Airbnb For Dummies
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The best way to estimate your profit potential on Airbnb is to find out what similar listings in your neighborhood are already earning on the platform. But how do you find out? You gather performance statistics — the occupancy rates and nightly rates—for existing listings in your market with which you’ll be competing.

Picture yourself running a nice one-bedroom Airbnb listing in your city. After all the operating expenses that include supplies, utilities, and cleaning, say you’re able to pocket a tidy $1,000 per month in profits. Should you be happy with your performance? Are you doing well as a host?

What if we told you that the other one-bedroom Airbnb listings in your market are making only $500 per month in profits on average? That would mean you’re earning twice as much as your competition! You should feel good about that because that means you’re executing well as an Airbnb host.

But what if, instead, your competition is earning $3,000 per month in profits on average? You wouldn’t be feeling too good about that information. If hosts with similar listings in the same market are earning three times as much as you are, you’re doing some things wrong as a host.In the early years, you would have to gather and estimate these statistics manually, a painfully laborious and inaccurate exercise that took hours to complete only to be outdated immediately. However, the growth and maturation of short-term rental data providers in recent years have provided fast, accurate, and up-to-date statistics to aspiring hosts for a nominal starting at just $20 to access local market reports. Some providers offer free limited reports or free trials occasionally, so make sure to search the web for a recent offer before making a purchase.Get the free reports and trials to see which one you like and then get a one-month subscription for full access to the market data in your market. You can’t get the statistics on your own, and even if you tried, doing so would take you many painful hours to days to put together an inaccurate data set. Don’t waste your time! You can always cancel your subscription after the first month. However, we recommend ordering the reports at least once a year to keep a pulse on your market and to gauge how your listing is faring against your competition in the market.You need to look beyond the published asking nightly rates of similar properties on Airbnb — just because a few listings ask for $250 per night doesn’t mean guests are paying that much, nor does it mean that these listings are able to fill their availabilities at this rate.And what the performance is like during one part of the calendar may look entirely different during other parts of the calendar. So, in addition to understanding the nightly rates, you need to look at other market metrics and considerations to access your profit potential accurately.

Finding the crucial market statistics

Regardless of which data provider you ultimately go with, you want to pay attention to a few key statistics when assessing the viability of hosting your property in your market. Here are the statistics to get and why pay attention to each:
  • Daily rates: The best way to know what you’ll be able to charge is to find out what identical or similar listings in your market can currently charge guests. Although obtaining market averages is better than having nothing, getting a range of daily rates is more useful because a few very high performing or very low performing listings can artificially inflate or deflate the average figures in the market. For example, AirDNA market reports will also give you the 25th, 50th, 75th, and 90th percentile figures. Most hosts should use the 50th percentile figure (median) for their initial estimate unless they have reason to place their listing as more or less attractive than competitors to use the 75th or 25th percentile figures instead.
chơi xổ số keno trực tuyếnLiên kết đăng nhập Average monthly rental revenue
Source: AirDNA.co
The chart above shows the average monthly rental revenue for one-bedroom listings in a select city in Los Angeles, shown at the 25th, 50th, 75th, and 90th percentiles. For example, to achieve rental revenue rates at the 90th percentile line, your listing would need to be among the top 10 percent of listings in the market.

  • Occupancy rates: Occupancy rates are the percentage of available nights that are booked. For example, an Airbnb listing that is made available for rental for 100 days out of the year and is booked 65 days has an occupancy rate of 65 percent (65 divided by 100). Just knowing the daily occupancy rate isn’t enough if you don’t know how many nights are being booked in the market. Similarly, obtaining a range of occupancy rates rather than just an average is more useful.

    Take an honest assessment of your listing compared to the existing listings on the platform that are your competitors. Compare your listing to this entire set of direct competitor listings, ideally at least ten. Is your listing in a more attractive location versus the others? Does your listing look newer, more modern, or luxurious? Does your listing have more appealing amenities? Where does your listing place among this set?For an older property farther away from points of interest than competition, you may need to use the 25th percentile figure for your estimate because your listing will likely attract fewer guests. Alternatively, for an attractive new listing located immediately adjacent to the top performing listings in the market, you may use the 75th or 90th percentile figures instead because you can reasonably expect similar levels of performance to the top performers.
  • Rental revenue: The top data providers will calculate the rental revenue figures for you and often present them in the same way they’ve presented the daily rates and occupancy rates data. Again, looking at the range is more helpful than the simple average. Brace yourself when you look at these figures the first time because many prospective hosts often have mismatched expectations from reality. For example, a prospective host whose expectations are colored by the news articles covering the new breed of six figure Airbnb hosts might be sorely disappointed to discover he’ll likely earn far less than six figures in his market. Better to know the truth early even if disappointing than to find out later after investing significant time and resources.
Although getting annualized figures are useful to understanding where your average daily rates, occupancy rates, and annual rental revenues may fall, you’ll want to look at the monthly figures as well for the prior 12 months. Why? Some markets may have pronounced seasonality where the demand is much higher or lower during some months than others. Having this knowledge can better help you prepare for both the high and low travel seasons in your market.

Understanding the market deeper

Each data provider will provide the three basic statistics for their users that we mention in the previous section. However, to stand out from their competition and to further entice their potential customers to choose them over others, the top listing data providers offer many additional statistics about the market.

Here are some other useful things you may find:
  • Market mix: The market mix is basically a relative ratio of different types of Airbnb listings in a given market. For example, the market mix for Airbnb listings by a large lake may skew toward cabins whereas in a downtown urban market it may skew toward one- and two-bedroom apartments. This information lets you determine what the current composition of active Airbnb listings is, including whether more studio and one-bedroom units are being reserved compared to larger units with three or more bedrooms.
Knowing the respective performance of the different subsets of listings can tell you what the travelers to this market are demanding. For example, if the top performing listings are all private room and studio listings whereas the few large big house listings are mostly unoccupied, you may want to explore turning your five-bedroom house into multiple private room listings instead — you can’t rent what people don’t want.

  • Long-term trends: Understanding recent statistics tell you where the market is today, but those stats doesn’t tell you how the market got where it is. Is the market growing or shrinking? Only by looking at several years of data can you spot this trend. With Airbnb increasing in popularity, more listings are coming online in more markets. However, in some markets, the influx of supply without a complementary growth in demand means more hosts competing for the same number of guests, leading to higher competition, lower pricing and occupancy, and ultimately lower profits for hosts.
  • Amenities statistics: To understand how your property stacks up against your competition you need to know what your competition is offering. By looking at the amenities that everyone else provides and what only the top performing listings offer, you can determine exactly what amenities you need to compete and what you can aim to have to stand out.
  • Future statistics: Some data providers have a direct data feed of hundreds of thousands of listings that allow them to know future occupancy and rates of competing listings. With this information you can price your future available dates to remain competitive.
  • Top listings: Being able to see the performance of the top listings in your market based on actual performance data provides a target to aim your performance. With this information you can scrutinize every aspect of these top listings from their photos and title to their descriptions, pricing, and policies. You can’t emulate the best without first being able to identify the best.
  • Rating statistics: How guest ratings are distributed across property types and among your direct competitors can tell you how competitive your market is. The higher the ratings for existing hosts, the more competitive the market and the less margin for you to make hosting errors with your guests.
  • Granular seasonality: Even though monthly figures help you spot broad seasonality trends in your market during the calendar year, having access to market performance for each day can help you spot and prepare for unusual spikes in travel demand. For example, an annual conference that brings in thousands of travelers can lead to overbooking during those specific dates. Refer to the figure for an example to see the full year seasonality for a market.
chơi xổ số keno trực tuyếnLiên kết đăng nhập Source: AirDNA.co

Seeing market seasonality.
In some markets, Airbnb travel demand is seasonal and varies significantly depending on the month of year. In addition, certain recurring special events can also create unusually high demand during specific days of the year. Knowing when they occur and how much impact they have on demand allows you, the host, to price your listings appropriately.

  • Traditional rental statistics: For investors who wish to purchase property for renting them on a short-term basis on Airbnb, comparing the traditional rental market statistics in that market to short-term rental statistics is crucial to making a sound investment decision.
  • Other statistics: If it’s an attribute you must decide on for your listing, chances are the data providers are tracking and sharing the results to their users. This information includes how others are handling minimum stays, security deposits, cleaning fee rates, cancellation policies, and more.
From our experience and those of our readers and students, hosts in different cities and countries find different data providers to be more or less accurate for them individually, so it’s worth first exploring several options to see which will work best for you.

About This Article

This article is from the book:

About the book authors:

Symon He, MBA, and James Svetec are the experts behind LearnBNB.com. Symon is also a real estate investing instructor with Linkedin Learning, and Udemy, and James is the founder of BNB Mastery Program, the No. 1 expert in rapidly scaling an Airbnb business.

Symon He, MBA, and James Svetec are the experts behind LearnBNB.com. Symon is also a real estate investing instructor with Linkedin Learning, and Udemy, and James is the founder of BNB Mastery Program, the No. 1 expert in rapidly scaling an Airbnb business.

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