a cascade of bookings
December I find is a quiet time of year and usually so is early January. At one point during the month I reduced my prices by 20% to avoid being empty, the first time I have done such a thing in as long as i can remember. Reducing prices instead of being empty is sometimes the best thing to do. I am very much of the opinion that bookings usually follow other bookings. By this I mean that if you reduce your prices to get a booking the airbnb algorithm will see you got a booking and therefore promote you further as usually this means more bookings will flow. Its a virtuous circle.
Warn your guests from overseas about Christmas
It seems every year I have a guest who seems to not know the consequences of being in London on Christmas day. A guest from South Korea arrived at my house on boxing day. I had already warned him when he booked that the 25th of December is a public holiday and there will be no public transport and that most of London will be closed. When I spoke to him he started asking me about how he can get to the British library. I explained to him that there is no public transport and even if there was public transport the British Library would be closed! He seemed extremely surprised. I guess some countries so not understand the enormity of Christmas day in the west.
Spring is in the air in London and I’m fully booked. I occasionally raise my prices on days where I would prefer to not be full (to give myself a bit of a break) but even these slots were booked up. After 3 months of cold weather and horrible rain it looks like the weather in London is about to improve. Better weather usually mean more guests so it could be very busy over the next six months.
How much should I increase my prices during the summer?
Although I do increase my prices during the summer it’s not by much. Only a few extra pounds per night. Part of the reason is that I don’t want disappointed customers who rate my listing less than five starts for value. If I put my price high then there is a certain expectation to live up to that price. A lower price has much less expectation – “at least it was cheap.”
I did notice this on my listing for the first time. “This is a rare find – Richard’s place is usually booked.” Being a ‘rare find’ must be some sort of special Airbnb host badge. It does at least create this extra impetus to buy for potential guests – If Richard is usually booked then he must be good. I have no idea what it takes to become a rare find but I have had over 300 guests and I’m usually full so maybe thats it.
My strategy is simple – stay booked all the time. If I have to lower my price I will. The way I see it Airbnb wants good hosts who will take bookings at any time. If your a reliable host they will reward you with more business (hopefully). Being too choosey on what price your willing to take and which type of guests your happy to accept will reduce your future bookings.
The more guests you’ve had the more guests you will have. It’s all about being a safe bet. Most of your guests will be from out of town and will not know your area and will judge on your pictures firstly and secondly on your reviews. A good looking picture helps a lot but it’s the reviews that make the sale. A long list of great reviews will put someone at ease and be confident they are getting what they see in the picture. To get those reviews you need lots and lots of bookings which means taking almost anyone who wants to stay and at the times when it doesn’t always suit you. Thats business.
Its December in London and the weather has been unusually mild for this time of year. Bookings have dropped off since the autumn and I’ve reduced my prices again for the new year. I’m now charging £28 a night for a double room for two people – this time a year ago I was hoping to be able to charge £35 a night by now, so its very disappointing. I have 200+ reviews and most of them have been positive but my five star review rate is still languishing at 64% and has been for about a year. I have noticed that there are more listings in my area and they are mostly double rooms at prices barely above the price of a single.
Airbnb Hosting Mistakes
Airbnb has been around a little while now in the UK but I’m seeing some very obvious mistakes with some listings such as:
Messy rooms in the pictures especially the cover image
Not using a real picture of yourself in your airbnb profile (hiding your identity on a website built on trust is not clever)
I have noticed the airbnb price tips to be different for my two single rooms (which are in the same house and are very similar) having wildly different suggested prices. One room currently has a suggested price of £21 the other £25. The one with the £25 price tip has in general received better five star reviews than the other (why I can’t really say as they are very similar) so this may be the reason.
Airbnb price tips are handy if your not sure what price you should be charging but I don’t find them very useful. The obvious problem is that if everyone is using the airbnb price tip then you will all be charging the same and therefore have as much chance of being booked as everyone else. I like to be full at all times even if this means selling at a discount (I would rather lose £2 than £20). I see an empty room as money lost so any sale is a good sale.
I would say on average most of my guests are very nice. They tend to be young, employed, and most come from Western Europe but occasionally from Brazil, USA, and East Asia. Surprisingly many are female which might say something for the level of safety I provide in my accommodation (lockable rooms and live-in hosts).
Guests on Christmas Day
Over the Christmas period I do have airbnb guests staying at my house. I still have my usual family Christmas and the guests were out of the house most of the time. I did have to explain to some of them that Christmas day meant that there would be no public transport in London which they found surprising for some reason. I did get some guest enquires about arriving on Christmas day which I had no problem with but I quickly explained to them that getting from Heathrow airport to my house on Christmas day would mean a taxi and and a very expensive one at that. It makes no sense saving money on a airline ticket because it arrives on Christmas day only to loose all your savings on the taxi trip from the airport in my opinion.