Starting an Airbnb has become a popular way to make extra money as it offers potential for passive real estate income and flexible property management. Practically anyone with a space to share can potentially become an Airbnb host.
However, setting up and running an Airbnb takes more than listing your vacation rental property on this OTA platform. It's a business that requires investment of time, money, hard work, and an effective revenue management strategy.
So, if you're eager to build a thriving business, this article will give you key tips on how to increase Airbnb revenue and take your vacation rental to the next level.
Is Airbnb Profitable for Hosts?
It's the first question prospective vacation rental owners consider when investing in an Airbnb property. The answer is yes. Depending on the location, owning an Airbnb can be lucrative if managed well and to its best potential. In 2022, the typical Airbnb host in the US earned approximately $14,000 in supplemental income.
But you shouldn't expect to start making much money with Airbnb instantly. Marketing your listing to attract guests, get bookings, and generate revenue takes time. Remember that although Airbnb is profitable for hosts, operating a short-term rental can also be time-consuming and may feel like a full-time job because today's guests expect top-notch customer service.
That's why it makes sense to automate repetitive tasks using vacation rental software like Hospitable. Then, you'll have more time to focus on tasks that require a personal touch to ensure exceptional guest experience.
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How to Make Airbnb Profitable
Unlike traditional long-term renting, Airbnb offers higher returns, but the profitability of your STR property depends on various factors. Here are the main factors to consider.
The location of your property will have a significant impact on how much money you can make. For example, a log cabin in a popular ski resort will likely see higher occupancy rates and potentially higher rental income compared to a studio apartment in an area that is less popular among tourists.
Market demand and the degree of competition in your area significantly influence the nightly rates you can charge. So, you should research your local market, analyze the demand for short-term rentals, identify your competitors, and research their pricing strategies. This info will help you set competitive yet profitable nightly rates for your listing.
The property type and its amenities—property boasting luxurious features, like a Jacuzzi or pool or Airbnb equipped with smart home tech, can have a higher price tag, especially in peak season. Yet a cozy studio in an urban area can attract budget-conscious travelers and maintain a steady occupancy rate year-round, offering a good ROI with fewer expenses.
Seasonality—your income may vary between high season and off-season due to seasonal changes in demand. The good news is that there are some strategies you can implement to mitigate this fluctuation and prevent your Airbnb from sitting empty during the slow season.
Your total costs—the profitability of your Airbnb depends not only on how much you earn when hosting. It's also about how much you spend to set up your business and keep it running, so it's important to consider all your expenses. You should account for initial costs like furniture and renovations and don't forget ongoing expenses like cleaning, maintenance, supplies, utilities, insurance, and taxes.
So, when thinking about how to make your Airbnb profitable, it's essential to come up with ideas that will help you increase revenue and take steps to minimize your ongoing expenses.
Wondering how to avoid unnecessary expenses? Download our guide on preparing your place for short-term rentals.
How to Increase Airbnb Revenue
Let's look at some tried-and-tested techniques that can help you attract more travelers and increase your Airbnb revenue while providing exceptional customer service.
Optimize your listing
Your Airbnb listing is the first thing your potential guests see when searching for a place to stay, so it's crucial to make it stand out. Choose a catchy title and write a detailed, engaging description of your rental space to let travelers know what to expect and highlight the best features of your property. Use relevant keywords and phrases to increase the chances that your listing will appear in the relevant Airbnb categories.
Add beautiful photos that show your space in the best light to make a powerful first impression on your guests. Upload high-resolution photos of every space your potential guests can access. Group your photos by room, and don't forget to add captions.
Complete your Airbnb profile to help potential guests know you better as a person. This will add credibility to your listing, make people feel like they know you, and encourage them to book.
Use dynamic pricing
Setting a reasonable listing price is crucial for maximizing your Airbnb revenue. Using a dynamic pricing tool is the easiest way to ensure your prices are competitive. It will help you adjust your rates based on real-time market data, considering market trends like supply, demand, seasonality, events, holidays, and days of the week. Top dynamic pricing tools can help hosts find the perfect pricing to maximize their profits without losing any potential bookings.
Prioritize communication
Respond to guest inquiries quickly. It helps build trust and is essential for creating the best experience for your guests. Airbnb asks hosts to respond to all guest messages, especially inquiries and trip requests, within 24 hours.
A quick response can reduce the chances that your potential guest may book somewhere else, and maintaining a good response rate will help your listing appear higher in search results. It's also one of the requirements for achieving a Superhost status that will help you stand out from the competition.
Effective communication with guests will help you make them feel valued, so they're more likely to leave you great reviews, which are essential for your success on the platform. However, guest messaging is also one of the most time-consuming aspects of hosting. That's why a smart approach is to automate it using vacation rental software like Hospitable.
Have conversations with your guests even when you sleep
Start upselling
Upselling is a great way to enhance guest stays by offering them add-on services, products, or experiences while significantly boosting your revenue. The important thing is to choose the right upsells so that guests can be happy to pay for these extras.
For example, you can offer guests early check-ins or late check-outs, luggage storage, additional cleaning, upgrading to premium amenities, or providing unique local experiences.
The best thing is that you can automate the upsell process using technology. If you opt for Hospitable, you can take advantage of our integration with The Host Co and easily create a digital store for your listing. Then, you need to set rules, and Hospitable will share a link to your store in your automated messages.
Market your rental on different channels
Listing your Airbnb property on multiple online platforms will allow you to expand your reach, diversify your booking sources, attract more guests, and potentially increase your revenue. So consider listing your property on major OTAs like Booking.com, Vrbo, or Agoda, market your rental on social media, and create a direct booking website to help you build a brand and drive repeat direct booking.
Hospitable users can use our dedicated service, Hospitable Direct, to build a direct booking website using easy-to-customize templates. We'll list your STR property on Google Vacation Rentals, and you'll be able to get direct bookings without paying high third-party fees.
9 Solutions to Reduce Operational Costs
