I have received an email from Airbnb notifying me of the number of views I have received, suggesting that my prices have resulted in lost bookings, and recommending that I lower my prices to attract more bookings.
This is flawed advice. Airbnb hosts should be encouraged to be price makers, not price takers. It is in the host's and Airbnb's interests to keep prices up, no lower them. I differentiate my property using non-price criteria. If I compete on price, then I end up supporting a race to the bottom. I am not going to do that.
Airbnb should re-think this short-term, flawed price-based policy!
Actually, @Gerry And Rashid, I think you're giving AirBnB at large too much credit for their apparent greed. The whacky advisories about how hosts should set their rates are really only coming from the 1 or 2 or 3 loose-cannon developers within AirBnB who, on any given day, happen to have checked in some code that affects and pushes out that sort of message. Based on my info from AirBnB insiders, AirBnB at large has little internal control of their code. Individual coders (I'm loath to call them "developers", as that lends too much credence to their quality) are constantly making willy-nilly modifications without any sort of overall planning.
But back to the original host's issue -- I fully agree that altering one's rates based on recommendations from AirBnB is the wrong way to go. Take their recommendations under advisement, yes; all input helps. But follow them blindly, no. As a host, one knows far more than AirBnB about the local conditions and the specific desirability of your own listing. I set my rates based on my "gut" and my history. Sometimes that ends up being lower than AirBnB's recommendations; usually it results in higher rates. The proof is in the pudding -- we're consistently 97% booked, 2-3 months in advance. (And we really, really cherish that one unbooked day per month!) Our guest ratings and reviews are all pure raves. When AirBnB suggests we drop our rates, they're usually wrong. And when they suggest we increase our rates, they're *always* wrong.
I base my pricing on data. I know my site views, and I calculate my booking rate. I target a monthly occupancy rate, and I calculate the 12-month moving average. I never lower my price, but I do increase my price when the occupancy rate is higher than my 50% - 60% target band.
For me, in my shared home, the occupancy rate is better performance indicator than the revenue. The revenue falls out of the KPI. I have successfully met my objective since I introduced it 9 months ago.
Dede, in my analysis, if you are booked more than 2 months in advance, then it indicates your price is too low. You are attracting too many bookings too early. If you were to nudge up your prices, you could monitor the forward bookings and keep it at no more than 2 months ahead.
Thank you I am new at this and your comments have helped me. I recently raised my prices because I wasn't going to break even let alone make any money and have been wondering if I was correct in doing this. I'll sit tight and see what happens. Alice
Hi Alice, I also felt that it was unfair to be told that we missed bookings and to lower our prices. I have just raised the nightly rate by a small amount and we have had non stop bookings. This tells me that as hosts, we are the best judge of the worth of our accommodation and not everyone offers quality linen, breakfast etc. Good luck and enjoy hosting. Cheryl
@Peter Thanks for your input, but I truly believe we're priced at the sweet spot for both maximizing income AND making our guests feel that they've gotten good value and had a good experience. We have, over the past year, increased our base rates by about 12%, and increased our special-event rates by over 50%. We also have our rates set higher than comparable listings in our area, which we can do because of our consistently high ratings, reviews, and 100% enthusiastic guests.
Our actual booking percentages tend to be 94-97% one month out, 85-97% two months out, and 30-60% three months out. We rarely open up dates more than 3.5 months out, with exceptions made for big special events, for which we double or triple or normal rates.
Lastly, I don't find much value in AirBnB's presentation of views vs bookings, especially since their last changes which made it even less informative. We get a ton of views, but the booking ratio is (non-worryingly) low because... most of the people are looking 10-30-60 days ahead, and find that we're already booked.
And lastly lastly (unless there's something even lastlier...) I've often experimented with still higher rates out three months ahead, but it has never attracted anyone at all. Like I say, I think we've found our sweet spot.
Will you reach out to us on this topic?
I also think that AirBnB's price suggestions are always
founded on nothing but hot air. Each market, each season,
has too many unique elements. And with particularly nice guests, we
often feel like discounting or accepting nothing or exchanging favors
to make friends.
Mind you - we're certainly not as busy as you.
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I hope this helps.
Wishing you all a Happy Holiday! Have a fantastic festive period.
Share some positivity by being part of our Community Center Project. It would be great to have you involved. :)
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Well, that test worked.
The Admin staff, in this case yourself, do have instructions to contain discussions
within the boundaries of this online forum. That's fine - but of little importance.
The Great Matter in host lives right now is that the software is behaving unpredictably against
host actions and settings. Obviously, you closely monitor these forums. The issue
is everywhere. This particular thread on price advice being misleading and false is
secondary, but also of concern.
Robin has been waiting for three days to get a repy from the executives. They know. You read these forums,
and tell them. He has shut down his listing!
Here's something else you can forward to those in a position to act - the difference between host payout and
guest payin is an increase of 21%!! Those funds go to AirBnB. That is even more than the huge 20% that Booking.com
forces major hotels to pay, and has these hotel owners very upset. Someone ought to think about this seriously.
Have a nice day.
@Dunny You should be aware that Lizzie and the other moderators here don't necessarily work directly for AirBnB and don't have much (if any) input into AirBnB's decisions or practices. They work for the thrid-party company that operates the forums.
Also, while I'm as acutely aware as any other host about the difference between what guests pay versus what hosts are paid, I don't think the typical spread is the 21% you mentioned. Hosts pay a fixed 3% fee. From what I've observed by chatting with guests, they typically pay about 12%. Sometimes a bit more, sometimes a bit less.
Hi. On the 21%, Let me say I was surprised. First, I agree with you from our experience as a guest
(this is from three years and more ago). The guest ABB extra fees we were charges were what you say, or perhaps
a bit less (I remember 11%-12%, and once close to 14%, for a very short stay). The host side ABB fees have been fairly
constant for us and minimal. 3% sounds right. Okay so far.
After a host or guest is used to these ratios, expects them and then accepts them, well and good.
For a first-time guest perhaps assuming that all fees are already included in a quoted price, there is a surprise.
Warranted or not, a surprise it is. Full disclosure: we suspected this situation, gave polite forewarning that there would be an extra
fuzzy ABB commission fee, and spoke warm pleasantries. Of course, after the reservation was complete, the honorable guest
inquired as why the rate that had been billed to her did not match the one we had quoted exactly as hosts. Well, we had to
mildly explain that this is the industry standard from our experience as guests, but that much is out of our hands, we don't control the show, and not to worry we'll take care that they have a nice time in our fair city. End of story. Go water your camel.
End of story, but. But I had glanced at the different fees on our end as they came down the pike, just before pressing send on
the offer. There they were: 232 for the 2-day rate (currency doesn't matter - privacy - call it the Mongolian tögrög) an extra 1000
Mongolian tögrög for cleaning equalled 242. ABB, bless them, snatched a sliver from us at only 7 Mongolian tögrög for the host fee.
What was the listed rate to be billed to the guest? 285 blooming Mongolian tögrög! I thought, ah, so, and had dinner. Pulling out the calculator for no reason, I put 285 over 235 to deliver a ratio. The 285 is 21.27% over and above the 235. Yes, I did the ratio that way for dramatic effect, but there it is. Now any person could play with simple arithmetric to deliver different figures. Let's have a look.
285 over 242 is 17.76% up. 242 over 235 is 2.978% trimmed. But turning things upside down, 242 over 285 is 84.9% (giving 15.1%
to the difference between 242 and 285). 235 over 285 is 82.45% (giving 17.55% to the difference). One could also play further:
43 (285-242) is only a fraction of 285. Let's try (and this moment I don't know what the answer will be).
Bingo. It is 15.08%. Does this matter. Meh. It's just business. It's what every bank, insurance company and advertiser does many times a day. Why? Because it works. It's the same reason that the genius of the early ABB software was to place this extra ABB commission fee in a smaller fonted scaled to a pale grey shade, and to reveal it after the guest prospect had emotionally committed to purchase,
lining it up in a tall list of digits. I fell for it the first time. Even the next! Talk about small hinges swinging big doors - that was the most important element driving the early growth of ABB over other platforms. You can decide the ethics of it for yourself. I look in the mirror, knowing I am a hypocrite at heart, also knowing that this is the way of the world. Will we take care of this guest well? You bet.
Before I forget, the 'piece de resistance' of these simple calculations is that the final figure is often deliverd
in the DIFFERENT currency of the guest from another nation, a result that the consumer has been conditioned
to accept as including some currency transaction rate inclusive of exchange fee of 1-4%, sometimes more.
Can the average consumer stay focused with all these mathematics swirling? No. How about veteran businesspeople? Yes.
Lovely, these guys. I want these guys on my team.
@Dunny ....Duncan, hey mate, please don't pre-empt or make a comment on what I may, or may not do with my listing!
I have NOT shut it down, and have no intention of shutting it down.
I am quite happy to engage you in dialogue on any topic, but what ever I chose to do with my listing is up to me and not something that I really want publically discussed by others on the forum.
Good morning Robin, mate.
Read your post. Am I reading you right?
I am a supporter of your contributions, and have complimented you publicly
and thanked you in private. Your post was public, thus this reply is too.
In referring to some part of your post, I thought my understanding was correct. No BS. Correct.
If it was in error, my apologies. I'm not Australian, and there are nuances and implications in
your style that don't hit the mark with me. I'm Canadian from a French area, and no doubt
there are nuances in my choices of expression that could be off-the-mark with you or others.
That said, to be considerate and fair - and because you're obviously a very good person and
gentleman as I have stated publicly - there will be no more references to you or your fine articles.
Sad, but best. I mean that. I'm sad. My loss.
I wish you all the best in this activity. Was having a lovely morning, but this popped the bubble.
Oh, well. You have a good one. Good luck.
@Dunny....Hi Pal...hey I was not having a go at our level of conatact, I was refering to something you said in a previous post which I though my response would slot in behind, but unfortunately didn't...namely this bit...
"Robin has been waiting for three days to get a repy from the executives.
They know. You read these forums,
and tell them. He has shut down his listing!"
That's the bit I am not happy with! As I have said before, we are all here to learn from each other, and you my friend make some really good points, some of which I agree with, some of which I don't, but hey, that's the wonderful thing about life! We are all different and we all bring something to the table.....
It's just that I want to carry my listing on my back, not someone elses...
While you are right about the developers let loose on the site with little or no governance over changes, the principle of encouraging guests to price to attract busienss is one that is underpinned by the principle: best they spend their money, any money with AirBNB, than go to a competitor.
I am not saying it is the right approach and we have never used their pricing tips as they are stacked in favour of AirBnB's wallet and not the hosts. So it's definitely a flawed strategy for hosts, but not for AirBnB.
I have been holding out against this strategy as well, and am glad to know that others feel the same. Every place has it's price, we go for quite a high rate but think our annexe merits that. Why would we want to complete with other more basic places in the area. It costs to provide quality and people like to have choices.
@Peter my prices are already very competitive for London, so I tend to ignore Airbnb when they tell me to reduce them. If they were really calculating the price tips effectively, why are they making no distinction for bank holiday weekends, which are peak season here? I think it is mostly nonsense, so you are right to ignore them!