However, making an Airbnb successful can be a challenge. While it may be a boon to some hosts, it can be a very risky investment for others. Read below to understand the basics of Airbnb hosting, how to get started, and whether it’s right for you.
What Is Airbnb Hosting?
Airbnb is a very popular short-term rental app. It lists photos and details of short-term rental properties, and guests can browse through the options and book a stay for their next vacation. Rental properties can be anything from entire townhouses to treetop tents. The app is open for anyone to create a property listing and become a host. Airbnb hosts can choose when their properties are available for short-term rental or even “snooze” their listings so that they’re not publicly viewable for a set period of time. No minimum time for property availability is required. Hosts can set their daily, weekly, or monthly rates, often with discount incentives for guests to stay longer. Rates vary widely, but the average nightly rate in North America in 2020 was $161. Airbnb guests can select their preferred property and length of stay, then book their reservation. The host doesn’t receive payment until 24 hours after the guest’s scheduled check-in. Signing up to be an Airbnb host is free. However, Airbnb receives a percentage of all guest stays. Most hosts pay 3% of these earnings to Airbnb; the guests pay for a service fee of under 14.2% of the booking subtotal for cleaning and other costs.
How To Start an Airbnb
Here are the first steps to starting an Airbnb business.
Have a Property
Research Liability and Insurance Options
An Airbnb host is not required to consider their liability to qualify for hosting. However, hosts take on a lot of risk, including property damage and injured guests. In addition to standard home insurance, hosts can buy Airbnb protection insurance for up to $1 million to protect their homes.
Review Local Laws
Laws regarding short-term rentals vary on state and city levels. Even a property itself, such as a co-op apartment building, may have rules regarding Airbnb rentals. To ensure that an Airbnb rental is legal, it’s critical to become familiar with local laws, such as business and housing standards, city zoning rules, landlord-tenant laws, and government tax collection policies on Airbnb stays.
Post a Listing
Hosts should log in to Airbnb and follow the app prompt to start a listing. They are required to upload at least one photo of the property and to set up a personal profile. On their listing, hosts can set their own rates. Listings should also include:
A description of the propertyDate availabilityLocationAccessibility informationAny amenities, such as air conditioning
Should I Start Airbnb Hosting?
Many people can start an Airbnb business—but not all Airbnb businesses are successful. Below are some issues to consider when deciding whether or not an Airbnb business is right for you.
Consider Property Size and Location
While it is free to list a property on Airbnb, profitability depends on many factors, including size, guests, and location. For example, one small private room with one guest in New York City is estimated to earn a host $1,393 per month, while an entire house with four guests in Tallulah, Louisiana, could earn $1,680, according to an Airbnb estimating calculator. Generally, metropolitan areas like San Francisco and New York City have the highest occupancy rates, while popular areas for seasonal vacation rentals such as Park City, Utah, can rake in the highest rate average nationally per night, according to AirDNA. Competition is fiercer in popular areas, however, so hosts should consider how much time and money they are willing to invest to take on the challenge.
Calculate Upkeep Costs
Airbnb strongly recommends that hosts provide basic amenities such as toilet paper and soap. At a minimum, the company says, guests in a lodging rental expect a clean and comfortable sleeping space with access to a bathroom. Some properties have private pools or access to a lakefront. A host should be prepared to maintain the amenities they offer.
Be Communicative
Airbnb hosts need to be reliable, honest, and communicative. For example, Airbnb requires that hosts maintain a high response rate by replying to reservation requests within 24 hours and that they avoid cancellations as much as possible. Hosts should answer guests’ questions and try to resolve problems.
Consider Risk
Starting an Airbnb business comes with a variety of risks. Hosts have to be constantly mindful of local laws to avoid penalties. Guests are entitled to request refunds. In extreme cases, some of them refuse to leave. Uncontrollable issues can disrupt the travel industry; the pandemic, in fact, slashed Airbnb’s overall revenue by 30% from 2019 to 2020. A host must decide whether they are willing and able to take on these types of risks. Before starting an Airbnb business, hosts should carefully review Airbnb’s terms and policies, research possible challenges, and speak to experts such as financial consultants and attorneys.
Tips for Successful Airbnb Hosting
Hosts have to be crafty and adaptable to make their business successful. Here are some pro tips.
Study the Market
Hosts should study other listings in their area to make sure that their prices and offerings are competitive. They can also meet up with other hosts in their area to compare notes.
Post an Excellent Listing
Airbnb recommends that hosts take special care to make their listings stand out, meaning they should always:
Use high-quality photos Fill out their entire profile and update it regularly Describe the space clearly using an attractive description and title Be honest and upfront about the property and any house rules
Set Smart Rates
Price is one of the biggest factors that guests consider when choosing an Airbnb space.
Accumulate Positive Reviews
Hosts should do everything they can to acquire positive reviews from guests. Airbnb data suggests that positive reviews on a listing are correlated to higher earnings. Guests can rate their overall experience from one to five stars and leave a written review, which will both live on the listing. Separately, guests can also rate specific elements of their stay including cleanliness, value, accuracy of the listing, communication, arrival experience, and more. Very highly rated, active hosts may qualify for “Superhost” status on Airbnb, which gives them exclusive rewards and more visibility on the app.
