How to MAXIMIZE your occupancy rate

[Rishabh10]

I started hosting with Airbnb just over a year ago - August 2018. 

The first couple of months went pretty well, but then December hit and occupancy rates went through the roof. Once it hit January, the festive season was over and occupancy shot back down. That's when I realized that an empty apartment adds no value to me so I had to come up with a strategy to maximize my occupancy rates, and it worked!

On average, I am now always at least double the average market occupancy rate. These are some of my strategies: 

Smart Pricing

The power of smart pricing is highly undermined. The ability to adjust your rate to fit the demand and supply of the market is a great tool. There are genuinely times I get a booking with a rate about 10-15% higher than I was expecting because the smart pricing took effect. For the most part, though, I have set my minimum rate as a fairly high amount so it does not usually go higher than my minimum. 

Price Tips

The price tips essentially tie into the smart pricing. For the most part, my occupancy rate is quite high competitively but I always want it higher! So whenever a date is approaching and my calendar is available for that period, I turn off smart pricing and just follow the price tips. Airbnb claims that it is 4 times as likely to being booked if your price is within 5% of the recommended price. Not sure about the exact percentage, but it definitely helps by slightly dropping your rate to get a booking. 

Booking Settings

The number of bookings you get surely depends on you as a host and your rating, but your booking settings play a big part in this. What is your minimum length stay? What is the latest time a guest can check-in? Imagine a guest who wants to stay 2 weeks but intends on checking in really late, if you can't host a late check-in then you've lost that reservation. Also, imagine there was a guest who wanted to stay 3 nights but because you allow a minimum of 4 nights, the guest does not even come across your listing as an option.

While all hosts have all kinds of restrictions, it helps to be as flexible as possible when hosting a guest.

Calendar Rule-Sets 

This is my favorite one lately... I personally set my minimum to 2 nights so I can host almost all guests (except 1 night because I personally find it not as worth it with the fixed cost of cleaning, etc). However, I do have certain situations when I have two guests staying with a 1-day gap and since I have a minimum of 2 nights, it's impossible to fill that in. 

Well, it isn't... this new finding has genuinely generated a lot of revenue. Basically, you go to the calendar tab and select the specific available date and a rule-set for that date. That basically means that this rule-set can allow you to deviate from your booking settings for specific dates. For those empty days, I just put a rule-set of minimum 1 night and chances are it's gonna get booked if it's not too last minute. You could also potentially lower the rate a bit to promote the booking. 

Conclusion

All in all, there are many tools to help with maximizing your occupancy. Some others include faster responses, a higher acceptance rate and more additions of your listing on the guests' wishlist. I am not going to dive into these since they are frequently spoken about on forums. But if you'd like some tips

on that, please let me know 🙂 

75% occupancy (3X the market average)98% occupancy across 8 properties.

[Emilia42]

You are the first host I have seen on this forum (thousands and thousands of posts) that recommends using Airbnb Price Tips. It is probably true that decreasing your price to an insanely low amount will lead to increased occupancy. In the off season, I would prefer to rent my space for half the time and make just as much. This leads to much less wear and tear and I have more control of the utilities. It makes no sense, to rent to a guest paying $40 a night (Airbnb suggested price tip) and then having the heat turned up to 80 degrees. I would rather rent for $85 a night and turn the heat way down when it is empty.

[Lisa723]

www.usewheelhouse.com

[Rishabh10 · Accepted solution]

Hi Emilia, thanks for the response. I am actually happy you pointed that out for the sake of a productive conclusion. If you can prove my method wrong, I have no reason to follow the price tips. 

This is my reasoning: 

I will use the example of one of my properties. I have a 1-bedroom that I rent out at $110/night. 

I did a trial for 4 months - Month 1 &2  with no price tips and months 3 & 4 with. All 4 months have similar demand so there is no bias. 

Month 1 & 2 - no price tips

Occupancy rate: 60% 

Average nightly rate: $110

Cost/night = $30

Profit/night = $80

Total month profit (pre-tax) = $80 * 30 * 60% = $1440

Month 3 & 4 - Price tips

Occupancy rate: 85% 

Average nightly rate: $95

Cost/night = $30

Profit/night = $65

Total month = $65 * 30 * 85%

Total month profit (pre-tax) = $65 * 30 * 60% = $1657

Conclusion

All in all, the price tips did reduce my average nightly rate but taking cost into account (utilities, cleaning, etc) and overall profitability, profits were still higher by over $200/month. 

Yes, it does not take the wear and tear into condition but based on the 250+ stays I have hosted, the wear and tear are minimal with the revenues. 

Once again, I am more than happy to understand your approach to not following price tips, but when the end bottom line shows price tips work, then I have no reason to believe against it. 

One last thing, I only use price tips closer to the date so most days are still gone with my original price. By setting price tips months in advance, I completely agree that does not make sense. But I use it as a filler, and it works. 

Thoughts? 

[Lisa723]

@Rishabh10your "one last thing" is the critical part of your strategy. Starting with high prices and lowering them as unbooked dates approach is a good approach to maximizing revenue, whether you use price tips to set the lower prices or not. (This is what third-party pricing tools such as Wheelhouse do.) It would be interesting to know whether you could get even better results with something higher than price tips suggest but still lower than your base price. One thing to keep in mind is that Airbnb has a conflict of interest when it comes to suggested pricing. Since their own guest service fees are variable and the formula to set them is opaque, if they can persuade you to lower your price they can increase their own fees while not raising the guest's total price. They have no vested interest in maximizing your revenue, as third-party pricing services do.

[Rishabh10]

Thank you for the input, and the intro to Wheelhouse! 

Would you mind expanding a little bit on the Airbnb conflict of interest? Isn't the guest service fee fixed? I am not too familiar with how they come up with a percentage.  

Thanks again.

[Lisa723]

No, the guest service fee is not fixed. And they don't document how they come up with it, or whether or by how much they raise it when you allow your own price to fall.

If you want someone to be notified of your response, you have to tag them @Rishabh10 

[Rishabh10]

@Lisa723 hmm that's strange. 

And thanks for the tip, new to the community center 🙂 

[Ann72]

@Rishabh10  From Airbnb:  "The fee varies based on a variety of booking factors."  But as @Lisa723 says, they never tell you what those factors are.  https://www.airbnb.com/help/article/1857/what-is-the-airbnb-service-fee

And thank you for your post.  I made a post during the community festival about how well Smart Pricing has worked for me - like yours, my minimum is quite high.  https://community.withairbnb.com/t5/Hosting/Festival-A-Smart-Pricing-Journey/m-p/1123517

Like @Emilia42, I've never used Price Tips - I really don't like how low they are!  But as I noted in my article above, the more Airbnb tools you use, the higher your place rises in the rankings, and the more bookings you get.  I'll take a look at Price Tips going forward - my listings are in Maine, where the winter is very slow.  But last year, with Smart Pricing, I did get some bookings.  Overall, my occupancy rate is almost always double the market median.

I also like your idea of using a rule set to fill in a night here or there, because my minimum is also 2 nights.  My cleaning person is always happy to have another job (especially in the winter) - I don't like the one-nighters because they require as much work as any other booking for less money, and they rarely leave reviews.

Regarding wear and tear - on the surface it may appear minimal, but keep in mind that appliances, things like boilers, and home goods like linens have a life expectancy based on number of uses, not on number of years.

[Rishabh10]

@Ann72  Thanks for the input based on your experience! And a great informative article 🙂 

I also didn't know that Airbnb ranks you higher for using their tools, but definitely makes sense. 

In my experience, price tips have worked for me as mentioned above. I do only use probably in the last week, or maybe even 2-3 days before. As long as my nightly rate is well above my cost of operating for the night (including overhead such as cleaning, etc) then I am happy to host the guest. 

In terms of wear and tear, I definitely agree with that. On the flip side, I have hosted over 200 guests and until now I have had to do minor upgrades or purchases. The amount I gain from those last-minute price tip bookings does enough to cover for my purchases on its own actually. 

But of course, it depends on how low a price Airbnb gives. 

[Kevin1322]

@Rishabh10 

If we followed Airbnb's price tips it wouldn't be worth hosting most of the time as they are often literally 50% of our base rate. Usually 1/3rd off.

For example we've been booked 5 nights this week but if we followed the price tips and filled up 7 nights a week we'd  still be working harder to earn far less.  If there were ten days in a week we'd still only turn over the same money  and be working twice as hard for it 😉

But to be fair we are on a popular all year round hikers route and most of our bookings are short notice.

Setting prices for us  by the weather forecast might be a better idea 😉

[Karen2391]

Just coming across this post. My thoughts are that your conclusion has you 25% more occupied for about $200 more. This is not a great deal to me. What am I missing? Take 100% of the work and costs you expend for the 60% occupancy and add 25% to that. Is that extra 25% expenditure (plus the wear and tear that you feel is negligible and may be in YOUR case) worth $200? Not to me, but again, maybe I’m missing something. 

[Sarah977]

@Rishabh10  I guess it depends on how low those price tips are. Most hosts, from my reading on these forums, find the price tips to be absurdly low, actually insultingly low, and can almost always command a higher price, sometimes by twice, as what the price tips suggest. If I were to follow the price tips for the private room/bath in my home that I list, which are even lower than a 4-person shared hostel room in my town goes for, I'd be making a profit, after expenses and my labor to clean, of about $8 US/night. Why would I bother? 

And quality of guests is much more important to me than quantity. 

[Rishabh10]

That's a fair point. I guess it depends on the percentage Airbnb drops it then. For me, it usually drops it about 20-25% at the maximum. But if they're halving the amount you would usually charge, then I can definitely understand why most people would not use that feature. 

[Sarah977]

@Rishabh10  Yes, in my case, the reduction is 33%, taking an already budget-priced listing of $28US down to $19/night, which is several dollars lower than a hostel room, shared with 3 other people and a communal bathroom goes for per person in my town. Insulting, no?