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.

Airbnb NYE bookings and How you should warn your overseas guests about Christmas

It's the end of the year and New Years Eve is only days away. I had a last minute cancellation of a guest for NYE. I took this as an opportunity to increase my price for this night and after having done so 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.

airbnb lower pricesReducing 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.

Warn your guests from overseas about Christmas

It seems every year I have a guest who seems to not know the consequences of being a guest 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.

How much should I increase my Airbnb prices during the summer?

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."   [caption id="attachment_269" align="aligncenter" width="511"]Make your price correct as guests will rate you on value for money Make your price correct as guests will rate you on value for money[/caption]   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.   Screen Shot 2016-04-03 at 16.03.01   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.   [caption id="attachment_274" align="aligncenter" width="299"]Guests putting you on your wish list helps your rankings Guests putting you on your wish list helps your rankings[/caption]   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.

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 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
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.   [caption id="attachment_230" align="aligncenter" width="636"]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[/caption]  
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.