The #1, biggest hosting mistake by Airbnb hosts is not understanding their market and competition.
Whether you’re an aspiring host or already hosting, knowing your market and your competition will allow you to get the most out of hosting.
Aspiring hosts can know the prize before committing to hosting.
Most new hosts start hearing stories from friends or relatives or online about how so and so is making this much money as an Airbnb host and they immediately think they can do the same.
So they rush into it only to find out that they are in the wrong market. Or that they don’t know how to position their listing to succeed in their market.
Yes, Airbnb is growing and expanding and doing amazing in more and more markets. But some are better than others. WAY better.
Wouldn’t you want to know how much you can make as an Airbnb host BEFORE you start investing serious time and money into it?
Don’t go in blind.
Existing hosts can only improve if they know how they’re performing relative to their competition.
“But I’m profitable”, you might be thinking to yourself.
If you’re making $2000 a month in profits, wouldn’t it be helpful to know whether similar listings in your market are making $500 a month in profits or $5000 a month in profits? You could be doing great. Or you might be leaving a lot of money on the table.
Know that not all markets are actually going to do well on Airbnb. And not all properties are going to do well in any given market. People travel to different places for different reasons. Understanding what works in your market can help you best position your listing to succeed.
Wouldn’t you want to know exactly how you’re doing versus your competition and how you could further separate yourself from them?
Well, now you can.
Know Your Market with AirDNA’s MarketMinder
It isn’t even close. If you want to know the size of your prize before you start hosting, there is no better source than AirDNA, an Airbnb market research company that pulls insights from over 90 million reservations across 4.2 million rentals from 20,000 markets.
To avoid this hosting mistake, you have to understand the Airbnb market you’re getting into. And you can get everything you need through AirDNA’s MarketMinder.
Here are just some of the things AirDNA will tell you.
AirDNA Will Give You a Market Grade
By looking at its extensive data of currently active listings going back as far as three years, AirDNA‘s market overview can give you an instant market grade based on a number of actors including rental demand, revenue growth, seasonality, and regulatory climate. This snapshot also gives you:
- the average daily rate, what current listings in your market are actually able to achieve in rents through Airbnb
- the average occupancy rate, how often the listings are being booked in the market
- the average revenue, how much the listings are making in an average month
- the mix of rental types, so you know what you’re competing with and what’s popular in the market
- the mix of listing sizes, again to know what you’re competing with and what’s popular in your market
AirDNA Breaks Down the Airbnb Rental Revenue in Your Market
Not only can you find out how much each listing type and size of listings are making, but you can also find out how much they make by month. Here, we’re looking at 1-bedroom listings in this market and we’re seeing the what it takes to be at the 25th, 50th, 75th, and 90th percentile in the market. For example, top 10% of 1-bedroom listings in this particular market tend to earn between $4500-$5500 a month. In the middle, 1-bedroom listings earn between $2000-$3000 a month. Even the bottom 25% earn between $1000-$1500 a month in this market.
New hosts: You get to see how good you need to be (or how poor you can perform) in your market to make a certain amount of money with your listing.
Existing hosts: Where do you stand in your market against your competition? Are you in the top 10%? Middle? Or are you in the bottom half?
AirDNA Tells You Whether Your Market is Growing
AirDNA shows you how the average daily rate, the rate charged by the listings in your market, has been changing over time. Are you seeing an uptrend to indicate a strong and growing market or are you seeing a flat or declining trend? A strong uptrend is great news for hosts in the market, especially those with strong listings. But a downward trend could indicate either oversupply or some other major issues driving demand down (e.g. a major local tourist attraction is permanently closed).
Similarly, by looking at the overall nights booked and mapping it to the overall number of properties with bookings, we can further gauge local demand. The chart above shows that while the demand, nights booked, grew from about 2000 bookings to over 6000 bookings, the number of booked properties also grew from about 100 to 400 listings over the same period. Nearly three times the demand but also four times the competition, meaning there is money to be made, but you better bring your A-game!
AirDNA Tells You Whether Your Market is Seasonal
Some Airbnb markets get guests all year round while some only get guests during certain months in the year. Even those that get guests all year round may see some months with way more demand than low season months. Why does this matter? Seasonality impacts pricing. In some markets, the highest demand days can be 5-10x the rental rate of their lowest demand days. Imagine if you charged the same rate on those days. You’d be left with empty rooms during low season, because you’ve over charged, and you’d be leaving money on the table during high season, because you’e under charged. Market knowledge (literally) equals profits.
AirDNA Provides Detailed Occupancy Data
While this information also helps in understanding seasonality, the occupancy data can inform you of how many bookings you can expect to get in any given month in your market. A typical booking is for 2-3 nights, so a 75% occupancy suggests about 21 days booked, meaning you can expect anywhere from 7 to 10 bookings that month. That tells you how often you’ll be doing check-ins and check-outs, cleaning, stocking, etc…
If each stay takes you approximately 4-6 hours of total work, using both the revenue information and the occupancy information, you can easily estimate your hourly profit.
New hosts: For the effort and hours you’re expected to put in, is the hourly profit enticing enough?
Existing hosts: Where do you stand versus your competition? Is your listing achieving the right levels of occupancy? Below average suggests opportunities to make your listing more enticing, or that you may be overpricing your listing. Too high an occupancy may suggest you are underpricing your listing.
AirDNA Gives You Other Actional Insights
In addition to the above, AirDNA will also provide information on the following:
- Amenities–what are the most and least offered amenities in your market? Tells you what you must have and what may be opportunities to set yourself apart from the others.
- Booking lead times–how far in advanced are the guests booking in this market? Tells you how far in advance you need to adjust your pricing for special events or high or low demand periods to maximize bookings.
- Future supply and available rates–how many listings have available dates for booking up to 6 months into the future and how much they are charging. Tells you how to price your future availabilities to stay competitive.
- Ratings–the distribution of ratings by listing type in your market. Tells you what ratings you need to achieve to stay competitive.
- Top Listings–shows you the best of the best listings in your market. Use these as benchmarks to compare against and learn from to improve your listings.
- Minimum stays–what your competition is doing with respect to the minimum stays. Is yours too high?
- Cancellation policy–what your competition is doing with respect to the cancellation policy. Are you too strict?
Are you ready to understand your market and competition? Check out AirDNA’s MarketMinder market insights here.