From small rooms in the city to large vacation homes on a private island, you can start a profitable Airbnb business by renting out your space online.
Airbnb began operations in 2007 and has since expanded to accommodate over 4 million hosts from all parts of the world, with over 1 billion total bookings to date and $24 billion in gross bookings in 2021.
So, if you are considering joining this platform to build a profitable Airbnb business, then this guide is for you. As it shows you everything you need to start right and succeed.
Quick Tips For A Successful Airbnb Business
Here are quick tips to help you guarantee a profitable Airbnb business:
- Use good quality photos
- Highlight your space’s unique features
- Keep your pricing competitive
- Gun for amazing reviews
- Highlight the local experience
- Turn on instant booking
- Respond promptly to guests
- Avoid cancellations as much as you can
- Cut costs by cleaning and servicing by yourself
- Dedicate enough time for booking & services
- Be a friendly host
- Embrace automation tools
- Install smart locks for smart check-ins
- Mind the laws in your area
- Include entertainment like board games, books, coffee, tea
How To Start An Airbnb in Easy Steps
Follow these steps to start an Airbnb business:
Step 1: Check & Get Permissions
Jurisdictions vary. So, while some areas have no issues about what you do with real estate, some places require that you pay tax like a hotel or have laws that forbid short-term rentals.
To steer clear of trouble and unnecessary expenses, it is best to check in with local laws. Do some research, ask questions if you have to, and make sure you are on the right side of the law.
Additionally, if you intend to grow and expand as a business, then it might be in your best interest to run your Airbnb business as a registered business.
The easiest way to do this is to start an LLC (a Limited Liability Company), as it protects your private assets from the dangers of business while offering you many tax benefits and options. Running your business as an LLC also makes it look more legit.
Keep in mind that you will get a 1099-K form once you pass $20K in sales or conduct over 200 transactions on the site. Airbnb will also collect occupancy taxes automatically for some jurisdictions, but you may have to pay the taxes on your own in other locations. So, do your homework.
Step 2: Learn The Rules
Airbnb has rules, and not playing by them can have consequences on your business. So, go here to read their terms of service and other necessary information.
Step 3: Define Your Budget
You need to know where you stand financially, so you know what you are working with. Having a budget makes it easy to plan the furnishing, maintenance, and any other costs for the business.
So, create a budget and work things out to the last details.
Step 4: Prepare The Space
If you own the property already, then you just need to set it up. Else, you may have to rent or buy the property that you intend to work with.
Your budget will also determine how far you can go here with regards to decorations, luxury setups, and other comforts like smart locks, WiFi, and entertainment options.
Step 5: Set A Price
Your listing’s price is also important because it can make or break your business – too much and you scare customers away, too little and you don’t turn a profit.
You have to keep your ROI in mind when setting the price. ROI stands for Return on Investment and it’s calculated as the percentage ratio of your profits vs invested capital.
In simple terms, a 100% ROI means that you have made back all the money you invested in a property. So, how long it takes you to make back 100% of your investment is up to you here.
Step 6: Create Your First Listing
You will need a title, a description, and good photos to create your Airbnb listing. Please keep your title and description as honest as possible, while providing as many details as necessary.
Explain what makes your space stand out. What are you offering that a guest cannot get elsewhere? Are there unique or memorable venues or events nearby? What would anyone gain from choosing your listing?
Once you have everything you need and are ready to create your listing, head over here and click on “Become A Host” to start.
Step 7: Grow Your Business
The foundation for successfully growing your Airbnb business lies in positive reviews. More positive reviews increase your booking rate because more guests are sure of a positive experience. And this, in turn, means more bookings and money for you.
To maximize your resources and grow your business, therefore, you should do everything in your power to get positive reviews. This includes being nice to guests, being honest and detailed in your listing, being prompt, offering a smooth check-in process, and good communication.
How Much Can You Make?
Let’s talk about money. If your goal is to rent out a single room in your apartment or house, then this section might not help you much.
However, if your goal is to earn as much money as possible from renting out accommodation on Airbnb, then there are steps that you can take to maximize your income.
Here are the most important:
- Location – Real estate business is all about location. Data shows that locations around city centers usually bring more income. Properties in popular vacation destinations like Dubai and Hawaii are also hot.
- Reviews – The data also shows that hosts with more reviews earn more. And the higher the reviews, the higher the earnings. For instance, while hosts with 0 reviews earned an average of $2,741 in 2021, those with 101+ reviews earned $23,862 on average.
- Space – The more space you offer, the higher you earn per property. Private rooms, for instance, earned twice as much as shared rooms, while entire homes earned 3x as much as private rooms.
In addition to your property’s earning potential, you should keep your costs in mind. For instance, 10% to 15% of your income will go towards repairs and general maintenance. While the addition of more expenses might further eat into your profits.
Selling Extra Services
You can easily make additional income on Airbnb by offering extra services to your guests. These can range from simple stuff that you know a guest would need to more time-saving tasks. Here are a few to consider:
- Vehicle Rentals – Especially bikes or motorbikes if you get tourists that like to move around.
- Extra Cleaning Service – This can be a time-saver for guests staying longer than a few days.
- Chauffeur Service – Picking up your guests from the airport or taking them somewhere special.
- Meal Service – This can be a welcome offer for many, especially breakfast for business travelers.
- Laundry Service – Also great for business travelers.
You can add these or any other service information to your listing. Then when your guests request any of your offered services, you send them a special offer on Airbnb.
Your strategy for creating a profitable Airbnb business should be a unique and pleasant experience that your guest cannot get elsewhere. The details of such an experience are basically up to you, but here are a few tips to help you out:
- Welcome Letter – How about presenting each guest with a welcome letter to show your hospitality?
- Welcome Book – You can also consider a welcome book with all the necessary information like WiFi password, instructions for select gadgets, your contact number, and anything else necessary to make your guest feel at home.
- House Rules – This is where you list the rules that a guest has to abide by. For instance, no smoking inside, off-limit areas, parking rules, noise rules, visitors, laundry, and pets. Every house is unique, so feel free to add what’s important to you.
- Occupancy Rate – A property’s occupancy rate is simply a ratio of how many days it is booked versus how many it is vacant. So, the higher the occupancy rate, the more profit you make.
- Extra Help – Depending on the size of your spaces and how you want to run your business, you may also want to consider extra help. This help could be from your family or an entirely external contractor that handles cleaning or dry-cleaning, for instance.
- Insurance – Airbnb offers AirCover protection for your hosting business and it is free. But since it has some exclusions, you may want to check if it is okay for you or if you need an extra short-term rental insurance.
- Extra Amenities – Here is a list of extra amenities that you can consider adding to your property to make it more attractive for guests and eventually earn you more income.
- A digital or smart lock for easy check-ins and -outs
- A WiFi and WiFi repeater, where necessary
- A smart TV
- Extra towels, slippers, & toiletries
- A workstation
- A loaded pantry with salt, pepper, tea, etc
- A hot tub
List of Helpful Tools
There are many tools out there to help save you time, boost your productivity, and help you become more profitable with your Airbnb business. Following is a collection of lists to help you further:
Coming to the end of this guide on how to start a profitable Airbnb business, you can see there is a big opportunity out there for anyone that enjoys hosting.
Moreover, over 4 million hosts from around the world are doing it. Listing is free and you only pay a service fee when you get a booking. So, if you’ve got a space for rent, then why not?