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

Claudia11
Level 5
London, United Kingdom

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

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?

107 Replies 107

Also take into consideration the amount of new hosts that came on in the last 12-18 months. Supply is increasing for home sharing as its catching on as a viable option globally. Not to worry as this is still a small option vs the billions of people who travel annually. Just manage your occupancy rates and revenue goals closer and adjust as needed. If you're not hitting your occupancy level (north of 60%) then adjust to a lower rate but a rate that will still hit your revene goal for the month. If you're seeing a higher occupancy for the following month consider increasing your rate.

 

As long as you don't cancel on a guest and maintain a 90% or higher rating you should be ok in search results. I imagine London is feeling some of the slowdown due to the attaches in Pairs as there would be spill over of potential tourists visiting France who would then head to London as well.  Just watch your metrics of occupancy and goal per month and adjust accordingly. 

I have many repeat guests and never adjust my prices. Occassionally airbnb's suggested price is highter, most of the times it is lower. By keeping my rate the same all year, except at Christmas holidays, people know what to expect and don't yet yoyo-ed around with price fluctiations. If you don't have repeat customers or you don't have your listing on other websites then I suppose you could use airbnb's prices. I just wouldn't, ever.

I liked your ideas. We're going to start keeping consistent prices. it's tough to see some of the prices drop down to $30 or so. I am not going to book the room just to get someone in there for 1/2 the price. There is no value in that.

Me neither, definitively! And as I need a break , then: " même pas peur!".
Edith

And besides, Paris prices will be more realistic this year because of "2016 Financial Law " which mandates sending their earnings Airbnb users or any other platforms. Some concurrence will disappear...
Edith

Airbnb business is slow in the winter and you need to make the requried adjustment for slow season. So does hetel and resort, even airline ticket. 

Deborah8
Level 4
Bournemouth, United Kingdom

The price of hotels & travel fares may be seasonal but our utlity bills remain constant , or increase .. same thing with food & other consumables we provide . The suggested price Airbnb ask sometimes makes me think , " Gosh thats cheaper than living in my home maybe I`ll move in to their place " lol 

 

Mieke0
Level 8
Amsterdam, The Netherlands

The prices in Amsterdam were low but getting highre now Christmas and New Years Eve are coming up. The best price tool are you. Have a look in your area, compare and set your price.

Mieke (from Amsterdam@)

I used to rent from a guy in the early 2000s named Christian. He owned a business called City Mundo that provided housing in peoples homes similiar to airbnb. I wonder if they are still around?

On my area the market is fully saturate and there might be more than twice as listings than what it should be. Besides this, Airbnb keeps pushing hosts to reffer new ones and now the price suggestion tips attempts to harm the general price structure by suggesting and guiding new hosts with rates that are deeply undervalued. For mostly everyone revenue comes from the difference of how much you earn from offering your place furnished to the tourism market vs unfurnished to the local market. That difference is reaching the minimum.

 

My thoughts is that Airbnb found a way to promote itself by causing a general price collapse to motivate new guests on using the service. Amazing listings paired with an amazing service for just a few dimes (Yeah!). The question the company is missing from my opinion is how many hosts have stopped using the platform for each new host that gets in. In general for any kind of business it is more easy to get a new client than to recover one that left.

 

 

I hope that this is not the case. However we are shocked, now our 7th year in the game and we are making less than brand new hosts. We started modestly at $15 per night for shared twin beds and worked up to a full apt. for 6 people for $112 to $126. This last year, we had to knock the price down to $100 per night and are now at $98. I cannot drop any further. Hopefully Airbnb will continue to provide the support for old hosts as they do for new. For the past 2 years Airbnb has given us $100 in vouchers for travel. We haven't received any such bonuses so far in the old or new year. I hope you are able to keep a thriving business there in Buenos Aires! Florencia!

One issue with recommended pricing is that the site cannot take into account local events that should result in higher prices.  To explain; I live in Annapolis and my home is a short and very scenic walk to downtown, which is historic and very touristy.  There are Naval Academy football games in autumn and boat shows.  People expect to pay more at these times.   The site does not yet have the analytics to find similar weekend attractions in every locale.

 

 

Very good point Anna =Leura hasnumerous festivals during the year and the price tool does not account for the law od demand in that market

 

Susie0
Level 10
Oakland, CA

The suggested monthly pricing on my place is now LOWER than what long-term rentals are getting in my area, that are unfurnished with no amenities. 

 

I think a big problem is there are so many Airbnb rentals now and they are not offering all the same value in location, experience etc. yet they get compared when people go to look for rentals. For example there is one near me at a similar price that has a view of the freeway exit (literally the crosswalk from the freeway ends at the house).

 

It's hard to know how to price! 

 

Happy new year. 🙂

 

 

Ernie0
Level 10
San Francisco, CA

Hi Claudia, 


I began using the pricing tool this past November when the number of bookings I was receiving plummeted. I used it sparingly at first and have been relying on it more and more as time has passed with  complete reliance on it during the month of December. Although I'm in a highly desireable location, my numbers during the off season are 1/2 the amount that they are during the busy season. That said, I have made 35% more money this December by using the pricing tool. 

Best, 
Ernie Thayer