7 Things I Learned From Managing Vacation Rentals For 1 Year

[Martin925]

Hi There Hosts!

I've been hosting on AirBnB for about a year now and it's been a great experience thus far. There has also been a bit of a learning curve, but I'm happy to say that I'm smooth sailing at this point (knock on wood). I wrote an article yesterday that outlines 7 important things that I learned as a reservations manager. 

I hope you all get some takeaways from it and definitely feel free to reach out with questions or comments.

Thank you!

ARTICLE: http://tiny.cc/1YearHostingLessons

[Huma0]

@Martin925

Thanks for sharing your article. I'm not in vacation rentals, just renting rooms in my own home, but it made interesting reading none the less. I especially liked the bit about giving 'freebies' but factoring them into the price.

I guess it depends on which freebies the guests value though and this does also depend on where they are coming from. I hosted a lot of guests over Christmas and left cards, gifts, treats etc. for all of them. What I found was that certain nationalities appreciated this and others not at all, even just throwing them in the bin without thanking me! Lesson learnt. I also assumed that everyone was familiar with Christmas crackers, until some American guests asked me what they were!

[Martin925]

Hey Huma,

Likewise, I appreciate your comments. They really made me think about what I wrote in a different light. I think you are correct and there there is an aspect of culture at play here. In hindsight, our Chinese guests overwhelmingly wanted certain freebies compared to our European, American and other Asian guests. Since we had so many guests come from China last year, my perceived experience was that 'guests want these certain freebies', but after your comments I thought about it more carefully.

Ultimately, I think different cultures will appreciate different things, but if you can balance built-in-cost versus perceived added value then I think it will have a net positive effect across the board.

Let's take airport pickup for example. I primarily work with luxury properties so free airport pickup is probably more effective in that market than lower cost, budget rentals. This is because on a percentage basis, the amount that you would have to build into the final price for an airport pickup, would be tiny for an expensive villa. For a budget rental it could be quite a lot (percentage wise). Therefore the added built-in cost versus the perceived value won't work to your favor. 

However, budget rentals or lower cost rentals could offer something else. 

For example, I have seen some cheaper accommodations in Hanoi do really well by including a free meal with their rentals. Many guests would mention the free meal as a big draw in their comments. The thing is that food in Vietnam is very cheap compared to a Western country so on a percentage basis, the owner didn't have to increase the price by much to offer the free meal, but from a value-perceived basis for a vacationing Westerner, they felt like they were getting a bargain.  

Once again, it's really about having that balance between additional build-in cost versus additional perceived value. We want to aim low for the former and high for the latter, with as wide of a gap between the two as possible. 

I hope that makes sense.

Thanks again for your comments.

Martin

[Ann72]

This is very clear and helpful.  I'm trying to figure out how to advertiste "passive" freebies. I can't offer free airport pick-up since you absolutely have to have a car to get around in Maine, and as a remote host, I can't offer meals or arrange for baskets of freebies to be there for the guests' arrival.  I've discovered that many hosts charge extra for things like firewood, sheets and towels, use of the laundry room, etc., but my houses are all-inclusive.  The pantry and bar are fully stocked, there are plenty of towels and extra sheets and firewood, laundry detergent, paper towels, toilet paper, and all the rest, and I say in my house rules to help yourself to anything in the refrigerator, because many guests leave behind beer, soft drinks, and other non-perishable items that they can't bring home.  (My housekeeper throws out everything perishable.) 

What's interesting is that this year I've gotten several returning groups who had visited two years ago but not last year.  I asked one of them, whose first review had given all 5 stars except 4 stars for value, if he'd tried another, less expensive place last year, and he admitted he had.  Obviously cheaper was not better, and he's back. 

I guess my strategy has been "if-you-build-it-they-will-come" patience.  My prices were somewhat modest the first season, to attract guests and get the required number of reviews.  Then I raised the price quite a bit and saw the bookings almost double.   I offer complete comfort and want the guests to have nothing to worry about.  So the price has to account for all the "cost-of-doing-business" expenses that are harder to quantify than utilities and property taxes.  Is there any kind of formula for this?  

[Ann72]

Thanks for the article, Martin!  My properties are in Maine and are therefore mostly booked during the warmer months, so the first thing I did after reading your piece was to change my cover photo to the wonderful screened porch that virtually every guest mentions in their reviews.  Wouldn't have thought of this most obvious thing without your article - thanks again!

[Martin925]

Hey Ann!

Awesome! It would be interesting to see if you experience an uptick in reservations with the change. Of course you cannot truly prove correlation versus causation with something like this, but you can compare your occupancy rate for the same time period the year prior to see if there is a difference. 

Anyways, I hope it does work some magic for you. 

Thanks for your comment!

Martin

[Sandra126]

Sure, but Airbnb doesn't take 3%, more like 23% (this will depend) if you factor in the final price. The way it is written you have not compared apples with apples.

[Ricardo85]

@Sandra126

Could show us the math?

Ricardo

[Martin925]

https://www.airbnb.com/help/article/1857/what-is-the-airbnb-service-fee

"The host service fee for homes is generally 3%, but may be higher for hosts in Italy or hosts who have a Super Strict cancellation policy. This fee is calculated from the booking subtotal (the nightly rate plus cleaning fee and additional guest fee, if applicable, but excluding Airbnb fees and taxes) and is automatically deducted from the payout to the host."

__________________________________

I'm not sure where you are getting 23% ?

Personally, I have found that AirBnB offers the most generous take-home pay compared to the other platforms. 

Perhaps, I'm missing something?

[Sandra126]

@Martin925, @Ricardo85 Air adds a percentage to the guest booking AS WELL as taking a very small percentage from hosts, but others will have it as ONE fee. So if you are comparing them, you have to add the total fees for a balanced comparison.

[Martin925]

@Sandra0--- AirBnB is very transparent about everything though. It's not a "hidden fee". If you look at your payout breakdown under the guest reservation, you can see the following:

a) rate per night x the number of nights
b) cleaning fee (if you have one)
c) AirbnB service fee.

If you do the math yourself, you can divide the service fee by the subtotal and it comes out to be 0.03 (3%). AirBnB isn't trying to pull a fast one on us. Everything is right there. 

As a host, my net after they take their 3% is what I care about. I can set my prices lower on AirBnB than on the other platforms because they let me keep more of the revenue compared to the other platforms. 

[Sandra126]

no, @Martin925, I never used the words ''hidden'' or ''fast one''. It is simply a fee ADDED to the guest, and as such needs to be taken into account when you compare sites, some of which may have it as one fee, rather than two. I looked at your listing and three nights will mean I pay AUD 264 in service fees to Air, they will also take the percentage from you. You may pay less, being quite expensive, but I have approx 20% added to mine. The more expensive, the less commission I think. Also depends on length of stay.

I only mention it so your comparisons are accurate, which they are not.

[Martin925]

@Sandra126 I get that. I travel quite a bit on AirBnB as well so I'm aware of their fees to the guest. I guess I'm just trying to wrap my head around what the final impact is to me from the hosting side. From a bookeeping standpoint, I only care that I can easily set my price, add my cleaning fee, and multiply it by 0.97 to figure out my net. I don't care about fees to the guest --- not because I'm a terrible human being or because I lack empathy, but purely from a tracking standpoint it has no bearing on what I'm doing. The only reason I think this might be relevant is because it has an impact on the final price to the guest, which could then influence whether they book or not, but from an accounting standpoint, I am still not the one paying the fee. The guest is. It's their fee. Not mine. I'm not disputing what you're saying. I understand it. I think it's more of a case of how much do I weigh it into my overall decision making and I suppose the answer is not much. Like you said, it could be because maybe I'm not getting hit as hard by it due to the price point. It's certainly something to consider though. Thanks for bringing it up.

[Jeff-And-Shauna0]

We are just getting started and have had excellent ratings but we have not had enough guest to get to super host yet. We recently had a guest book last minute and once they were in said he would stay another night if we reduced our rate. We are already on a low end rate fee since we are trying to attract more guest. When we told him we weren't lowering our fees that 80 a night was the minimum requirement since we don't have a cleaning fee he asked how he should pay and of course we replied through Air B&B. I told him to book again through the site and he complained that we needed to Lower it to 65 so that he wouldn't have to pay taxes and booking fees. Since I had been reluctant to rent to him in the first place due to his ratings, I went ahead and sent him a 1 time special offer and now he won't even leave a review for us to get the ratings we need. Ugh!  It's winter and we are just trying to recoup some of our monthly expenses by renting it, but truthfully, by the time it's cleaned it will be at a break even. What do you do in a situation like this?

[Sandra126]

Sure. quoting from the article you wrote:

''Just to give you an idea of how widely they vary:

• AirBnB takes 3%
• Booking takes 15 — 20%
• Agoda generally takes 20%
• Ctrip takes between 10–25%''

But they don't vary much at all, it is a rough 20% for the lot. Used to be 10% many years ago, with Takeabreak and so on. Things have certainly risen.