What is the future of Airbnb hosting?

It’s February in London and Brexit is here. The UK left the European Union on Friday 31st January at 11pm. My first European guests since Brexit arrived about 1 hour later from Italy. They were nice guests and for them at least it seems nothing was any different. Strictly speaking nothing much hans changed. The UK is in a transition period for the next 12 months where as far travel for EU citizens into and out of the UK there is no changes. No new visa is needed. After that what will happen we don’t know yet.

What is the future of airbnb?

I recently read a forum thread about being a landlord and/or a airbnb host. Someone left some interesting comments that I agreed with and made me think more about the future of airbnb.

I have copied the post in full as I want to show it in entirety in respect for the writer. The link to the forum post is here. https://www.housepricecrash.co.uk/forum/index.php?/topic/235721-landlords-regret-investing-in-buy-to-let/

i get hotels regular, and the airbnb concept is in for a massive crash.  the market is completely saturated and rooms very cheap. there is hardly a city in the uk that you cant get a 30 quid room infact none if you look hard enough. and as airbnb is mostly homes with 2 or 3 rooms whats happening is many are getting fed up. lucky to achieve 50% occupancy rates and very little in the winter. the changing of sheets and tidying up and organising of it all is creating a situation many are making very little. add in the fees airbnb take and mortgage interest and very soon half are begging for a full time tenant again. 

hotels have got smarter and better and takling airbnb head on and i can get room after room with a breakfast throwing in for 30 quid something no airbnb can do. i know people doing bnb that have started to refuse 1 or 2 night lets and are only looking for week long lets due to the work involved switching over to new people each night. hotels can do this due to economy of scale with 20 or 30 or 50 rooms full a night. 

hence when i rent rooms now i never do airbnb for these reasons. 

1. airbnb is often more expensive

2. airbnb is full of amatuer landlords that make you feel uncomfortable to relax in their precious homes

3. the neighbours of tese homes are often hostile and fed up of people coming and going

4. you get a breakfast at a hotel

5. airbnb owners will be far more active in complaining or witholding any monies due to any damages due to the same reasons amatuer landlords do the same ie granmas precious house where they really despise anyone staying but need the cash.

5. i want informal, heres your keys and have a nice evening. airbnb is often full of owners far too interested in your comings and goings and what your up to than a hotel is. 

6. mostly no owner on the premises what if the loony in the next room starts running around the place with an axe

7. big chance of getting to the property but then having to wait around for the owner to arrive to gain entry.

8. as above but with far more restrictive times to get keys etc than a hotel unless there in all day and live next door. 

9. more chance of a perv sticking a spy camera in the shower room

10. far more penny pinching going on with heating etc especially when they only got one room let and only got 35 quid for it, they dont want you burning the heating all night whereas a hotel with have 30 or 40 guests and a bigger more economical heating system. (this is actually a huge moan of people that use airbnb, )

 

Should you become a host or perhaps stop hosting?

I can only tell you about my own experience of being an airbnb host. I don’t want to make assumptions of how other hosts find the whole system and how they benefit. For me it has been mostly very good. I have empty bedrooms in my house and wanted to let them out for the extra income. So i gave it a try.

I was initially surprised when my first airbnb bookings came in. I had 4 empty rooms in my house. Two I let to people from my work (on a lodger agreement). They were longer term but not fixed (i.e not locked in for a year). One left after a year or so. The other stayed for 2 years I think. The remaning two rooms I would put on airbnb and try my luck. My house is reasonably central in London but is not central enough that you can walk to the main tourist sites. The distance to the centre might seem quite far for someone who is not used to the size of London. I assumed my place would be nothing but a last resort type place but at 2000+ guests so far it’s exceed my expectations.

If I search right now for a room like mine in a better part of London then I can see similar listings for about £40 which is double my price. To be honest if I were a guest I would probably pay the extra money for the better location. But not everyone will feel the same way. I do offer a alternative deal for a more price conscious traveler. But it does tell me that unless the upper end prices go up mine will probably stay low too since there would be no reason to save the extra.

Just for comparison an Ibis hotel in my part of London is £50-60 a night. So my airbnb is about half the price of a proper hotel (when you take into account the fee airbnb charges the guest etc). Which is good but I recall before airbnb existed a decent but cheap London hotel would be about £80-100. The hotels have gotten more competitive since presumably they were losing a lot of business to airbnb.

Airbnb seems constantly pushing me to lower my prices. This may be for my own good. Assuming airbnb’s data is correct people are expecting lower prices. It’s very possible that if your listing is very special (like say you can see Big Ben out the bedroom window) then you can probably ignore such advice. But if like me you have a very nice but still very ordinary room then being competitively priced is a good idea. My strategy has always been to be fully booked all the time, no matter what it takes. So if I need to lower my prices I will!

I have noticed some airbnb listings are what I would call expensive. £50 or more to sleep in someones spare bedroom seems like a lot to me. Even if it is well decorated and kind of niche it just doesn’t seem right. I’m sure many of the hosts are very nice and welcoming people but at the end of the day you are only a guest in their house. When you pay for a hotel room your kind of made to feel like your the boss by the hotel employees. I’ve never known anyone apologise to a hotel owner for coming back late at night.

I do generally leave my guests to themselves. In fact I would say I almost avoid them. I don’t want them to feel uncomfortable during their stay so I stay away. Occasionally if I get a good vibe from a guest i will offer them a glass of wine or similar. But that’s about it. I don’t offer an ‘experience’.

What to do when your airbnb bookings dry up in January?

It’s January in London and so far its been a mild winter but it has rained almost every day since August (well it certainly feels like it). The heavy rain has caused unexpected damage to my house which is very annoying but it has not affected my airbnb which has been full most days (only Sundays I was not 100% booked out but that was almost a welcome relief for me). But now it’s reached January and like every year for the past 5 years that i’ve been an airbnb host my bookings have dried up.

Did you airbnb bookings suddenly drop off in January?

It’s only because i’ve been a host for over fives years that I know the sudden drop off of bookings is normal. I know its obvious that January should be a quiet month, thats not the full issue. The issue is this – not only is January quiet but there don’t seem to be forward bookings either. In my experience about half my guests book about 6-10 weeks ahead. The other half about 2 weeks ahead. But looking at my calendar there are very few bookings in Feb and March (where I would expect to be about half full already, and of course no bookings at all in the next 2 weeks). So what should i do?

What to do if you don’t have bookings?

If you have suddenly stopped getting bookings in January first don’t panic. There may be nothing at all wrong with your listing, or a borderline bad review has not ruined your hosting future. It’s just that time of year. It’s actually scary looking into the darkness and only seeing a empty airbnb calendar, if this is your main source of income.

I have a mortgage to pay so I really need my airbnb money to come in every month without fail. I can’t miss a month and make up the difference later. I need that money now! Its a simple fact that demand has dropped and now the airbnb market is crowded with empty rooms. There is only one thing for it and that is to drop my prices.

When I first became a airbnb host 5 years ago I was charging £20 a night average for a private room. Today I charge the same amount – £20. Adjusting for inflation I am charging less than five years ago. Why am i charging the same price? Well it’s basically because the market can’t handle a higher price.

Despite the increasing popularity of airbnb for travellers this has been more than offset by the increased number of those who want to host. Also I suspect traditional hotels have significantly reduced their prices to compete with airbnb, so this has kept prices low.

I have tried to increase my prices slightly but this sometimes led to not getting bookings and I would rather be full than empty so this didn’t work out. I find it’s better to be full ALL the time for two reasons: 1. the constant cash flow 2. bookings generally lead to bookings

Should you drop your listing price?

So what can you do about your empty airbnb calendar? Well first you need to drop your prices. Every year I have bitten the bullet and dropped my prices BELOW my acceptable minimum price. In some respects I was making a loss (when you consider my time and effort as well as the actual cost of my house). My guests were getting a dam good deal in my opinion.

Why would I drop my prices like this? Well first as mentioned above bookings generally lead to bookings. This is part of airbnb search rankings. A place that was booked will be seen as positive by airbnb’s search engine and push you up the rankings. Possibly therefore ensuring future much more lucrative bookings! Second is to stay liquid. Cash in every day pays the bills. Profit next year is no good to me if I have bills to pay TODAY.

Also to get more bookings there is possible 2 things you can do. First is start using Instant book. Using Instant book will push you up the rankings. Second is to be more flexible with your guests. An example of this might be reducing your minimum trip length to 1 night (some hosts have a two night minimum for example). There are other possibilities such as allowing pets etc.

Having regular guests can keep you in business

Bookings have dropped off but fortunately for me I have a steady stream of regulars. Some of my regular guests have been coming for 4 years or more. They all pay cash and usually come on the same days every week (for example every Monday and Tuesday).

All my regulars are working in the city of London so they are consistent. They usually arrive at about the same time every day and are out all day (at work of course). Guests like this are easily the best in my opinion. I give them a good price and I get peace of mind (the chances of a regular guest causing trouble are very low).

How do you find regular guests? Well I suppose if your listing is not close to any commercial centre you might struggle to get any regulars. However if like me you are in a major city this should be easier. Its somewhat easy to spot a potential regular. Often they will mention in their first contact with you they are in town for work. If not this then if you see them hurry out the door in work clothes early in the morning then this might be an easy hint. You simply have to ask them straight if they are here for work and do they want to make their stay with you ‘a regular thing’. I often immediately make clear that it’s cash only and and that I’m flexible with bookings (often people don’t like to commit too far in advance). It’s usually as easy as that!

Airbnb Single Night Bookings

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.

Should you accept one night bookings?

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.

Should you cut your prices to get bookings?

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.

You can read my previous post on earning extra money for last minute airbnb bookings here!

Airbnb Profile Pictures and Private Room Listings

It’s January in London and like last year things have gone very quiet. The Christmas and New Year period were ok but not as busy as some previous years. This time last year I had a significant drop in bookings. I blamed the airbnb smart pricing system (or to be more specific the fact I was not using it and I believed I was being penalised by airbnb for not doing do). I can’t say the same thing again this year as I am already using the smart pricing system. I have dropped my prices 10% to see if this helps get me more bookings. Still the airbnb smart pricing system recommends £12 a night a massive 40% drop on my previous prices. I have now the lowest prices in 5 years of being an airbnb host.

Should you require guests to have a profile picture?

In my opinion airbnb profile pictures should show a picture of the person who is making the booking. This seems obvious but some people use other images such as Pokemon characters and the like. So sometimes I have no idea what to expect. You might say this shouldn’t matter but it does cause problems when I have to guests who can’t find my house and I have to go out looking for them for example. Sometimes profile pictures have more than one person in the picture and I am not sure who is who. Some guests have no photo at all and also provide no details on their profile. I find this both las and unhelpful. In my opinion the airbnb system is built on trust and this does not help.

There is now a option to require guests to have a photo when they make a booking. I am not certain this will work as I’ve already explained some photos are not of the person but something else. Airbnb says the feedback from some guests has been that they are not comfortable providing photos. I can understand this in some ways as I have occasionally made unfair judgements about someone by the way they look. I don’t insist my guests have a profile picture but I always ask them to complete their profile. Most usually understand what I mean.

As a reminder, Airbnb’s nondiscrimination policy prohibits hosts from making booking decisions or canceling reservations based on race, color, ethnicity, national origin, religion, sexual orientation, gender identity, or marital status.

How to deal with guests who book a private room

In my house I have 4 airbnb listings as private rooms. I live in the house with my wife and little dog. So I have to know how to treat my guests who may be uncomfortable staying in the same house as me and vice versa.

There are some very good tips from airbnb here about listing a private room.

It seems I have had over 400 guests in my private room listings in the last year. I honestly couldn’t remember about 300 of them. The simple reason is after they have checked in I rarely seem them again. Sometimes they even self check in using the key safe and some instructions so I don’t seem them at all. This shows a lot about my hosting style. I generally leave my guests well alone. I provide them with everything they need and leave them to it.

I do get a lot of feedback from guests that they enjoyed the privacy of my private room listing. I rarely see my guests after check-in. Occasionally we will pass each other in the hallway or similar and I say hello and ask if everything is ok. But that is usually all. Even the checkout I tell the guests to just leave the key in the room and don’t worry about saying goodbye. I understand this make the experience a lot less personal but it also makes guests feel less like they are under any obligation to act as a houseguest. The more business like this transaction is the less uncomfortable they will feel being in my house.

How you setup your airbnb business goes a long way to make dealing with private room guests easy or hard. I don’t allow my guests to use my kitchen, living room, or really any other parts of the house; other than their bedroom and allocated bathroom. In some ways it’s the same as a hotel. The guests have a nice clean comfy bedroom but not much else. This means I don’t have to worry about guests using my kitchen when I want to cook, or sitting on my sofa, or touching anything else. It also encourages them to leave the house as soon as possible. They usually get-up, wash, and go out. Most spend less than 8 hours a day in the house.

Most of the guests who stay with me are passing through London usually by themselves. They are using my private room listing as a safe place to sleep and use the bathroom. This suits me fine as I don’t have time to entertain them and it keeps my house mostly for me. Some guests check in as late as midnight and check out very early in the morning. I charge a low price for this service and I get mostly very good feedback. If I charged a higher price I think guests would expect more and I would have less favourable reviews. One of my most common review comments is “you get what you pay for” which in my option is exactly right.

Should you accept cash payments from Airbnb guests? and How to automate your Airbnb home.

Its January in London and cold and wet. The number of bookings I am getting has reduced and I have the occasional empty day. This is the same as last year i recall so I’m not worried. The low GBP will keep the tourists coming to London and I keep my prices low so I’ve always got a steady stream of customers. I have many ‘regular’ customers who found me on airbnb but have kept coming back and now pay me cash.

Should I accept guests who pay cash?

Nobody want to pay the airbnb service fee but that’s the price you pay for using their platform. Without the airbnb platform I would find it very difficult to find new customers so it’s only fair I pay them for this service. But what if I already found a customer should I accept them? Well yes if your happy with that person. Airbnb does keep a record of who stays at your place and should have copy of their ID etc so there is some safety. If you accept a cash payment then you open the possibility of getting into some unexpected trouble perhaps. Most of my regulars are UK citizens who are working in London a few days a week so I’m happy with them. Guests who pay cash might also be a way of getting round the 90 day rules in London.

 

 

How to automate your Airbnb Home

If you are a live-in airbnb host like me then from time to time you might feel unsure about leaving your guests in the house alone when you go out to the shops or where ever. It’s hard to relax when there are strangers in your home even if they seem very nice on first impressions. So there are a few small ways to keep an eye on your home and give you some piece of mind.

Install security cameras

Now don’t get me wrong here the idea is not to spy on your guests. I have a camera in my living room, which is off limits to guests. The purpose of this camera is partly to keep an eye on my little dog but also in case any guests decide to break the rules and enter my living area and kitchen. I use this camera from Canary https://canary.is I find it excellent quality and easy to setup. I am also considering putting one facing my front door so I can see who comes in and out of the house.

 

Door Sensors and Motion sensors

I once had a guest who sent me a complaint via my mobile phone that the house was too cold. I was not at home at the time so was unable to switch the heating on. Shortly after I installed Hive Active Heating in my home so I can control my heating using the mobile phone application. As part of the pack I was send a door and motion sensor. Both of these I have found very useful in keeping an eye on my home. The door sensor lets me know when someone opens and closes the door. The motion sensor detect movement. I put the motion sensor near the guests door so I know if they are at home or when they come and go. It’s non-intrusive and can make you feel more comfortable when away from your listing.

Should you have Airbnb guests on Christmas day?

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)
  • Unrealistic prices

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 provides price tips so you can avoid being too expensive for the market
Airbnb provides price tips so you can avoid being too expensive for the market

 

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.

What should I do if I’m not getting bookings on Airbnb?

August has possibly been my worst month for new bookings. My calendar for the month of August was actually quite full but September onwards is looking pretty empty. I find that guests tend to book about 4-6 weeks in advance so to have so many blank spaces at this stage is not good. Some guests do book much further in advance of course but the main bulk tend to come in only about a month ahead. I do get a lot of last minute bookings due to my location in central London but I would prefer to have bookings all my bookings in advance given the choice even if it meant losing a few quid.

Why have my bookings dropped off?

Well A quick search of my local area in Newham, East London, has revealed that there are many new listings in my area. Most of which are priced lower than me. I recall only about a year ago there were less than 5 similar listings in my area which consisted mostly of old ladies and couples with a spare room. Now there are multiple listings of small rooms in former HMO’s all over the area. Clearly those former slumlord landlords who formerly let single rooms to asylum seekers and desperate immigrants have now switched to becoming Airbnb hosts.

Why is there more competition in my area?

One of the reasons why I think these slumlords have switched from the desperate poor to Airbnb holidaymakers is the recent tightening up of Newham council’s HMO license and additional licensing scheme. HMO licenses’ are mandatory across the UK for properties which fit House of Multiple Occupation criteria. But the additional licensing is a newer scheme and has made it less desirable and more expensive for landlords in the area.

So what can I do about my empty calendar for September?

Well this first thing I did was drop my prices. I now have the lowest prices since I started hosting. I was expecting that as my hosting experience grew and my good reviews piled up I could start charging more and more for each listing. Sadly not! I also removed my deposit requirements for each listing. A risky move to be sure but it seemed worth a try even if it just got the ball rolling. For a few more days it was deathly quiet but then the bookings started to flood back in. It’s hard to be sure if this was just a quiet patch that we just came out of or if my pricing strategy did the trick but I’m sure happy to be getting bookings again.

Should I change my cancellation policy?

I’ve had a fair few cancellations recently. Almost always I have been able to get another booking at the last minute but I am starting to think it’s not a good idea to be so flexible with the cancellation policy. I currently have my cancellation policy set to Flexible which means a full refund if cancelled 24 hours prior to check-in. I am going to change this to Moderate – Full refund 5 days prior to arrival, except fees. I think this shouldn’t turn off too many people who are serious about their bookings.

You can change your cancellation policy under your listing Terms
You can change your cancellation policy under your listing Terms

How to get rich using Airbnb?

Can you get rich using Airbnb? Some DO I’m sure. But how do they do that exactly?

Most of the stories I’ve read about those who’s say they’ve made sooo much money using Airbnb go something like this – “I was taking a six week vacation (they are usually from the USA) and decided to give using Airbnb a try to rent out my apartment while I was away. I was making so much money I decided to quit my job and stay on vacation forever.” Or some bullshit like this. The obvious point they never seem to touch on is the fact they already own a apartment in a very central location in a major city, presumably mortgage free, and had they rented this out in the normal fashion to a local worker would have made almost as much money anyway.

So do I know a way to get rich using Airbnb? Well not exactly but I did come across a listing once in central London looked like the best way of getting some serious earnings. It was a one bed flat with a double bed in the bedroom and instead of a sofa and dining table etc in the living room it has two (2) double beds. So that makes 3 double beds in a one bed flat. It was advertised as ‘sleeps 6 persons’, which is does of course with three double beds. It had the one shower room and a small kitchen. The price was £150 a night – THATS £1050 A WEEK!

So to get rich on airbnb do as follows:

  1. Get a one bed apartment in central London
  2. Put one double bed in the bedroom and two double beds in the living room. No other furniture is needed
  3. List for £150 a night, sleeps 6
  4. Repeat

When is the peak season on Airbnb and how to get rich on Airbnb?

I’ve noticed a reduction in the number of bookings coming through. I’ve got quite a few empty slots from the end of August through September and beyond (in my experience people tend to book only a few weeks in advance so it’s no surprise December is still empty for example). A quick look on the Airbnb Groups discussion page for London hosts and many of the comments there are saying the same thing – not enough bookings.

What to do if your not getting bookings?

I price my listings cheap and to have an empty room now and again is disappointing but no big deal for me. Those with expensive big listings (such as whole apartments in the city centre) are missing out on big money if they have any vacancy. The question is what can you do (if anything) to solve the problem? The obvious answer is to cut your price – better less money than no money. But this does eliminate the possibility of getting a last minute booking at a good price.

“it was as if a light switch went off in final part of July. Suddenly enquiries and bookings just stopped across all my listings”- airbnb host in London groups

A similar thing happened in January I recall and this didn’t really pick up until April. I also noticed more listings appearing in my area at a discount to even my low prices so that’s not helping. My only solution is to keep my prices low and ride it out. I often get last minute bookings – which is the big advantage of operating in a major city like London. I assumed August and September would be the high season, when I would clean up, but this is clearly not the case.

Getting one star ratings from guests

My star ratings have been getting worse and worse lately. Most guests leave very nice written reviews but when it comes to the stars they often give a 3 or 4 with some even putting a single star. My biggest problem is one I simply cannot change and that is – my location. I live in Newham in East London, one of the worst areas for poverty in London. It’s not dangerous (no gangs on street corners etc) and it’s reasonably central (zone 3) and has decent transport connections and plenty of shops/fast food. My biggest draw card is my price – I’m very cheap and my property is fully refurbished and it still has the ‘new’ feel. I would have thought someone might say “well the location isn’t perfect but what do you expect at this price.” But it doesn’t seem to work that way.

“I would have thought someone might say well the location isn’t perfect but what do you expect at this price”

How to get rich on Airbnb

I’ve just come across a listing where the host has put two double beds in the living room and another double bed in the bedroom and charges £150 a night, sleeps 6. Now that’s a way to make money on Airbnb!

So what’s it really like being an Airbnb host

I’ve been a Airbnb host now for nearly a year and have had over 150 guests in that time. Most guests stay for only a couple of days which suits me fine as the longer the guests stay I find they are more likely to hang around the house, and eat smelly takeaways in the bedrooms, instead of exploring the city.

Weekly and monthly rates

I choose not to offer a weekly or monthly rate for the reason that I don’t like longer term guests. I don’t offer use of the kitchen or living areas in my house so guests are limited to their bedroom and a bathroom. My ideal guests is a tourist who has come to visit the city of London for a few days and only uses the house for a sleep and a shower. This means I get the house to myself for the majority of the time and wear and tear is kept to a minimum. The downside is a greater turnover of guests means the sheets and towels need changing more often.

Guest check-in’s

Guests will want to arrive in their own time and leave at a time that suits them. I have set my check-out time as 11am and my check-in as 12. I always ask my guests if they can give me a rough idea of what time they will be arriving but I always take their answer with a pinch of salt. Most guests misjudge the amount of time it will take them to arrive at my house especially those coming from the airport. If a guest says they will arrive at 3pm I usually expect them to arrive sometime after 4pm. I’m not out to rubbish my guests it’s just that most people don’t realise just how big London really is.

I work full time in the city so It’s usually impossible for me to check in my guests in person. I’m lucky in that my wife stays at home during the day and is there to meet the guests and show them the room and explain the house rules. If you don’t have a family member to check your guests in then you are going to have to hire someone else to do it. This can be expensive as guests tend to arrive late and what seems like an easy task can mean waiting around, possibly for hours.

Price Competition

I would love to charge more for my listings but I really can’t or I will price myself out of the market. Several new listings have opened up in my area and most of them at a slightly cheaper price than me (some as low as £17 a night for a double room!). However these listings don’t look as professional as mine and my listings have lots of positive reviews so I still get plenty of guests. My experience so far has been that new listings come on at lower prices and some old ones tend to drop off as they no longer feel the hassle is worth it. Airbnb is still new so lots of people would not have tried it yet so the potential for market growth is still huge but we shall see.

Is the money worth it?

Being a host can be a lot of hassle and it’s certainly not for everyone. I very rarely have an empty room (the city of London is a popular destination) so I maximise my earnings potential. For analysis I would say the yield on a airbnb listing is about 5% (a normal buy-to-let might be about 4%) so not massive. If your looking to get rich using Airbnb then your probably headed for a huge disappointment. I would say however in a good location the money is very steady and it’s a great alternative to renting out a room full time to a local.

What is your Acceptance rate? Does it matter?

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It’s April and the sun has finally come out over London and this has lead to an increase in bookings. Airbnb had been continually warning hosts that December to March is considered the low season and hosts should consider reducing their prices by 15%. Many hosts it seems didn’t reduce their prices or started to believe the low season would never end and started complaining of their being “too many hosts and not enough guests.”  Well it does look like we are all back in business.

To me it seems there are good bookings and bad bookings, and in my opinion you have to take your fair share of the bad bookings to get the good bookings. Airbnb seems to be thinking along the same lines – your acceptance rate now affects your search rankings. Previously to get a high ranking in the Airbnb search one of the things you could do was to reply to guests enquiries quickly.

An active and prompt host is exactly what the airbnb likes, so it makes sense you are rewarded when replying to your enquires quickly. To quote from another hosts on the group discussions forum “My gut is anything that negatively impacts the precious “conversion rate” (one of the holy grail metrics for hospitality businesses), will cause the host/listing(s) to be buried in search results.

Airbnb Acceptance Rate and Rankings

I personally agree with Airbnb acceptance rate metrics for search rankings. We need to think of the paying customer. My wife has complained to me a few times that taking guests for just one night isn’t worth it. Every guest gets a fresh set of clean sheets and towels and a bottle of water and the room will need to be cleaned again. It’s obviously much more profitable and less time consuming to have longer staying guests. It is possible to set a two day minimum in your listings calendar settings so hosts can easily prevent one night requests.

I am willing to accept single night requests because I don’t like to turn down business (in my opinion if you only accept business that suits you then soon you won’t have any business). A good customer might spend a week at one hosts listing and then a single night at a stopover at another hosts listing en-route to another host. Is this person a bad guest? No this person an excellent guest but somebody has to take the single night for the team.

 

Checking out the Airbnb competition

Between changing bedsheets and checking-in guests I often peruse the listings of my fellow Airbnb hosts. Partly to get a feel for who’s charging what in the market, partly to steal ideas for making my listing look more attractive.

A very price sensitive market

How much of a price sensitive market is Airbnb? Very I feel. Especially at the sub £50 a night level. A simple search reveals a £5 increase per night from £35 to £40 the number of listings jumps from 149 to 317, more than 100% increase. For anyone looking to make some serious money being a airbnb host then this is not very encouraging.

Pricing your listing well below average is the best chance you've got of full occupancy
Pricing your listing well below average is the best chance you’ve got of full occupancy

I’m not going to get rich anytime soon from Airbnb

Being an Airbnb is not an easy path to riches. The level of competition in my city of London is so high that nightly rents are at rock bottom. Supply is currently well in excess of demand. Demand is rising quickly as far as I can tell; I guesstimate as many as 50% of my guests are first time airbnb users. It may take some time for either demand to equal supply or enough disappointed airbnb hosts give up on the hope of easy hosting cash.

I get the feeling I joined the airbnb hosting party a bit late (I started hosting late 2014). The market is saturated. In this persons blog post he make $22,000 in 132 days in 2103. That’s $169 a night. A quick look for whole apartments in London with a price per night of £100 are 3 bedroom apartments for 6 guests. Thats less than £35 per room. A normal long term 3 bed rental for those living and working in London is at the lower end £500 a week and there is no vacancy period and the tenant pays all the energy and cleaning bills etc. You might ask why bother?

Ideally you will have a 100% occupancy rate or near enough to have any chance of making a decent profit. Cutting your nightly rate to a rock bottom price can help you achieve full rental but can eat into your profit. I sometimes cut my prices to ease my cash-flow over a certain period. Less money is maybe better than no money. It’s surely easier to ensure your as full as possible as far into the future as possible. Don’t rely on last minute bookings to keep you afloat. For popular listings I suspect the average vacancy to be about 20%.

Reading this article in the Telegraph makes Airbnb hosting seem like easy money and even a lucrative lifestyle choice. The lady being interview charges £60 a night for singles and £70 for doubles in Oxford. Definitely at the top end for a private room listing for Oxford. I couldn’t find her listing in Oxford but a quick look at the empty calendars for current listings in that price range suggests that she has either dropped her prices or dropped airbnb.

Competition can be huge in a city like London and not enough demand
Competition can be huge in a city like London and not enough demand

Too many hosts and not enough guests

This airbnb group post says it all. If you can’t read it the hosts says her views have dropped to almost nothing and so have her bookings (she charges £300 a night for a whole apartment). A fellow airbnb host says she has dropped her prices 25% because of the competition. Another Airbnb hosts comments on another thread “too many hosts and not enough guests, thats the long and the short of it”

Should I be charging a cleaning fee?

You have the option to charge your guests a cleaning fee on top of their booking fee. The fee is of course a one off fee added to the total. The question is should you be charging this fee?

Airbnb Cleaning fee – Why I don’t charge it

I don’t charge a cleaning fee. There is just isn’t a good enough reason to charge one. In fact I would say that if you do charge a cleaning fee then guests might well assume that they don’t need to clean up after themselves as they have paid for cleaning on top of their booking fee. If I were a guest I would personally find a large cleaning fee off putting and it might change my mind on selecting a particular booking.

The cleaning fee is included in the price in search results

In the search results guests will see the nightly rate inclusive of the cleaning fee so the obvious question is why have the cleaning fee and not just include this cost within the nightly rate?

See how Airbnb calculates the nightly rate inclusive of the cleaning fee here.

I would personally find a large cleaning fee off putting and it might change my mind on selecting a particular booking.

The fee Airbnb charges both hosts and guests is calculated including the cleaning fee so there is no benefit there.

The cleaning fee is in fact an incentive for a longer booking

Because the cleaning fee is spread out over the term of the booking a longer booking will have a lower average nightly rate than a shorter one. This will make your listing less competitively priced for short lets and more competitively for long lets.

If you have a good reason for charging a cleaning fee please let me know because I can’t find one.

Some additional advice on charging a cleaning fee can be found here.

What will Airbnb charge me as a host?

Airbnb takes a commission for every booking your listing has. However how much of a cut depends slightly.

What fee do Airbnb hosts Pay?

Airbnb says it takes 3% of the hosting fee plus VAT (in the UK 20%) so If you charge £100 per night then the hosting fee will be £3.30. See here for more details on Airbnb help section.

note – Airbnb will round up it’s figures so if your hosting fee is £6.60 this will be rounded up to £7.

Airbnb charges hosts a percentage of the listing price per night
Airbnb charges hosts a percentage of the listing price per night

Airbnb guest fees

The guest also pays a fee of 0-20% of the total price called the guest service fee. Which listing pay 0% and which pay 20% you ask? I am not sure and to my knowledge Airbnb has not revealed this information. Most of the listings I have checked hover around the 14% mark the lowest I have seen was 8% and that was on a shared room for £10 a night. The only detail we know is that the higher the nightly price the lower the percentage.

Airbnb can pay hosts via Paypal or Direct Credit into your bank account
Airbnb can pay hosts via Paypal or Direct Credit into your bank account

Airbnb payments via Paypal

Airbnb will pay you your hosting money the day after the guest checks in. There are several methods of payment to choose from however the main two are via Paypal or Direct Credit into a bank account. What’s important here is the time it takes for the money to reach you. If your getting paid by direct credit into your bank account then this can take up to 5 working days (occasionally longer in my experience) however Paypal takes only a couple of hours if not instantly. You can then transfer into your bank account and have the money in a couple more hours after that.

There are two major reasons why you might want to choose Paypal instead of Direct Credit into your bank account. The first being the time it takes (Paypal can take only a couple of hours versus 5 days or more for direct credit). The second could be tax planning.

Your first Airbnb listing

New listings get a boost in rankings so you may find that you a few enquires on the first day or two. After that enquires might drop off suddenly and then you will need to work on your ranking.

How many of my guests are first time Airbnb users?

Airbnb is still relatively new to most people in the UK and Europe despite being very popular in the USA and some other places for a few years. Consequently many of your customers will be using Airbnb for the first time and will not have any reviews from previous hosts (I estimate that about 50% of my guests are Airbnb virgins).

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So you get an enquiry from a potential guest asking to stay a few nights but there is no profile picture and almost no information on their profile. I always ask them to upload a profile picture and to tell me why they are coming to London and if they can tell me a bit about themselves. This puts you in the driving seat and lets the Airbnb newbie know what is expected of them as a bare minimum. Anyone who refuses to answer or upload a picture I decline. You don’t want to be unreasonable as get too intrusive in other people’s business but some basic information like this can reveal a lot about somebody’s intentions and how they might behave in your property.

Declining a guest request to stay

I had a potential guest who actually had a reasonably complete profile and actually had a good review from a previous host. I asked him why he was coming to London and he said to meet up with some friends. The booking was for one night (a Saturday) and his profile said he is a student. I said it was ok to stay but reminded him that check-out is 11am. He wrote back and asked if he could have a late check out and even offered to pay any extra. I got the impression he wanted a late check-out as he planned to stay out late in to the night with his friends and most likely this would mean some medium to heavy drinking. I wrote back to the guests saying that I didn’t think it was appropriate that he should stay with us as other guests might not appreciate him coming home at a late hour and declined his request but wishing him all the best. It’s a shame as he probably is a really nice man but our listing just didn’t suit his purposes and it was unfair on everyone to accept his reservation.

Mention your house rules up front

It’s probably a really good idea to mention certain house rules when guests first enquire about a booking. I always mention that there is no use of the kitchen allowed. This does put off some guests but better that than them get really disappointed when they arrive. It’s worth doing this as many guests don’t completely read the profile before enquiring.

When a guest arrives it is another chance to mention the house rules to them. Be clear that this is their bathroom, this is their bedroom, do not go in this room, etc.

 

How do I price my Airbnb listing?

What price you should charge depends on your market but there may be other factors to consider what price you are going to charge.

Other factors might be:

  1. The cost to clean the room and sheets
  2. Your free time taken up to meet the guests, check them out etc.
  3. The rent you could have received from a local long term renter
Try searching for your listing. If yours is too hard to find then you will struggle to get bookings
Try searching for your listing. If yours is too hard to find then you will struggle to get bookings.

Your location could determine the type of guest you will get no matter what service you provide

My listing is in Newham, East London; a reasonably central suburb it is none the less the wrong side of London if you are a tourist (my main market).

I could try and aim more towards customers who are in town on business rather than a holiday but so far I have had so few of these clients and don’t believe these types of customers are using Airbnb in any great numbers in the UK (maybe this will change).

Know your competition

My competition is whole of Greater London. Most of my customers are not familiar with the many different boroughs of London so will simply be searching for London. But this could be reduced to the inner three zones of London – 1, 2, and 3. My listing is in Zone 3. For anyone nor familiar with London a small apartment in Zone 1 can set you back as much as million pounds.

To maintain full occupancy you will need to set your price at a discount to the market
To maintain full occupancy you will need to set your price at a discount to the market

How I work out my Airbnb listing price

This is how I decide my price so I stay fully occupied. I do a search for the whole of London and reduce the price until my competition falls below 100

My Results are below. Most of my customers will be paying in Euros so we use € currency.

  • Price €99 = 1000+ other listings
  • €79 = 888 listings
  • €69 = 648 listings
  • €59 = 264 listings (a huge drop in the number of listings from €69)
  • €49 = 109 listings
  • €44 = 56 listings
  • €39 = 10 listings

I have priced my listing at 44 Euro’s to maintain a maximum occupancy. I could consider increasing to 49 Euro’s if say the number of listings at this price level drops below 100. If my listing was prime central London then I would increase my price to 59 euros and expect to do well. I certainly would not increase the price to 69 or above as my bookings would most probably fall to zero.