Is Airbnb forcing down your prices?

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 slowing 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.

The issue of Airbnb forcing down prices appears in the Host Q&A – Airbnb Community 2018 event. Airbnb explained the issue as below: –

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 living calendars bookings suddenly flooded in. However I was 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 recently received an email from Airbnb with the subject reference “Demand is down by 15% in London.” The email was a call-to-action to reduce my minimum prices before its too late. Presumably every host in London has received the same email. What the actual effect on demand would be if we all cut our prices is hard to be sure. The recent decline in the pound sterling has made the UK cheaper to visit compared to other countries so even lower prices might have virtually no impact at all.

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.