Correlation does not imply causation – everyone’s favorite adage; a tale as old as time. The phrase is a warning to be skeptical of seemingly causal events before proving them to actually be so. Seems fair enough, but is this skepticism always the smartest route to success?
Onto what that means for you as an Airbnb host, Airbnb is a fairly new business concept, only really planting its feet at the center of the sharing economy about seven years back. This means that there are not yet many absolute rules in play to promise particular outcomes for any particular host. On the flip side, seven years is enough time for the community to understand the game of Airbnb, and to understand it well enough to strategize wisely.
The best Airbnb strategy, in this case, is to assume causality. Here’s what I mean – if the three most lucrative Airbnb hosts are all, say, Superhosts, then being a Superhost is as sure of a way to making money on Airbnb as anything (but we’ll get to those details later).
The bottom line? With little room for hard, conclusive data in what is [mostly] a newly erupting economy, hosts need to run with what they can know and apply it to their own Airbnb strategies in order to run a successful home sharing business. And so far, what we can know is some good ole’ correlation.
So with that, here are what the most successful Airbnb’s have in common… and hey, it worked for them, right?
Property Size Matters
When trying to run a successful Airbnb, It’s pretty apparent that an Airbnb host renting out one room will make less money than an Airbnb host renting out an entire home – the more supply, the more opportunity to fit demand. However, what’s not as apparent is how significant this difference really is.
Airbnb’s revenue generated from a host listing a shared room on Airbnb averages out to only 0.56%, whereas the company’s revenue for a host listing an entire home is roughly 100 times that amount, if not more.
There’s yet another contrast in the level of success for different types of Airbnb hosts – the difference between the success of an Airbnb host listing only one property as opposed to that of an Airbnb host listing at least two. For starters, hosts with more than one listing – whether it be a shared room, a single room, an entire home, or any combination – account for a huge chunk of Airbnb’s business. On top of that, almost half of all Airbnb reservations are booked in properties owned by hosts who have multiple listings. To put it simply… “Hosts with lots of listings pretty much always make money,” (Adrian Glick Kudler, LA Curbed). It’s becoming pretty clear that the more listings, the merrier.
If you were to take a look at New York City alone, a city that enforces some of the strictest home sharing regulations worldwide, you can see how much more beneficial it can be to rent multiple listings on Airbnb (a host also known as a “professional host” or a “commercial user”).
While commercial users represent a minority of hosts, they dominate the private short-term rental market in units, reservations, and revenue.
– NY Attorney General Eric T. Schneiderman, “Airbnb In The City”
These are the most successful Airbnb hosts – the ones who are giving more (in terms of listing entire private homes, and multiple entire private homes, at that) are getting more. Point-blank: where there is the opportunity to go big or go home, go big… because there is money to be made in offering more on Airbnb.
Be In The Right Place, At The Right Time
Not every city can be an Airbnb hit wonder. While it may be unrealistic for you to uproot your home or your Airbnb business or whatever you have going on to open up shop in a foreign city (unless of course, you already operate in one of the following home sharing Edens), it is nonetheless something to consider if you want to be a more successful Airbnb host.
I hope your ears are perked because there is much more rhyme and a reason for these supposed “correlations” between cities and Airbnb success than one might think.
Last year, Miami and San Diego were ranked the two most profitable American cities for Airbnb hosts (let’s stick to cities in the U.S. for the sake of being straight to the point). These coastal towns have a lot more in common than their shared hospitality to Airbnb hosts: they both have warm weather and affordable housing. Before you jump to say that those qualities sound like relatively ordinary qualities for a city, consider the fact that other popular warm vacation destinations are generally very, very expensive (think: San Francisco, Los Angeles, need I say more?). However small this detail may seem, it is rather the main reason attributed to the success of Miami and San Diego. And their optimal weather is the cherry on top.
So we have the urban developmental factors, the environmental factors, and that leaves us with the recreational factors. Both Miami (#2) and San Diego (#11) topped the list of American cities attracting the most international tourists, and both cities also set overseas visitation records among an even smaller selection of U.S. destinations.
There is a clear trend here – that affordable and warm cities breed success in tourism and more importantly, in hosting on Airbnb. There you have it, these cities are lined with fertile soil for growing high-performing short-term rental businesses. Why? Because people want to visit there. So give the people what they want… because the success will make you happy too.
MAke Sure Your Property Looks Good and Feels Good
If you feel stuck with your home sharing inventory and your locale at the moment, take a deep breath – there is some method to the madness of building a kick-ass Airbnb profile for success. The cliff notes: it’s all in the presentation. This ranges from photographs to transparency, to pricing. present yourself with your best foot forward.
Your approach to your listing photography is truly the bread and butter of a successful Airbnb business. And the company understands that. The founders saw the dramatic change in the success that high-quality pictures brought to Airbnb hosts, which is why Airbnb offers free professional photography in a variety of cities to a variety of types of listings. It’s that important.
High-quality photos taken of the apartments helped move listings….
Michael Munger, an economics professor at Duke University and an expert on the sharing economy, says these improvements and refinements helped Airbnb do something previous sharing companies hadn’t managed–to acquire an aura of style, respectability, safety, and trustworthiness. ‘The photos in particular made the locations seem prestigious, compared to bad, blurry photos on other sites,’ says Munger. ‘It’s these tiny initial differences that lead to cascades,’ he says.
Now we’re left with the emphasis on transparency and on pricing. The heart of mastering these points is to keep it real. Don’t claim to be something you’re not, in terms of amenities and any other details that you wear on your sleeve in your listing description. Be honest about the good, the bad, and the ugly – because the last thing you want is an unpleasantly surprised guest and an even more unpleasant review. These are some things that do not have success written all over them.
Your listing(s)’ pricing strategy is of the same nature. You’re not a hotel, and presenting yourself like one could be a huge turn-off. Be practical about how you price your listing, while still staying aware of the competition. There are some strategic approaches to hitting the nail on the head with this one, as well as some internal Airbnb features that help lead you in the right direction. The most successful Airbnb’s leave no wiggle room when it comes to baring it all, as transparency is the signature token of expression that makes the Airbnb world go round.
Make Sure You Color Inside The Lines
Last but not least, keep it legal. Unfortunately, bigger cities (and even smaller cities) are cracking down on home sharing laws and seem to be making a point out of enforcing them. Just be careful to ward off complaints in the best of your abilities, because this running into trouble with your local laws is quick sand to Airbnb success.
The simplest tip for running the most successful Airbnb: maintain the positive curve you already have going, then add to it.
The crux of creating a successful Airbnb career of your own is to learn it from the pros. Their similar ingredients in approaches or Airbnb styles mix together to create a pretty comprehensive recipe for success. And that’s the only causal relationship you need to lean on: if it didn’t kill their hosting game it made it stronger. So why wouldn’t it do the same for you?