With the advancement of technology and the appearance of the Internet, the world as we know it changed forever. Because of it, not just accessing information became easier for people, but the business outlook also experienced a revolution. Even the business of renting properties has witnessed considerable changes, and making money with Airbnb has become very simple and straightforward.
After the introduction of the internet, the playing field changed, and many new opportunities for earning money opened up. People understood that with the internet, the world had become a global market, and everything has become possible with just a single tap of a finger.
Making money with Airbnb is also based on this notion of a single tap, and it owes its existence to the internet. It makes it possible for the hosts to list their properties to rent, and for the guests to book these rentals after virtually checking out the property. Guests can talk to the host while sitting thousands of miles away. Thus, the Airbnb business is capable of aiding guests in finding suitable accommodations and helping hosts in earning more money.
However, that said, it must be noted that while the internet can be owed gratitude for opening up new ways of earning money, it is still the strategies and decisions of the entrepreneurs that aid them in making profits. This sits true in the case of Airbnb business as well. The Internet makes it possible for services like Airbnb to operate. With smart thinking and better utilization of facilities, a host can make decent money with Airbnb.
So, only having a beautiful property in a prime location and access to good speed internet is no guarantee of success. Instead, for making profits, the host needs to make wise choices and offer additional services to satisfy their customers. To help you decide on these wise choices and additional services that can aid a host in making money with Airbnb, continue to our next sections!
Is being an Airbnb host a profitable business?
When you are starting any business, you want to know if getting involved in it would earn you any profits. But there is generally no certain answer to this question. The same follows for Airbnb business.
While it is true that some hosts in Airbnb make as much as $10,000/ month on a single property, it is also true that other hosts earn barely enough to meet their regular expenses. So, whether being an Airbnb host is profitable or not depends upon a multitude of factors like your pricing strategy, type of property, seasonal trends, etc. and on your individual choices and actions.
Useful tips on making money with Airbnb
Before listing the property on Airbnb, here is a list of things that you should do.
Estimate your earnings
For making maximum profits in your Airbnb business, your first step should be to get an estimate of your potential income. Doing so will help you in getting an idea about how much money you can make by renting your place, which, in turn, will help you in strategizing and planning your next steps, like in setting up the right rates for your accommodation and services.
In order to prepare a comprehensive analysis of your earnings, you can use the Airbnb profit calculator. The calculator will use the available past data and the present trends to give you an idea about your potential earnings. For using this device, here are some parameters that you should take into account.
- Cash Flow– In the cash flow, you take into account your Airbnb earnings after deducting your charges and monthly rental expenses. So, for example, if your income from renting is $2000/ month and you pay $600 as charges, then your cash flow is $1400 (positive).
- Potential rental income– This is the estimated approximate figure that you believe you can make by renting your property.
- Occupancy rate– When determining your annual earnings, it is important to take into account your occupancy rate. This rate is basically the ratio showing the number of days your property was occupied vs. the number of days when it was vacant.
Check-out your competitors
No matter what business you are involved in, it is always important to know what your competitors are doing. Having an idea about their moves and strategies is relevant for conducting online businesses because it helps in evaluating what it is that your competitors are offering that is helping them in improving their performance. Doing so also helps you in staying updated on the current trends.
Now, for making money with Airbnb, analyzing your competitors is useful because it can aid you in establishing your nightly rates, and in deciding how much you should charge your customers for any additional services. Now, for finding comparable properties on Airbnb, you can use the available filters to narrow down your search. You can set the search area, the available amenities, and the number of rooms to seek your competitors.
Check the legal issue and liabilities.
Making money with Airbnb is a comparatively easy process. One does not need to make big investments or to put in 24*7 hours of work like you would probably need to put-in when working some other online business. However, this does not mean that with Airbnb things are less complicated. The cause for this is the legal aspects that you need to be aware of while renting your place and the detailed strategizing that you need to line up if you are an Airbnb host.
Thus, before listing your property and making money with Airbnb, as a host, it would be prudent to check the legal issues and liabilities in your locality. Doing so will help you in complying with the law which, in turn, will keep your business afloat in the future. Ensuring legal compliance will help you conducting your business and avoiding the payment of unnecessary bills. Now, while checking out the legitimate complexities, here is a list of legal aspects that you should check-
- Taxation rules– every locality has its own rules. In some areas, the law requires Airbnb to collect taxes and to make the payment on their behalf, while in other jurisdictions, the host needs to pay his taxes on his own. So, if you are an Airbnb host, you should probably consult your local tax advisor to figure this out.
- Business license– In some jurisdictions, the host needs to acquire a business license, or their business is considered illegal.
- Zoning rules– In some states, certain rules guide how you can use your home. Thus, to know if you can rent your room, you should check what the rules suggest in zoning code, city ordinances, or planning code.
Determine your operational and additional expenses
Listing your property on Airbnb is a little different from traditional renting practice because Airbnb hosts make sure that guests are with the supplies, utensils, and with clean and spotless surroundings. The host makes the payment for all these services. Thus, for making money with Airbnb, it is important to calculate your operational and additional expenses before devising a strategy. Doing so will help you in setting up your rates.
So, if you have a manager for handling your rentals, then take his fees into account while calculating your costs. To deal with the cleaning expenses, consider introducing a cleaning fee for the guests. As for the additional costs, like for the repairs and maintenance, you can earmark a portion of your revenue. This money should mandatorily be used for covering the expenses related to the upkeep and improvement of the premises. Even when the expenses are low, and funds are lying unutilized, you should let them roll over so as to cover any big unforeseeable expenses.
Strategize your Unique Selling Proposition
As a result of living in the global economy, competition in every field has increased significantly. One way of dealing with this competition is by setting up lower prices for your product. However, while this solution may sound like a good idea in the beginning, in the long run, this strategy won’t help you in maximizing your profits. So, what else can be done? Well, the other way includes promoting your USP.
For making money with Airbnb, you must differentiate yourself from your competitors. For ensuring this, you should think about offering additional amenities and services to your guests. Some such services can include things like a hot tub, smart locks for self-check-ins, a digital guide of your place and locality, etc. Also, remember that merely working on your USP is not enough, as a host, you also need to promote and highlight it for your potential guests.
Additional services for making more money on Airbnb?
Well, if you want to make money on Airbnb, then an excellent way of doing so is by offering your guests some additional services. If you will do so, then it will leave a good impression on your customers, which, in turn, might aid you in scoring some good reviews. Now, some excellent additional services that you can offer to make this possible include-
- Extra cleaning services
Some guests are idealists and cleanliness is their priority and they like staying in spotless residences. For such guests, you can offer at your rental property extra cleaning services. You can discuss with them in advance when and how often the cleaning service must arrive. Remember to negotiate the prices with them in advance so that they don’t feel cheated at the time of billing.
- Bike on rental
A lot of guests who are renting a property at Airbnb are visiting the locality as tourists. Such guests usually do not have a means of transport, and they have to rely on public transport for their trips. Hence, for making money on Airbnb one solution is to offer bikes on rental to your guests. Doing so can significantly increase your earnings and aid your guests.
- Offer guided tours
If the guests who are residing at your rental property are tourists, then it makes sense that after their arrival, they will look for someone to offer them a guided tour. Now, for making money on Airbnb you can arrange this guided tour for them by partnering with a local tour agency. Offering your customers pleasant discounts on such tours will also ensure satisfied customers.
- Airport pickup and drop-off
When the guests arrive in a new town, they do not know much about the place. In such circumstances, if you will arrange for them to be picked-up and dropped-off to the airport, they will feel grateful. However, while offering this service, you should take care to charge your customers reasonably, or else they will prefer calling Uber or another car service over giving you a chance.
- Offer cooked meals
It is true that when travelers arrive at a new place, they like exploring new restaurants. However, if you will offer them breakfast at your rental, then the chances are that in the exchange of this convenience they will agree to pay you gladly. So, if your rental is located in a famous tourist locality, then consider offering your guests breakfast as it can help you in making money on Airbnb.
- Offer tickets to events
If you have your rental property in a tourist place where events are organized on a regular basis, then maybe you can consider offering event tickets to your guests. While providing these tickets, remember to highlight them in your listing description as that will help you in luring more guests. Because of this, your guests won’t need to search and book tickets to events on their own, and you will end up making more profits.
- Decorate your space
A lot of guests prefer traveling on special occasions, breaking the din of their regular monotonous lives. For such people, the hosts can offer staging services in exchange for a small fee. The customers will appreciate this service as they won’t have to worry about arranging decorations after arriving at a new place, and the hosts will make money on Airbnb.
- Laundry and dry cleaning
The guests who are staying at your place for attending a meeting or for business purposes, laundry, and dry cleaning services are of great use. The guests will appreciate not worrying about their attire, and this way they will also feel encouraged to choose your rental over others. The hosts, in turn, will also get a chance of making extra money on Airbnb.
How to sell additional services to your guests for making money on Airbnb?
Once you have decided upon the additional services that you will be offering to the guests staying at your place, the next step is to convince your customers to use those services. Now, one way of making this possible is by attractively promoting your additional services. So, when you get an inquiry call from your guests about reservations, remember to mention the extra services and the advantages that such services offer. Also, on your Airbnb listing, highlight these services so that when your customers are checking for reservations they come across the special benefits of choosing your place.
For example, if you have a rental property located in a small area and you are offering your guests the tickets to a local event, then make sure to inform your customers about what they can expect at the function. For many people who live in big cities or very populated areas, this will be an opportunity to enjoy a rural event.
However, while promoting your extra events you should also take care to be honest about the cost of your services. This will aid you in avoiding any misunderstandings.
Thus, for making money with Airbnb, along with the online presence, smart and quick decision-making capability is also required. With the right choices about what additional services to offer to the guests, and what aspects to consider before setting up the rates of your rental, you can make huge profits.
You may be offering your premises across various platforms. Hosty’s Airbnb management software can help you manage your property in an optimal way so that all listings are updated as per the current availability. This feature ensures that your offerings are up to date all the time without any hassle.