Prices dropping by 50% - is the pricing tool a complete disaster?

[#1]

What is happening with the prices in London? I have been an airbnb host for 3.5 years and the prices are tumbling like I have never seen before. Am I the only one experiencing this? 

I have two listings, one for a private room with own bathroom in my large 2bed home, the other one is for the entire home for times when I’m away (I only started doing this one year ago). Ever since the pricing tool was introdcued I looked at it in disbelief of what it suggests and could only ignore it. To me, it actually feels unsafe using the recommended prices, yet I totally and utterly rely on the income from my place being rented and, for the first time ever, this month has been incredibly slow. When I first listed my entire home over Christmas last year I charged £140 plus cleaning as an introductory price, I since had regular bookings throughout the year for £200 per night with all all the reviews saying "good value", now I am suggested to charge £100 and even less. I have also checked a website called Pricelabs, who is making similarly low price recommendations. If I had followed the suggestions by these pricing services all year, I would have had a much lower income. Instead I do what I always did: regularly check what similar listings in the area are charging, or what the average price is for listings like mine seen on the home page. But I am now wondering whether overall prices will be affected, if every new airbnb host sticks to the price recommendations by the pricing tool? Understandably, if I was new I would do the same. However, this is London - everyone knows that a million dollar mansion could be right next to a council estate and a computer just won’t have an algorithm for that anomaly. 

What is everyone else experiencing? Especially longer term hosts - are you experiencing drastic price drops? Are you following price suggestions from airbnb or other services like Pricleabs? Are you finding them useful? Any info would be much appreciated as I’m at a loss as to what to do - drop prices drastically (and risk opening my home to people who might not appreciate it for what it is worth) or keep taking the risk of higher prices and a potentially empty home?

[Art-House-On-43rd0]

7 years with airbnb as of Jan. This last year bookings and income down due to a huge flux of new properties. They will all stay at the top of the list while my property plummets to the bottom. How is that fair after so many years of devotion?

[Lucille-and-Alan0]

There are also many more hosts than before so this may also afffect the prices.

[Edith0]

That's true. But 2016 french financial law   will change the tax return and the City of   Paris makes ​​war on Airbnb hosts that are not in order. Some might decide to retire.       I prefer to host less or even stop, than     hosting for a pittance !

[Edith0]

You are completely right.

As 2016 french Financial Law will change the tax return (1 st of July) and the City of Paris is making war on Airbnb hosts that are not in order, some might decide to retire.

As to me, sharing my home, hosting in two private rooms with bath and offering breakfast in the center of Paris, I prefer to receive less often or even stop (yes, seriously, I think of it), rather than hosting for a pittance.

[Margaret4]

It actually harms the web site's reputation abit. Owners have to check that their listed price is still represented by the web site.

[Randy9]

I have my house on both, but I get the weirdest questions from people on there compared to airbnb, and they over charge what I try and sell my house at with their insane fees

[Ann10]

I think she means home away. I have been much happier with them.

[Patrick22]

I check the pricing tool now and then, mostly for a laugh.   The pricing tool is generally ridiculous  $58 (half my excellent rate) to $20 or more over my rate.  No rhyme nor reason,  not always weekends or holidays for the higher prices.  Why $58 one day and $75 the next?  Especially when we are told our rate of $120 is a great value in evaluations.  For the amount ABB suggests, I would prefer to not rent, and it would be foolish to do so.

[Anita3]

I have found the same problem with the pricing tool in San Francisco.  It is usually way too low a price for the entire two bedroom house I offer.  I have learned to just ignore that "tool" when it seems way too ridiculous.  I still manage to book a fair amount of guests, so I have not found that I need to stoop to such low pricing....(I am also much happier when I get a fair price for my home).

[Susie0]

This thread has given me the confidence to raise my prices back up. PHEW. 🙂

[Michelle15]

The pricing tool simply isn't sophisticated enough to do the work for us.  Most of the time it tells me to rent out our suite for $88 per night.  I am still getting a good response at $125-$150 per night.  Had a Thanksgiving booking for $150-$200 per night when the tool was still suggesting $88.  

[Christina6]

I list rooms in shared houses.  After Airbnb Open I turned on the Smart Pricing on most of my listings, but I am going to turn it off.  The prices are just too off.

I can have two bedrooms in the same house, very similar and Airbnb is suggesting two totally different prices.  

I also agree that sometimes the pricing is less that an unfurnished bedroom or home in the area.

I have a feeling Airbnb is trying to expand too quickly and is saturating the market.  I've been offered $300 for each new host I refer.  Why would I want to create competition for $300?  I can lose so much more in lost bookings to the competition.

[Vicky0]

Both price labs and airbnb pricing will only show you a few months in advance. At the moment I gather it is very slow in London (and it certainly is in norwich). I find the prices probably roughly correct to be honest. At the monent they are very low (around £23 recommend for my night). But in the summer it recommended nearly £40 per night. It constantly goes up and down depending on demand. But no- it can't take account that my room has a private bathroom and others are shared or one includes parking etc...

to be honest the value of the property is meaningless in terms of what you can rent it for. There's only so much that people will pay to rent a nice room or flat and eventually there is going to be an amount people will not pay over no matter what the value of the property.

[Kristi0]

I live in a California beach town and so yes its seasonal, summer being the high season. I lowered my prices 10% these past few months but would never lower my prices to the ones I see Airbnb suggests. I checked yesterday and they recommend a 50% reduction. There are two reasons I would never do that........1. The cost of offering my Casita is almost that, with the ammenities, cleaning, wear and tear on furniture, towels etc.  2. I have attracted stellar people and have 5 star reviews, (no one ever dinged me for value!) I seriously don't want to attract the buget people who actually expect more and pay less. I feel the situation of lowering prices is all generated directly from   1. Airbnb encouraging many listings, everytime I go to my Dashboard they ask me to refer another Host.  2. The towns and cities are regulating Airbnb's now. Too many complaints from neighbors, too many Hosts not getting licencing and paying taxes. Once a week there is some negitive article in our county or town newspaper. Don't get me wrong I love being an Airbnb Host and I only list on this site. I just stick to what I know works for me and have the most amazing Guests and when I travel my Hosts have been great and their listings just perfect for our vacations. So thank you Airbnb! 

[Deborah0]

I agree @Kristi0 and @Christina6, I think AIrbnb is creating problems for existing hosts by pushing to recruit too many new hosts, which results in a glut of listings in many areas that hurts all hosts.  Brian Chesky did a talk where he spoke about how he hoped one day we would see an Airbnb listing on every block in every neighborhood.  Well we already have that, in fact in some areas we have 2 or 3 Airbnb listings on each block, block after block, and this is a problem for hosts.