If you told me that you had never heard of AirBnb in the year 2020, I would have a very difficult time believing you. Along with Uber, it is perhaps the most renowned of the new generation co-sharing platforms that have taken off in the last decade. Started in 2008, AirBNB has blown up to unimaginable proportions; their site now hosting over 2 million people every single night. If you’re reading this, AirBNB is practically guaranteed to have at least a few listings near you, with the brand operating in 191 countries worldwide.
With the rise of AirBNB, new opportunities developed for entrepreneurs and creative types to capitalise on the trend and build their own businesses, or at least claim an additional side income for their efforts. The most obvious example is renting out space in your current home, or a property you own. Through this, an entirely new industry has spawned: AirBNB Management, offering a new take on the traditional property management services generally reserved for real estate agents. This new (relatively) phenomenon is what this article will cover, diving into how to start your own business in this niche and how to generate pretty sizeable profits. There is huge potential here and it’s an exciting opportunity that is well within the reach of most of you. So, let’s dive in!
The Benefits of Short Term Rentals
Firstly, a quick overview on the viability and differences between short term rental (of which AirBNB is generally classfied) and the traditional 6 months+ model.
With the rise of AirBNB and other similarly minded companies, the viability and demand for short term rentals has increased dramatically. Home owners have always had the option of renting their property out short term, rather than through a traditional 6 months+ rental model, however it was just so much more difficult to organise the whole process. There were few online booking sites catering to such approach, so it was generally up to the owner to create their own site and drive demand through advertising in various forms. Nowadays, the demand is already present and the customer base is already searching in just a few places for a place to stay. All a homeowner has to do, is put their listing up and the demand occurs automatically (provided the listing is suitable of course).
Homeowners will find that short term rentals provide a much better yield than longer term rentals, provided the occupation rate is reasonable of course. There are also benefits in the turnover aspect- the possibility of being stuck with a bad tenant for a year is banished. If the owner wants access to the property fro several days a month, all they have to do is make those days unavailable to be booked.
In addition, the demand for such accommodation has drastically increased. Holiday makers & business travellers have found the short term rental option to be a very viable alternative to the traditional hotel or motels they would’ve previously stayed in. Often it’s cheaper and provides a more private and warm experience than a hotel counterpart.
The Business Concept
So how do you capitalise on this trend and build a viable business, without the tremendous capital it would require to actually purchase the properties? You offer an AirBNB management service. Here’s what that actually entails..
In essence, you are taking over the management and running of AirBNB listings from private owners. This can be broken down into 3 key segments:
- Property Listing
- Property Maintenance
- Post-stay Management
Property Listing
The first step in any AirBNB management service is getting the property listed on a site. We’ll go through details on the specific sites and options later in the piece. For now, let’s just assume it’s only on AirBNB. Aspects of a successful listing include high quality photos, listing description, pricing and then external promotion to get people onto your listing page.
Quality photography speaks for itself, it can be the difference between getting a booking or getting looked over. Listing description is perhaps not quite as important, though still plays a crucial role. This is the very definition of sales copywriting; highlighting the properties key features while also excluding those potential applicants who may be undesirable (smokers for example).
Pricing is an often overlooked detail that can play with margins by a factor of 20% or more. You see, short term rentals are especially seasonal and a quality property manager will adjust pricing relevant to events or lulls that may occur throughout the year in the property’s location. Finally, you’re never going to get a booking if no-one sees your ad. Though AirBNB is a search engine in itself that allows potential customers to find your listing, it can also be a huge boost to attract visitors from other sources (e.g social media or other listing sites). Other avenues of attracting ‘stayers’ and giving them the option to book is also highly recommended for another reason: it reduces risk. Though AirBNB is a behemoth, it may crash one day, leaving many stranded with empty properties that can’t be booked. By creating your own ‘brand’ for your property, you’re avoiding this problem. Take a look at 160 Steps, a local listing in WA for an example of this premise executed well.
Property Maintenance
The next aspect of an AirBNB Management service will be property maintenance; ensuring the property is in a presentable state both before and after listings. This will include detailed cleaning, washing of sheets and pillows, replacing any generic consumables (toilet paper etc..) as well as stocking any items that are included as part of the lisitng (e.g coffee or a bottle of wine upon arrival). This is the time consuming and expensive part of any short term rental- the necessity of cleaning, washing and stocking can be the death of any potential profit. A quality management business will take care of all these aspects of operation for you, ensuring the cleaning turnover is completed on time and efficiently and everything is ready to roll for the next guest. This will often need to be organised within a few hours.
Post-Stay Management
The final aspect is what happens after someone has stayed at the property. The next clean will take place and a post-stay inspection is often conducted. This is to inspect the condition of the property- both to see if any damage was done by the last tenants and to assess if there are any larger issues that need to be addressed.
The other aspect of post-stay management is handling the all-powerful reviews on the AirBNB platform and wherever else the property may be listed. Reviews are absolutely essential to any service business in 2020, the short term rental business being a testament to this. In the location a property is listed, there may be dozens of similar options available at similar prices. What is going to set one apart from another? The reviews will probably be the fundamental part of that equation. All things considered, if indentical properties have reviews of 3 stars and 5 stars respectively, the 5 star offering will be the first choice for 90% of bookings. Reviews are EVERYTHING and the proper facilitation of the process is paramount to a successful AirBNB management service.
Tell me this wouldn’t be an attractive place to stay…
How it Works in Practice as a business
The great thing about exploring this as a business model, is the multitude of options available to focus on. A few of the opportunities are listed below…
- AirBNB Consultant : Show owners how to run their own short term rental(s) effecitvely. Encompasses all aspects of the business side of the venture.
- Interior Design Consultant: Arrange the furniture in short term rentals to maximise impact. An option is to also provide the furniture on lease.
- Listing Consultant: Organise photos and write the listing to achieve the best results for an owner.
- AirBNB Management Service: Manage the entire process from listing, to booking to post-stay management.
- AirBNB Cleaning Service: Take care of just the cleaning and tidying of short term rental accommodation.
Of course, your business could choose to incorporate several of these services as they are all related. As you can see, there are many ways to form a profitable business around the short term rental model, without actually owning any property yourself. So how do you actually charge for the service you’re looking to provide?
We’ll use a full AirBNB Management service as an example.
The general trend is to charge between 15-30% of each nights revenue, depending on the level of service provided.
It is possible to find services that charge a flat rate per month, though this can leave owners open to paying extra if bookings are low, a prospect most won’t appreciate. Having said that, in can work in their favour as well. Generally, a percentage of revenue will tie you into the performance of the service though, which most people will appreciate
For a comprehensive service charging 30% of a listing, you can expect the following;
Cleaning services will generally only be organised by an AirBNB management business through a thrid party (though some may employ cleaners as well). The cleaning fees will then usually be included as an additional charge on the listing price. This is one benefit of AirBNB over general listings through another website- it displays the cleaning cost to guests. The longer a guest stays, the cheaper that cleaning fee will be for them.
So as an example, let’s say a property owner has a small apartment they want you to manage. You’ve listed it at $100 per night during the week. You would take $25 from that total, assuming you are charging 25%. A cleaning service may then be an additional $60, which should be covered by the guests. The total cost would then be $160 per night for the guest, of which the owner would then receive $75.
If guests chose to stay for 3 days during a peak period, the you may look to increase the rate to $150 per night. The guest would then pay a total of $510 for the 3 days (3x$150 per night + $60 for the cleaning which stays the same). Of the $450, you would take $112,50, leaving the owner with a profit of $337.50. That’s a clear benefit to the owner, considering they have had to do essentially nothing throughout the whole process.
How to Get Clients
It’s clear in the example above, that an AirBNB management business provides a valuable service if done correctly. So the question of whether anyone would actually use an AirBNB management service is put to rest right there. Stories like this should give you confidence as well. So how to actually get clients coming in and utilising your services…
First things first, you have to establish a legitimate and professional presence. That means setting up your business properly and building an online profile to showcase your expertise. In fact, before you even consider this, make sure you DO have expertise. Study the local market, understand what makes a quality listing, pricing and all aspects of short term accommodation. Next you should look at getting a basic, yet professional website in place at the very least.
Once a base is in place, you need to implement a marketing strategy. Broadly speaking, there are 2 ways to get clients: chasing them, or getting them coming to you.
Chasing Clients
The best way to do this is to approach individuals who are currently managing their own properties on AirBNB. There are a number of ways to do this, though to start it is probably best to ask for referals from anyone in your network. You can also search through pages on social media as well as websites that may have hosts listing separately to AirBNB. You can also look to approach people who are advertising their property as a long term rental and attempt to persuade them to take the short-term route.
Once you’ve found the owners details, it’s up to you to convince them it’s worth more to them to you have you managing their property instead of doing it themselves. Time and hassle is the obvious selling point, though you could also point out increased pricing efficiency which both maximises profit and decreases vacancy.
Getting Clients to You
The best way to do this is to advertise through Social Media and Google Ads. Targetting specific ads at current AirBNB or longer term rental owners with value will generally work. He’s an example from the article linked above…
Showcasing success stories throughout your social media profiles with listing details and results will serve as a quality portfolio for you to drive prospects to. These highlights should also be displayed on your website. As with any business, the key to social media marketing is providing value. Write articles and shoot videos on how to maximise an AirBNB listing. Showcase your expertise, then provide the offer to take care of management.
Keys to Success
There appears to be several keys to being successful in this industry. The AirBNB management sector has become quite competitive and will become more so every day. Having said that, the number of properties used for short term rentals is also increasing, so there will always be properties available to manage.
1. Manage CashFlow.
This may sound like generic business advice but what holds true generally, holds true for this industry. Cashflow is the lifeblood of any new business and unexpected costs on top of delayed invoice payments is always a killer. Ensure you have enough capital to get all your infrastructure in place and to keep the business tiding over for the first few months. Provided you have flexibility with your normal work schedule, this is probably a good one to start as a side hustle.
2. Systemise From the Start
Good systems are key to keeping everything running smoothly and effectively. While you may be able to juggle 5 properties with a notepad and brain cells, managing 100 in different cities is a very different story. Everyone who’s done this successfully has implemented good systems from the very start. Systems to manage listings, to manage bookings and customer correspondence to systems around cleaning and accounting.
3. Focus on the Customer
Not your client, but the customer that’s booking their accommodation. Make sure their experience is the best it can possibly be. Provide excellent customer service and communication as the standard rule. Go above and beyond to ensure the person booking the accommodation has an experience they won’t forget- get the bottle of wine out, provide a list of places to see, put in a coffee machine and fresh eggs. If the customers are happy, your clients will be happy. At the end of the day, your role is purely a customer service one. Don’t forget that and you should have a thriving business in no time.
