Airbnb has revolutionized the world of real estate investing by providing investors with the opportunity to outearn long-term rentals. But if you’ve tried your luck in the vacation rental industry, you might have come to the realization that buying a property and getting it listed is not enough to run a huge profit. At least, it’s not enough to maximize your returns.
In this article we look at what helps investors optimize the performance of their rental: everything from furnishing the property and responding to guest needs on time, through implementing dynamic pricing and utilizing search engines, to hiring a professional property manager and seeking constructive feedback. We provide you with 8 specific tips on how to make the most money with Airbnb.
To increase your Airbnb revenue you should:
1. Invest in High-Quality and Durable Furnishing
Unlike traditional rental properties, Airbnbs need to be fully furnished and equipped to provide a comfortable stay for guests. Knowing this, many new hosts make the rookie mistake of buying cheap, poor-quality, oftentimes second-hand furniture to limit costs while getting their rental ready for listing as quickly as possible.
But to maximize your daily rate and occupancy rate - the two most important factors for Airbnb income - you need to invest in high-quality furniture which is restful, matches the overall style of the location and the property, and durable.
Good-looking furniture that is the same style as your Airbnb and contributes to the guest experience will make a positive impression. Potential guests browsing through the rental platform are more likely to choose your listing over other competitors in the area.
Furthermore, if the furniture contributes to the guest experience once on site, you can generate 5-star reviews and good rankings, helping you achieve a Superhost status and pushing bookings even higher.
Bad furniture has the opposite effect. Furniture is one of the first things that gets noticed on Airbnb listing photos. This includes not only the availability of essential items and their type but also their current state. That’s why it is important to buy durable furniture and maintain it regularly.
A damaged chair visible in a photo will push away guests and reduce your bookings. Even worse, if you don’t display broken furniture in your listing but guests encounter it upon their arrival, they are likely to include this in their review and give you a poor rating.
It’s hard to say how much it costs to furnish a short-term rental in order to maximize revenue. Hosts have reported anything from $1,000-$2,000 all the way up to $100,000 in furnishing cost for an Airbnb property, based on the market, the property type, and the experience they want to offer.
With our vacation rental furnishing program, we at Awning can help you design, furnish, and install everything for a price of $15,000-$40,000, depending on the property size and desired finish.
With regards to furniture replacement frequency in an Airbnb property, it can range from 6 years for a mattress to 20 years for wooden tables and shelves. Generally, expect a slightly shorter furniture lifespan than in a long-term rental or a private home, as Airbnb guests tend to be less careful than tenants or homeowners.
To minimize repair costs and boost profit, the key is to choose brands that are known for durability and that offer a long guarantee. It’s also important to check up on the furniture frequently and perform any needed maintenance right away.
2. Be Quick to Respond to Guest Needs
Another tip to make the most money with Airbnb is to bring down your response time to guest questions to a minimum. In terms of response time to approve or decline a guest’s initial booking request, Airbnb gives hosts up to 24 hours. There are no requirements regarding further communication prior to or during the stay.
However, the sooner you can get back to guests at any stage of their journey, the better. Being an attentive host helps you and your investment strategy in many different ways.
During the booking process, from a guest’s point of view, how quickly you respond to questions and requests is a good indicator of how devoted you are to your guests and to making their experience as pleasant as possible. If you’re sluggish in your response time, potential guests are likely to drop off and select another property where the Airbnb host appears more available and committed. The speed with which you address questions directly affects your bookings and your average occupancy/vacancy rate.
Once they are on the property, guests expect responses to their needs within a reasonable amount of time. 24 hours is too long in their eyes, so it is advisable to try to get back to them within an hour or two. While you don’t have to comply with every random demand, you have to do everything possible - and sensible - to provide for the needs of your guests and make them feel comfortable and taken care of.
To optimize communication, you can leave a phone number in the welcoming materials at your Airbnb property. Sometimes sending a message to your inbox on the Airbnb platform is not the most effective way to receive questions and requests from guests. Indeed, many local authorities - including the majority of Texas markets - require short-term rental owners to provide emergency contact person information. This has to be someone local who can react immediately in case of emergency, whether a security threat or something breaking at your Airbnb.
How quickly you respond during a guest stay, especially in an emergency, impacts their reviews on the listing platform as well as how likely they are to recommend your rental to friends and family.
Your response rate is one of the factors that gives you access to the Airbnb Superhost program. You have to reach and maintain a response rate of 90%+ to get the benefits of the program which help you get in front of the eyes of guests to boost bookings, minimize vacancy, and optimize revenue.
3. Practice Dynamic Daily Pricing
One of the biggest advantages of the short-term rental strategy compared to its more traditional counterpart is the ability to implement dynamic pricing. The Airbnb rental market is affected by multiple factors such as seasonality and holidays, and hosts can base their daily rates around these factors to enhance the performance of an Airbnb property.
Importantly, your dynamic pricing should be daily as opposed to monthly or weekly. This is to reflect the quick changes in Airbnb demand during weekdays vs. weekends, public and local holidays vs. regular days, summer vs. winter, around local events, etc.
For example, if your nightly rate is below the market average for comparable properties during high season, you might be leaving money on the table by not pushing up your rate. Meanwhile, if you charge more than competitors during low season, you will get fewer or no bookings, which will impact your occupancy and eventually your returns. Thus, you should implement Airbnb dynamic pricing to reach a balance between vacancy and income.
If you opt to be a DIY host, you need to get familiar with your market to know when high-demand and low-demand times are. You also need to check what daily rates similar properties in the area charge during high season and low season. Based on this data, you can prepare a pricing schedule for your property.
As you can imagine, adjusting the rental rates on a daily basis will take a lot of time and can turn hosting into a full-time job. The good news is that there are multiple tools which help you make money with Airbnb without putting too much effort. The Smart Pricing feature on the Airbnb platform itself provides automatic changes to the nightly prices based on demand.
There is also a plethora of third-party short-term rental property management tools with dynamic pricing functionalities. You could use comparable properties for pricing in the Airbnb Estimator or select a full service property manager that handles dynamic pricing.
4. Don’t Ignore Search Engine Optimization (SEO)
Getting your listing higher in the search results on Airbnb as well as on Google will boost your bookings and rental income. You can do a number of things to achieve this, based on the Airbnb algorithm. Ranking high on the Airbnb platform might take some time to cover all requirements, so it’s recommended to start working on this as soon as possible.
Here is what you can do to optimize your listings for the Airbnb search engine:
- Fill in your host profile in full and in detail
- Write a detailed listing description highlighting all relevant features of your property as well as the experience you provide
- Upload multiple high-quality, professional photos showing all rooms and amenities
- Create a guidebook for your guests
- Get Superhost status
- Have many 5-star reviews
- Achieve a 4.8+ overall rating
- Have dozens of stays
- Maintain a <1% cancelation rate
- Boast a 90%+ response rate
- Enable Insta Book, an Airbnb feature which allows immediate bookings without an approval from the host
Having your property listing as high as possible on Airbnb is crucial, but this is not the only short-term rental search engine you can use to make more money as a host. While Airbnb has about 150 million users, Google is used by 4.3 billion people worldwide. Can you imagine the kind of exposure you can get if you manage to list your property on Google?
Luckily, Google Vacation Rentals is a relatively new functionality which allows hosts to list their properties directly on Google and enable guests to find them through the Google Search bar or on the Google Vacation Rentals tab.
To get your short-term rental findable on Google, you can list it on one of Google’s OTAs partners such as Tripadvisor and BluePillow or work with one of Google’s approved connectivity providers. To list directly on Google, you need to have a minimum portfolio of 5,000 vacation rental properties. Importantly, Airbnb is not an OTA partner, so listing your property on the platform does make it searchable on Google.
5. Work With a Professional Property Manager
When you think about how to make the most money with Airbnb, the property management process is one of the major factors. If you don’t have the time to be a DIY Airbnb host or if you invest out of state, you can consider hiring a professional property manager. This will help you make passive income from real estate.
The best full-service Airbnb property managers are expected to take care of all the day-to-day activities needed to operate your rental and optimize its performance. These include:
- Managing your listing
- Marketing the rental property
- Adjusting the pricing according to demand
- Approving bookings
- Communicating with guests
- Arranging check-ins and check-outs
- Scheduling cleanings
- Performing regular inspections of the property
- Organizing maintenance work and repairs
- Reporting to the Airbnb host
The most important part of the work of a vacation rental property manager is to actively seek ways to improve the performance of the Airbnb property and boost the host income. After all, most property managers charge a proportion of the monthly revenue - an average of 20-30% - so it’s in their best interest to boost your earnings.
However, because professional managers ask for such a hefty rate, you should understand what services they don’t offer before making a decision. Most Airbnb property management companies don’t:
- Pay the mortgage
- File taxes
- Submit insurance claims
- Undertake major property fixes and repairs on their own
- Devote their time and effort to only one property
In theory, hiring a property manager should improve your management process, optimize pricing, bring down vacancy, decrease rental expenses by streamlining services, and ultimately push up profit. However, to make sure that this really happens, you need to find a diligent, experienced professional who will spend enough effort on your property to make their fees worth it. The best way to locate a good property manager is to connect with local Airbnb hosts and ask for recommendations. Do not rely simply on online reviews.
Before you start working with a professional manager, ask them to provide a detailed analysis of the expected results. How many more bookings can they get you per month? By how much can they reduce recurring costs? How much more income can you expect on a monthly basis? The answers to these questions will help you evaluate whether working with a manager will cover the cost and turn a higher profit.
6. Seek Feedback for Improvement
Maximizing your Airbnb income is not a single step but a process. You have to continue putting effort into providing an always evolving experience to your guests. The best way to do that is to constantly ask for feedback from them.
You can ask guests for an official review after they complete their stay in your Airbnb property. While it’s important to generate positive public reviews to boost your rating, it’s equally important to try to acquire more detailed feedback from guests for your own personal use as a host.
After a guest leaves your rental, give them a couple of days to travel back and set up comfortably. Then reach out via the Airbnb platform or by email if you have their address to ask about their experience. Don’t forget to start your message by saying that you hope they enjoyed their stay and had a safe trip back home. Explain that you are striving to continue improving the service you provide to valued guests like them, and that their feedback is a crucial part of this. In other words, make them feel special and appreciated to predispose them to allocate the time to supply you with valuable information.
Then, list a number of questions that help you learn about their stay. Formulate your questions in a way that allows for as short or as long an answer as your guest is willing to provide. Mix in both multiple choice questions and open ended questions. Ask about the features of your property that you want to know the most about. For example, if you have the space and the budget to add children’s playground facilities in the patio but cannot afford adding a swimming pool, inquire about the former rather than the latter.
In addition to asking for feedback directly, you should aim to observe how guests use your Airbnb and draw conclusions indirectly too. For instance, does the coffee finish after every stay while the tea has been there for months in a row? This means demand for coffee is stronger than demand for tea, so you should provide a bigger amount of coffee and maybe even more varieties. This simple example can apply to many different aspects of your short-term rental and can help you improve guest experience without the need to bother them.
As you continue to work on enhancing the Airbnb experience of your guests, they are sure to leave you more 5-star reviews, pushing up your ranking on the rental platform, getting you more bookings, and helping you make more money on Airbnb.
7. Upgrade the Experience With Amenities
While how you furnish your Airbnb is important, what amenities it offers is even more important. The reason is that amenities contribute significantly to the Airbnb experience, and in recent years short-term guests have been all about the experience.
The pandemic has caused a few shifts in the vacation rental industry, and one of the major ones is the increased demand for outdoors experiences, as reported by Vrbo. In addition to choosing a rural market, you can offer amenities which will further enhance guests’ experience.
Some of the most popular amenities at the moment include patios, barbecue areas, playgrounds, and even outdoor gyms. It is wise to focus on amenities that add value to the experience but do not cost a fortune and do not require expensive and extensive maintenance. For example, a patio costs an average of $3,500 and can cater to the needs of both families on vacation and business travelers. Similarly, you can buy an outdoor grill for less than $1,000 and attract both families and friends looking to spend quality time outside.
Meanwhile, stay away from amenities which cost a lot, require heavy and expensive maintenance, have high recurring costs, and may threaten guests’ health and safety, turning into an insurance liability.
In addition to providing some general outdoor amenities that are sought after nationwide, a smart Airbnb host will look into local demand. You need to conduct Airbnb rental market analysis. A straightforward way to do that is to have a look at existing listings with many 5-star reviews in your area and identify what amenities and extras they offer. You will be able to pick some trends and implement them in your strategy to boost the amount of money you make on Airbnb. Furthermore, you can ask your own guests what further amenities would have made their stay even better.
8. Go Above and Beyond in Small Ways
Remember to pay attention to the small things. You don’t have to spend thousands of dollars and months of work in order to enhance guest experience. There are many small things that will go above and beyond and help you boost your Airbnb profit margin.
For instance, you can welcome your guests with samples of the local cuisine. The smell of home baked cookies or the freshness of a local cup of coffee can do miracles for your guests’ experience and their reviews later on. You can also have a paper or virtual guidebook with all the local attractions and events, the best way to get to them, entrance fees, and everything else that will help your renters tour the city conveniently.
You should aim to incorporate the local culture into the way in which you furnish the property. If you own a beach house, provide sea-themed bed sheets and bathroom towels. Buy paintings and other decorations from local artisans. Going the extra mile in this way does not cost more than a few hundred dollars but can make all the difference in how your guests perceive your property and you as an Airbnb host.
You can offer add-on services such as airport drop-off and pick-up, early check-in and late check-out, home cooked meals, cleaning during guest stays, laundry, dryclean, or local tours. Such add-ons will not only make guests’ stays more comfortable but also allow you to generate a few extra dollars with each stay.
In other words, when it comes to a short-term rental business, think small to make big money on Airbnb.
Buying a rental property is the first step to becoming an Airbnb host, but it’s not enough to run a profit. To make money on Airbnb, you need to put effort into providing your guests with a better space and a better experience than the other vacation rentals in the market. With the 8 tips provided above, you will be on your way to being a successful Airbnb host and maximizing your profit.