Airbnb Hosting 101: Overview
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Airbnb Hosting 101: Overview

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Airbnb’s Place in Australian Real Estate

Since 2008, Airbnb has attracted 150 million users across 190 different countries and hosted over 4 million listings. About 4% of the Australian properties have been rented on Airbnb with about half of them being houses. But the types of properties have been increasingly diverse including boats, train cars, yurts, tipis, and even lighthouses. The total number of unique listings has been growing by 2.43% month over month. Melbourne has the most Airbnb listings, followed by Surfers Paradise and Point Nepean. The growth of the short-term economy is showing no sign of slowing down mainly due to the formidable expansion of the sharing economy.

Australia is a popular tourist destination. Over 9 million tourists visited the country between July 2018 and July 2019. Over 30% of them are from China and New Zealand. In addition to recreational tourists, Australia also attracts about 1 million business travelers and over 500,000 education-related travelers each year. With more and more businesses allowing (or even encouraging) renting Airbnb for accommodation, the short-term rental industry is expected to become a significant part of the real estate economy. Some argue that Airbnb will actually experience an accelerated growth post COVID-19 as many people feel more comfortable with renting a home rather than staying in a hotel building with a bunch of strangers.

All in all, Airbnb and the short-term home rental industry aren’t going away any time soon. Anyone who has a property which can be legally rented to Airbnb or short-term guests can make great money from hosting. Here are some tips to maximise your profit while mitigating the risks.

Airbnb – How It Works

You can post either the entire place or part of the property for rent (private room or shared room) on Airbnb. Airbnb will take 3% commission from the hosts and 6-12% from the guests.

Airbnb collects certain information from both hosts and guests to verify their identities and hosts can decide to only accept guests who have verified government IDs. The platform is built on ‘trust’ between unfamiliar parties based mainly on community reviews and digital identity. Everyone is expected to abide by the set community guidelines and violators will be weeded out due to feedback from other members. You can set your own standards and criteria to manage your risks inherent in opening your home(s) to unknown guests.

Airbnb provides host guarantee which protects hosts globally for up to $1 million USD in damages incurred by the guests. However, benefits are only paid out if the hosts followed all the suggested safeguards such as setting and delineating reasonable expectations (i.e. house rules). In addition, hosts also are provided with host protection insurance which covers up to $1 million for any bodily injuries or damages to properties belonging to guests during their stay. These benefits, however, do not cover any financial penalties incurred by the hosts due to hosting properties illegally.

What Makes One a Successful Host

How successful you are as an Airbnb host depends on the following factors. Createbnb.com.au provides detailed tips on each one.

After some good reviews from happy guests, you can become a superhost which allows you to have more leverage in pricing and guest selection. An average host makes about $5,600 a year but the top 10 hosts could make between $2 and $5.3 million across multiple listings. The revenue from hosting could be significantly increased if you invest the time and effort into it.

Property management has become a crucial part of the hosting economy and top Airbnb hosts often achieved growth with property managers. They can help you maximise bookings and enhance the quality of guest experience at scale, optimising revenue opportunities.

SELF MANAGED GUIDES

Overview

Airbnb Hosting 101

You can post either the entire place or part of the property for rent (private room or shared room) on Airbnb. Airbnb will take 3% commission from the hosts and 6-12% from the guests.
Be memorable

Furnishing and Amenities

You want to make sure the guests have access to the bare minimum they would have come to expect nowadays and also deliver pleasant surprises to make their stay memorable in a positive way.
Attract attention

Making a Good Listing

You want to include the photos highlighting the best features of the property but also want to set realistic expectations with the guests.
What to charge

Pricing Strategy

While the maximum and minimum you can charge are likely set by the value of your property (based on size, location, etc.), you have quite more control over the revenue stream than you realise.
Guidelines

Guest Screening & House Rules

If expectations are not clearly set, you can be on the hook for damages caused by guest behaviours not explicitly prohibited by your house rules.
Ratings affect your status

Reviews & Becoming a Super Host

According to the survey, 94% of consumers will avoid dealing with a business with bad reviews. People don’t trust businesses with lower than 4-star ratings. So listings with lower ratings will have to compromise seriously on the price to attract bookings.
Listing occupancy

Maximising Airbnb Occupancy

You want your occupancy rate to be 80% or higher for the next couple weeks and be at about 30-60% for the next 2 months.
What you should know

Insurance & Risk Management

Airbnb offers $1M host protection insurance and $1M host guarantee to almost all hosts globally. The host guarantee is not insurance but a resolution program offered by Airbnb to help hosts in cases of theft or property damages.
Dedicated management

Using Property Managers

Oftentimes property managers will offer a shared revenue model in exchange for full management services. Some (although not a lot) offer a la carte services where a host can cherry pick some key services a property manager can offer.
What is it?

Airbnb Plus & Luxe

Airbnb Plus is an invite-only programme made up of top superhosts and places. Airbnb Luxe, on the other hand, is even more of an elite programme for the most extraordinary homes handpicked by the Airbnb team.
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