If you’ve recently taken the plunge into Airbnb hosting, you’ll quickly find yourself swimming in a proverbial sea of variables. Everything from pricing strategy to marketing and finding a reliable cleaner.
It’s exhausting, honestly. Thank goodness for experienced and successful host Jasper Ribbers, who, along with co-author Huzefa Kapadia published the excellent guide Get Paid for Your Pad.
Within a month of our planned “go live” we got our first two bookings. In our case, waiting until after the holidays was all it took. We had the place painted and new floors put in by now. Shortly thereafter, the new sofa and chair combo with an area rug arrived, and that allowed at least a couple of pictures in the listing to attract attention.
Remember the checklist in that earlier post? Here is a similar one with a few repeats, but with elaboration. Point is, BE FLEXIBLE when first listing your vacation rental! You want to get a healthy number of bookings under your belt to acquire good reviews. Those reviews will then drive new bookings, and then you’ll have the credibility to raise rates.
Here’s just a sample of the changes I made to my listing, based in large part on the advice in Get Paid for Your Pad:
- Eliminated the security deposit. Deposits can be a turn-off for guests who might fear nitpicky things being charged back to them.
- Removed cancellation fees. I’m too new in this game to be restrictive with cancellations. My main focus needs to be getting guests in there and giving positive feedback. The more reviews I get, the more my listing will rise in the search. Just like a new product trying to elbow its way into a crowded market, you must come in low to get noticed!
- Enhanced descriptions. It’s much better to evoke emotions when describing your space. Don’t simply say, “There are two bedrooms and two bathrooms, nice hardwood floors, and a balcony to watch sunsets on.” An improvement might be, “Come back from a long day enjoying the white sandy beaches and relax on the sun-filled balcony with a glass of wine. Retire later to a master suite appointed with luxurious bedding and plenty of space to stretch out after a day of Northern Michigan adventure!”
- More flexible length of stay. I had my listing limited to one-week minimum stays. But Airbnb is built on the idea of a quick stopover. Maybe one or two nights for most guests. To generate traffic, more reviews (key for a profitable vacation rental!), and ultimately more cash flow, I changed my minimum stay to one night. The book advises a maximum stay of seven nights to promote turnover and more reviews when starting. After about ten bookings/reviews, we went back to 2-night minimum stays.
- Accommodate parents with infants. What great advice! I remember when our twins were at that stage. It sure was nice to arrive at a hotel and have pack-and-plays already set up in our room for them. Along those lines, I plan to buy a pack-and-play for the condo, so little visitors can sleep safe and sound.
- Cut prices, at least initially. This is a key one. The book suggests undercutting the local competition to get those first few guests and some reviews coming in. Discounts of 20-30% are suggested. Whew! Now that that’s taken care of, I doubt you’ll find a better value until summertime rolls around.
- Lower the cleaning fee. I originally had a cleaning fee of $75, about enough to cover three hours of clean-up work. I’ve lowered it to $50 and will eat the $25 if there’s an extra hour needed to clean up. I’ve also offered my cleaning lady a $25 bonus for each 5-star review we achieve. It can’t hurt to offer incentives to ensure a super clean pad. If nothing else, the “Get Paid” book is clear on the importance of a super clean, spick-and-span experience.
- Over-communicate, and respond quickly! I’m now poised to get back to all inquiries within minutes of receiving them. My phone goes nuts now with each one – notifications come through via the Airbnb app plus SMS text messaging and email. Bases are covered. So when I get an inquiry, I’m quick to respond and respond with enthusiasm and detail. The more gracious you are throughout the process, the more likely you are to receive great reviews.
- Review your guests right away. This is a tactic that makes sense. Put the onus on your guest to give YOU a good review, by beating him to the punch. Right after checking out (assuming the cleaning lady doesn’t find piles of empty champagne bottles, half-eaten pizzas, and a stray tiger in the bedroom), give him 5 stars. And then, send a very nice note of appreciation for choosing your pad.
Airbnb Pricing Strategy
Airbnb puts forth a good effort to automate as much of your listing as possible if you let it. They have a newish pricing engine that sets your nightly rate based on your local competition and, apparently, seasonal factors. Sadly, as I found out through experience (backed up by Get Paid for Your Pad), Airbnb tends to low-ball listings when using its Smart Pricing feature.
I ran into a bit of a wall trying to manually set seasonal rates. Airbnb is a bit limited in this regard. You can set a price by week and by month, but those rates only apply for 7 plus nights and 31 plus nights, respectively. My only option was to set prices day by day, in the booking calendar. Onerous defined.
Thankfully, this process isn’t too bad, once you figure out the sliders. For a while, I was updating day by day and thinking, “There HAS to be an easier way to do this!!!” Not so intuitively, Airbnb puts little handles on each side of the date window, which you can “grab” and stretch to cover a range of days and weeks. Whew!!!
And of course, you must use those “9”s as part of your “Most Significant Digit Pricing” strategy. Get Paid for Your Pad does a nice job of explaining the psychology behind the appeal of something that costs, for example, $29.99, vs. $30. It seems our brains are subconsciously wired to believe that the extra cent is more appealing. Okay, then!
As for long-term guests? Vacation rentals aren’t geared for stays longer than one month. It’s possible, but I don’t personally recommend it. That said, I would consider longer-term rentals of one to three months when you’re at the start of the race.
Having just a single tenant to look after for a long duration allows you to catch your breath, and capture some rent while you plot your high-season strategy.
Keep in mind that for longer-term rentals of up to a year, you’d have to take the conversation offline and work through a lease agreement. Airbnb and VRBO are good at restricting hosts’ ability to make “back door” arrangements. Email addresses and phone numbers will be blocked out in their message exchange system.
In our case, we were able to rent our unit for a month before the high season arrived. The booking was made through Airbnb, and we fetched a cool $1,200 for March. Not bad for a typically dreadful month demand-wise.
Managing Guests With Automation
Airbnb makes it pretty easy to manage everything. I use BeyondPricing.com to price the unit, and it integrates seamlessly into Airbnb and VRBO, both of which I use. What’s also great about the two platforms, you can sync calendars between them with ease.
Remember that there’s much more to this endeavor than the online experience. If you want to build and keep up a reputation for excellent customer service, you’ve got to communicate early and often with your guests. That means sending a note before they arrive:
“Hello, Jane! I’m looking forward to hosting you and your group this weekend. Please let me know if I can be of assistance with anything you need. I’m happy to offer suggestions on activities, dining, and sites to see. You’ll receive your entry code on the day of check-in via a special link from Airbnb. Best!”
It’s not much, but you need to remember to do this every time. And with Airbnb, you might have 3 or 4 different guests in a given week.
Thankfully, both Airbnb and VRBO have a templates feature that allows you to reuse common messages over and over again. I use this feature for new bookings, pre-check-in, post-check-in, pre-check-out, area activity ideas, and review reminders. Simply swap out the names and the rest of the content can be sent off as boilerplate.
There’s also a bit of back and forth that can happen during a guest’s stay. Some guests you’ll never hear a peep from. Others, you’ll get texts with selfies showing what a great time they’re having. I prefer somewhere in the middle as a host. Just be sure no matter what, to be RESPONSIVE.
One of our very first guests couldn’t stop gushing about how awesome the place was, which was music to my ears (eyes), but after a few more messages asking “where did you buy this piece or that piece?” it started to get old.
Still, you have to take the time to respond, and treat your guests with respect. That extra effort pays off, especially when you get those 5-star reviews rolling in.
You Must Use Top-Notch Photos for Your Listing
Staging any profitable vacation rental for appealing, pro-like photos is probably the single most important factor for generating bookings. You’ve got to make the place shine for the listing to get some traction.
1.) Rely on natural light. Early AM seems to work well. You want the sun to be present, but not glaring too much through the windows.
2.) Take your photos at waist level. This is what real estate pros do when staging a home for sale. From the waist or roughly three feet off the ground, you create a larger feeling space. I used this tip to excellent effect in the “after” images earlier on in this post.
3.) Put the clutter away. Simple things count, like getting rid of a second trash can in the kitchen used for recycling. And putting away extra charging cables.
4.) Apply a good filter to enhance the photos. I love the Camera Plus app on my iPhone 6. After I snapped all of our vacation rental shots, I applied the “Clarity” filter to bring out the contrast and brighten all of the shadows. It’s worth a couple of bucks for the pro version of this app.
5.) Don’t overdo it on photos. Just pick the best dozen and leave a little to your guest’s imagination.
The wonderful thing about the sharing economy is that it’s providing incredible opportunities to make money that wasn’t there before. Airbnb, VRBO, Lyft, Uber, DogVacay, GetAround, you name it. Photographers of weddings can now zip around and help us amateur vacation rental hosts!
Achieving Airbnb Superhost Status
The first couple of bookings were hard to come by for us. A ski weekend here, a retreat weekend there. I was charging maybe $60 a night during late winter and early spring. Nowhere near a high enough rate to meet our first-year ROI goals.
Then things started to pick up. A combination of winter latency prompted people to book their summer vacations early. And good reviews kept streaming in.
Before long, we had achieved ten 5-star reviews out of ten possible tries. Airbnb is excellent at promoting guest and host mutual feedback.
VRBO is starting to pick up on the success of Airbnb’s system, but it’s still fairly basic. For instance, I can only give star ratings on a few categories to VRBO guests – but no commentary.
Now that we’ve achieved Super Host designation on Airbnb, we’ve seen a surge in views of our listing by 20%. This should encourage more bookings.
It’s a significant achievement and one you should strive for. If you’ve put the hard work and effort into this investment, the Super Host designation is a meaningful reward that will boost your return even more.
BeyondPricing automates future date pricing for multiple platforms, BUT, you’re still on the hook to set the base price and minimum price for your average single night of stay. That’s quite a lever to have control over.
Starting, I kept the base price lower than I’d have preferred, at $69. It wasn’t until I started obtaining more bookings and 5-star reviews that I was in a place to raise prices. The Airbnb listing is now at a base price of $119. VRBO at $129. (Update 8/3/22: Base prices have since jumped up almost 100% to $220.)
This is supply and demand stuff. The supply of Super Host properties is limited, and the demand for vetted properties with multiple reviews is always high.
Over time, there will inevitably be a shortage of available vacation rentals as units get booked. That’s the supply constraint.
What Beyond Pricing factors into the pricing equation:
As you can see, I have upped my base price from $69 at the outset of the listing, to $119 today. Seasonality is a negative factor because summertime is lights-out amazing. But then, voila! A few local events are happening the weekend depicted above, that bring people up north in droves. Boom. +$108.
Finally, because it’s a Saturday, a healthy +$38 “day of the week” bonus is added. This is how valuable Beyond Pricing is. I wouldn’t have dared to more than double that Saturday rate. Leave it to the pricing algorithms to crack this nut. The 1%-of-revenue fee I pay Beyond Pricing is well worth the investment.
Build Goodwill With Neighbors
Guests, by and large, are pretty dang decent people. Regardless of that, the folks who live at the condo units full-time simply don’t like the steady stream of new people coming and going. What’s a vacation rental host to do?
One regret I have is that I didn’t make more of an effort to reach out to ALL of my neighbors before I started up bookings earlier this year. I would strongly suggest you get to know as many of your neighbors as possible and float your intent. Better to know in advance what the perceptions will be, and simply making yourself known builds some trust.
Earlier this spring one of our neighbors complained about noise from slamming cupboard doors. This neighbor is a really good chap. He offered to install slow-closing hinges on the cupboards and drawers. I paid for the hardware, he installed.
Problem solved. This was a neighbor I had met before firing up the rental, and I’m glad I did.
When you think about it, having guests coming and going is sort of unsettling for neighbors. Even in an apartment or condominium setting, one typically prefers the stability of knowing who’s sleeping next door.
I imagine here, in my neighborhood, what it would be like if my next-door neighbor all of the sudden turned his house into an Airbnb. I would not like it.
So I get it. The only saving grace is that these condos are, by and large, summer havens for snowbirds. There are already a few other units that are rented via VRBO each summer and require a minimum 1-week stay.
The thing is, when you’re getting established, you can’t enforce week-long minimum stays and hope to make a return on your investment. Year one is crucial to break even on your invested cash.
Our story isn’t unique. This “not in my backyard!” phenomenon is gripping much of well-traveled Europe these past few years. Europeans want to make money just like everyone else, and Airbnb has proven to be a boon for them.
The trouble is, their neighbors are like, “What the hell, Gunther?!? Another busload of American tourists?”
I’ll leave you on that kind, parting note pictured above. Yikes. Just a reminder, be sure you do your homework before selecting a location for your Airbnb business. No sense making the natives restless!
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Featured Photo by Zoltan Tasi on Unsplash