Wondering why your Airbnb rental is sitting vacant?November 26, 2013
When I bought my condo in downtown D.C. I was planning on making the second bedroom my office. Instead my then-boyfriend said “Hey, I just read about this website called Airbnb. You should rent it out for short term stays. It’s perfect!” And it was. The location made it popular for both tourists and business travelers alike. I took great pride in decorating it to be the perfect eco-friendly room, decked out in all the comforts one might like in a luxury hotel (like providing bathrobes and fresh flowers) while having the added personal touch of being in the home of a local. I quickly became a “Superhost”, got almost exclusively rave reviews and was at near 100% occupancy.
Then recently something happened. All of a sudden the reservation requests stopped. I didn’t get any new requests and had only one inquiry in weeks. At first I thought it was just the slow season but then I compared it to the past two slow seasons and saw this doesn’t compare. Something’s different. What’s up?
Well, today I did some research and I think I figured it out.
Airbnb recently implemented some major changes. They had a big conference in San Francisco recently to announce this.
I’ve also noticed that there are a lot more real estate agents and other professionals with multiple listings who are now using the site to fill their vacancies. And since it’s not really a secret that renting out your place at $99/night to short-term travelers is going to make you a lot more money than renting it out at $900/mo to a long-term renter, a lot of landlords are opting to do this.
What I’m trying to say is the supply side of the market is flooded right now.
If you live in DC and have heard about Airbnb and are thinking about trying it, now is not the time to start!
This trend is not likely to change anytime soon. Why? Because Airbnb, which takes a cut of each transaction, makes the most money off those professionals with multiple listings who do multiple transactions every day. People with just a spare bedroom like me can’t compete. Even if you have more than 200 positive reviews, which I do, the sheer volume of the supply means your search ranking makes it to the front page a lot less often than it used to. That means fewer travelers see it, which means fewer inquiries and bookings for you. You might need to redo the math on whether you can make it work for you or not.
I had an interesting exchange with a former employee of Airbnb who is now one of those professionals with multiple listings herself. Here’s what she had to say. Read carefully:
“I worked for Airbnb and it’s something they’re trying to figure out as well. The truth is that professional hosts such as myself are the ones that create the most revenue for Airbnb. I started just with a spare room and grew from there. Airbnb needs to have a mix of pro and non-pro to stay afloat. You will have to differentiate yourself by offering a truly excellent experience for your guests. It’s the reviews that get you bookings, not how many properties you have.”
That last sentence is not true. I have over 200 positive reviews. But I have only one room and one listing. The professionals have lots of rooms and lots of listings. They have a much higher chance that their ads will get seen more.
Real estate agents and others aren’t going to stop using the fastest growing internet travel website to book short-term stays because it’s the fastest growing internet travel website for booking super-profitable short-term stays.
And as this guy’s research shows, those with multiple listings do generate the most revenue for Airbnb (about 75%) and Airbnb does make the most money from them. So I imagine this is not something that’s going to change any time soon.
I caught a lucky wave but I think it’s over. I wish I had figured it before spending a few thousand on room renovations but that’s why I’m putting this out there. Airbnb hosts need to have this information in order to make an informed decision about whether or not to do it. I still like Airbnb and I’ve loved hosting people from all over the world but if Airbnb goes too far in the direction it’s going in now, it risks driving away their target host audience: people like you and me who just have a spare bedroom, a spare couch or hey, even a spare airbed. Just FYI.