While the short-term rental industry, specifically Airbnb, offers property owners the chance to provide meaningful experiences for guests, investors would understandably first have to make sure that it's a sound financial decision. Crafting the correct strategy can impact how well your property stands out in this dynamic, yet rewarding, market.
Here are a few ideas to help you kickstart your business case if you're planning on listing your property on Airbnb.
1. Identify your target audience
Guests from all walks of life make use of Airbnb, from business travellers and families looking for a short holiday, to those looking for a temporary home while renovating theirs. With all these potential guests in the market, it's beneficial to define which types of guests your property will cater to best.
The first step is to assess your own property's unique qualities. Take a look at what your property's best-selling features are and decide which types of guests it will most likely attract. If you have minimal artwork, railings on your stairs, more than one bathroom and a large garden, your property will be perfect for families with small children for instance. Once you've answered this question, it will be easier to generate new ideas on how you can position your listing on Airbnb and style your property.
Hometime's Tip: Learn more about the market by asking experts such as Hometime's property specialists.
2. Set aside a budget and stick to it
Once you've identified the potential guests, you can start looking into a budget for your upfront investment. Know how much you are willing to spend to get your property Airbnb-ready and try to stick closely to that budget. It's important to note that guests make their decision based on your Airbnb listing and reviews. A listing with engaging copy and professional-level photography can help improve your chances of reaching potential guests who are part of your target audience, ultimately helping you secure more bookings at better rates. An internal study by Airbnb actually stated that listings with professional-level photographs can stand to earn more by 40%. When professional grade photos were used in a listing, it was found that it yielded a 24% increase in bookings and a remarkable 26% uplift in nightly rates.
A popular misconception about Airbnbs is that you will need to spend a large amount of capital to furnish and style every corner of your property. However, our own experience with managing hundreds of properties have shown that small details and targeted features, such as an artwork that adds a pop of colour or a small and cosy nook can do wonders to your property's appeal and generate more value for your money in the long run.
Hometime's Tip: Use a style guide to get more ideas on home décor.
3. Approximate pricing and occupancy rates
While there are different ways to estimate just how much your nightly rate should be and what your average occupancy could look like, a helpful tip would be to do some research first. A quick search of Airbnb properties in your area is a good start. You can then check their calendar availability to get an indication of their success at listing these properties in that price range. Another good platform to use is Airdna where you can find monthly revenue figures and occupancy rates in your area.
For occupancy, self-managed listings typically average around 60% while professionally managed Airbnbs with their own team of data specialists can reach up to 75% and beyond.
Hometime's Tip: Reach out to professional property specialists and ask them about rates and occupancies in your specific area.
4. Consult experienced professionals
One of the most common mistakes when building a business case for an Airbnb is to miss out on speaking with professionals who have experience in managing short-term rentals. Every property is unique and the distinct features of your own investment property may be overlooked by those who are just starting out in the short-term rental market. A fresh perspective, especially from those who already know what to look for, can give you an advantage in sourcing additional ideas to add to your home.
Research is important but combining it with first-hand professional knowledge from those who can provide useful marketing insights from managing a large portfolio of Airbnb listings, is invaluable.
Hometime's Tip: Get personalised assessment and recommendations by scheduling a call with one of our property consultants here.
If you need to learn more about your local area and chat over coffee about your property and the broader short-term rental market, reach out to us at Hometime.
Kieran O'Neill is the Co-Founder and CFO of Hometime based throughout Australia and New Zealand. Hometime specialises in Airbnb property management by partnering local Hosts with homeowners and services in their regions. Find out more about Hometime on their website: www.hometime.io