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.
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 more listings in my area and they are mostly double rooms at prices barely above the price of a single. 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
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). Over the Christmas period I do have airbnb guests staying at my house. I still had 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.
August has possibly been my worst month for new bookings. My calendar for the month of August was actually quite full but September onwards was 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. [caption id="attachment_191" align="aligncenter" width="611"] You can change your cancellation policy under your listing Terms[/caption]
Can you get rich using Airbnb? Some I'm sure do. 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 no 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 sofas 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:
- Get a one bed apartment in central London
- Put one double bed in the bedroom and two double beds in the living room. No other furniture is needed
- List for £150 a night, sleeps 6
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 groupsA 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 – 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 guestsMy 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’s my location. I live in Newham east London, one of the worst areas for poverty in London but 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 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 AirbnbI’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!
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 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 ratesI 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'sGuests 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 guests says they will arrive at 3pm I usually expect them to arrive sometime after 4pm. I'm not out to rubbish my guests but 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 my guests in in person. I'm lucky in that my wife stays at home during the day and is there to meet the guests in person and show them their rooms 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 CompetitionI 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.
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 warming 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 company likes so you are rewarded to 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.” 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.
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 also partly to steal ideas for making my listing look more attractive.
A very price sensitive marketHow 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. [caption id="attachment_119" align="aligncenter" width="734"] Pricing your listing well below average is the best chance you've got of full occupancy[/caption]
I'm not going to get rich anytime soon from AirbnbBeing 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. [caption id="attachment_120" align="aligncenter" width="705"] Competition can be huge in a city like London and not enough demand[/caption]
Too many hosts and not enough guestsThis 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"
You can opt 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? Why I don't charge a cleaning fee
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 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.
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.[caption id="attachment_125" align="aligncenter" width="691"] Airbnb charges hosts a percentage of the listing price per night[/caption]
Airbnb guest feesThe guest also pays a fee of 6-12% of the total price called the guest service fee. Which listing pay 6% and which pay 12% 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. [caption id="attachment_123" align="aligncenter" width="723"] Airbnb can pay hosts via Paypal or Direct Credit into your bank account[/caption]
Airbnb payments via PaypalAirbnb 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 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. You might want to consider that Airbnb is a US company and will be collecting its revenue in US dollars. It will then need to convert that money to GBP to pay you.
New listings get a boost in rankings so you may find that you a few enquires on the first day or two. You mat then find that enquires 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). So you get an enquiry from a potential guest asking to stay a few nights but there is not 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 stayI 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 frontIt’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.
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:
- The cost to clean the room and sheets
- Your free time taken up to meet the guests, check them out etc.
- The rent you could have received from a local long term renter
Your location could determine the type of guest you will get no matter what service you provideMy 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 competitionMy 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. [caption id="attachment_138" align="aligncenter" width="723"] To maintain full occupancy you will need to set your price at a discount to the market[/caption]
How I work out my Airbnb listing priceThis 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