Anyone who has stayed at a nice hotel in the past decade knows it’s not cheap. When was the last time you stayed in a major city for under $100 a night? Or under $200 for that matter?
There is money to be made in the lodging industry. And it’s never been easier for average people to get a share of it, thanks to a disruptive startup called Airbnb that has rewritten the guidebook for travelers.
What Is Airbnb?
Airbnb is a new lodging option for travelers — and a new way to make extra money if you have some spare space in your home.
The site acts as an online community that connects travelers and hosts. Members can list and rent out their apartment, or even just a spare bed, to other members on a short-term basis. Airbnb handles all the money and takes a small cut on both ends of the transaction.
The company began in San Francisco when roommates Brian Chesky and Joe Gebbia couldn’t afford the rent on their loft. They decided to take advantage of their high-rent location by turning it into a makeshift bed and breakfast.
With a design conference coming to town, hotel space was limited. So they set up three air mattresses in their loft, designed a simple website with photos of the space, and listed each airbed for $80 a night, including a free, home-cooked breakfast. They landed their first three guests that weekend, and the idea took off. They soon launched Airbed & Breakfast, and later changed the name to Airbnb.
Several years later, Airbnb has more than half a million active listings in more than 190 countries, and has completed 15 million bookings. The company was valued at about $10 billion earlier this year — more than Hyatt Hotels.
Listing Your Space on Airbnb
Do you have an extra bedroom or in-law suite you could rent out, or a second home that often goes unused? Or would you consider renting out your own home, or a portion of it, while you’re on vacation to help cover the cost of your trip? Here’s how to get started as an Airbnb host.
Location and Amenities
Before you begin, you need to consider when — and whether — people travel to your town.
Do you live in or near a major city? In that case, there’s likely a steady stream of both tourists and business travelers who need a place to stay. Is there a college nearby? You might be able to rent your space for homecoming weekends, college tours, reunions, and graduation. If you live in the mountains or near the ocean, demand for your place may be more seasonal.
Does your location, and your home, offer the kinds of amenities a traveler would want? Can guests walk to restaurants or public transportation? Is there a place for them to park their car? Will they have access to a kitchen and space to unwind?
My wife and I own a two-family home in the Boston area, and rent out the extra apartment as a fully furnished vacation unit. But some people rent out just an extra bedroom in their home, or their own home when they’re away on vacation themselves. If you go that route, consider whether there’s adequate privacy for guests — for example, will they have their own bathroom?
If you’re renting out your personal space, is there a room or closet where you can lock up valuables or personal items? We have friends who rent out their two-bedroom apartment when they’re on vacation, but they list it as a one-bedroom, locking up anything of value or personal significance in the other bedroom.
Create Your Listing
You can create your free listing in just minutes, but you probably shouldn’t. Airbnb walks you through the steps it recommends to improve your listing and profile; here are some tips to keep in mind.
- Use an alluring headline. Sum up what you have to offer in one compelling line — this is what people will see when they perform a search in your area. Try to be both enticing and informative; e.g., “Big, Bright Loft 2 Blocks From Convention Center” or “Breezy 2BR Bungalow With Ocean Views.”
- Write an enticing, detailed, and honest description. Explain what’s available to guests, including the number of bedrooms and what types of beds they are, whether they’ll have access to a kitchen, a deck, a private bathroom, a place to park, cable TV, air conditioning, Wi-Fi — anything you can think of. Just don’t make claims you can’t deliver on: If a guest is expecting to do work on your Wi-Fi connection, but your router is broken, they have every right to file a complaint and you may not get paid. If your apartment is on a busy street downtown, make a note of it — some people may be turned off by noise, but others may be enticed by a bustling location.
- Take great photos. And lots of them. In many areas, Airbnb will send a professional photographer to your home free of charge, as they’ve found that quality photos increase bookings considerably.
- Be transparent. Airbnb keeps your full name, phone number, address, and email address hidden until a guest completes a booking. But you should create a full profile with a photo of yourself, ID verifications, and a bio.
- Set house rules. You can choose a variety of cancellation policies and price structures, and you can also set your own house rules, such as no smoking, no additional overnight guests, or please feed the cats.
Pay Attention to Timing
The story of Airbnb’s founding offers a good lesson for any host — and any entrepreneur, for that matter: Time your launch to give you a jump-start. Try scheduling your opening at the same time as a big local event that will boost demand.
When we decided to turn our rental unit into an Airbnb apartment after our longtime tenants bought their own home, we set a deadline for ourselves — it would have to be ready to rent in time for the long Columbus Day weekend. Between the fall foliage and events at local colleges, October is a popular time to visit Boston. And the following weekend would be the Head of the Charles Regatta, which draws visitors from all over the world.
Most hotels in and around the city were filled up for those two weekends, and what rooms remained were fetching astronomical prices of $500 or more, so we knew it was our best chance to get some early customers — and positive reviews — to help build momentum.
Airbnb also gives a temporary search-results boost to new hosts to help them gain their first customers. However, once that window expires, your ranking will be decided by your reviews, price, and location. So it’s important to get some happy visitors early on.
Set a Price
You can set whatever price you want for your listing, and charge different rates for weekends or different seasons. But what’s a fair price?
One way to find out is to compare your space with other current listings nearby. If you’re just starting out, knock off $20 or more per night until you get some positive reviews under your belt; given the choice, people are going to book a place with good reviews over one without them unless there’s a big savings to be had.
Another way to determine your price is to see what hotels in your area charge. If you can offer an entire apartment for the same price or less than a standard hotel room nearby, you should be able to attract visitors.
Marriott opened a 460-room hotel in our city a few years ago, and they regularly charge $169-$249 a night. (Plus, they’re not near the subway, and charge a fee for parking.) So we decided to undercut them a bit to start out, charging $150/night on weeknights and $180/night on weekends. Now that we have a few glowing reviews, we’ve raised our rates a bit for next year’s busy season (April-October), but it’s still a pretty great deal compared to a hotel.
It’s free to join and to list your property. Airbnb takes a small percentage cut of each transaction — from both the host and the guest — and you have several options for payment, including direct deposit or PayPal. Funds are released to the host 24 hours after check-in as long as the guest doesn’t report any problems.
Of course, it’s not free money. Even after you set up your listing, there’s work to do — you’re essentially becoming a part-time innkeeper or landlord.
- Communicating with guests: You’ll have booking requests and inquiries you need to respond to, within 24 hours if you want to keep on Airbnb’s good side (you’ll be penalized in search results if you fail to answer within a day). You’ll also need to communicate with guests about how to find your place, where to park, and how you’ll exchange keys.
- Updating the calendar: Your calendar will update automatically when someone books a reservation, but you need to update your personal availability yourself. For example, if you have family coming to visit, make sure to block off those dates.
- Cleaning: Guests may not be expecting the Marriott — but they certainly want a clean bathroom, clean sheets, and fresh linens at a bare minimum. Meanwhile, depending on how nice your photos are, guests may be expecting something better than the Marriott. So make sure your space lives up to the description and photos online.
Airbnb allows hosts to charge a cleaning fee, charged on a per-stay (not per-night) basis; this rewards longer-term stays. I’ve found that cleaning between guests — including stripping and remaking the beds, doing all the laundry, vacuuming or mopping the floors, and cleaning the bathroom and kitchen — takes me about two hours, so we charge a $50 cleaning fee per stay.
If you don’t want to deal with all that, you could also get a quote from a local housecleaning company and see what they charge for regular top-to-bottom cleaning — then just make that fee your cleaning fee.
Good Hosts Get Good Reviews and More Bookings
Airbnb members have more than 550,000 properties to choose from, so simply listing your place may not be enough to attract visitors. Here’s how to set yourself apart.
- Be friendly and responsive: For starters, be cordial and quick to reply in your communication with guests. You can send and receive messages through email, the Airbnb app, and via text message, and the faster you respond to someone looking to firm up their vacation plans, the more likely they’ll book your place.
- Keep it clean: One of the easiest ways to get a bad review — besides a fraudulent listing or canceling on someone at the last minute (don’t do that!) — is leaving the place filthy for guests. Make sure the bathroom is clean — no stray hairs or mildew in the shower — and that the sheets and towels are freshly laundered. Tidy up so guests aren’t tripping over your clutter. Empty the trash and clear the fridge of spoiled food so it doesn’t stink.
- Personal touches: Finally, any unexpected extras you can offer can go a long way toward giving someone a stay to remember. Leave your guests a welcome basket of local craft beers or food from a local shop. Did you just bake a batch of muffins or cookies? Leave a couple of them for your guests. Or offer to pick up a guest from the train station or airport if it’s raining and you’re not too busy.
Basically, think like a traveler: What would you want at a minimum? And what would wow you?
Give your guests a great experience, and they’ll give you a great review. And better reviews instill confidence in future guests and can help your listing rank higher in search results, driving more bookings and more revenue.
What About HomeAway or FlipKey?
If you have an entire apartment or house to rent out, there’s nothing stopping you from listing it on other vacation rental sites as well, such as HomeAway, VRBO, or FlipKey. In fact, you may find these sites offer more potential guests, and a clientele who are willing to pay a higher fee.
There are a few things that make Airbnb unique, however:
- You can rent out a single room. You don’t need a second home or apartment unit to rent out; you can list a spare bedroom, or even just an extra bed or air mattress in a shared room. This means more people can list their spaces, and budget travelers can find a potentially nice place to crash for very cheap — about the same price as a bunk bed in a hostel.
- Airbnb is actively involved as a third party. Unlike most other vacation rental sites, guests pay Airbnb in advance, not you, and the money is held in escrow until 24 hours after check-in, assuming the guest doesn’t file a complaint. Likewise, as a host you have 24 hours after check-out to file a complaint through the resolution center, and Airbnb will get involved if necessary. This eliminates potentially awkward scenarios or misunderstandings when money changes hands, and offers both sides a sense of reassurance.
- Airbnb listings are often in real people’s everyday homes. Unlike HomeAway and VRBO, which are more commonly used by professional vacation rental companies — think beachside condos and furnished rental apartments — Airbnb users tend to rent out their own homes and bedrooms when they’re not using them. This may be a pro or a con for you, depending on your preferences. The listings can be homier and more comfortable, with a lived-in feel and food stocked in the pantry. At the same time, they may be more cluttered, and personalized with a stranger’s stuff, compared to the blank slate of a vacation rental unit.
Legal and Safety Issues
Airbnb has had its share of growing pains.
As the company started growing exponentially in 2012, some hosts encountered problems with guests. One host’s home was trashed beyond repair; another came home to a disaster littered with meth pipes. Yet another found that their guests had changed the locks and refused to leave.
Airbnb has since introduced a $1 million guarantee to hosts to cover damage caused by guests (which the company maintains is rare).
As a host, you are never obligated to accept someone’s reservation request — if you check out their profile and get an uh-oh vibe, simply decline it. (This will impact your host metrics, but that’s hardly worth your safety or stress.)
You’re also able to charge a security deposit, just like a landlord would. We charge a $200 deposit, which simply places a hold on the guest’s credit card. If someone were to break the TV or ruin the sofa, we would lodge a complaint through the resolution center and keep part or all of the security deposit (or negotiate directly with the guest as necessary).
The company and its hosts have also been subject to some legal challenges, largely based on the fact that hosts don’t pay hotel taxes to their city. Other problems have occurred when hosts rent a space that isn’t zoned for such a use, or when renters violate their lease by subletting their apartment.
Plenty of people rent out their homes on Airbnb despite improper zoning or lease restrictions, but they’re taking a big risk. Make sure you’re on the right side of the law in your city and that your lease permits it — otherwise you may get slapped with a big fine or even get evicted.
It’s Not for Everybody
Do you like meeting new people? Do you have a general sense of trust in humanity? Are you uncomfortable with having strangers in your home when you’re not there? Do you find the the idea of cleaning up after strangers revolting?
I’ve always enjoyed people, and have never minded menial tasks. Some of my favorite jobs were lousy ones — grocery store clerk, coffee cart guy — where I got to interact with people all day and had to clean bathrooms or wash dishes.
My wife feels much the same way, and we both love traveling and meeting fellow wanderers. (In fact, we first met at a hostel while traveling separately years ago.)
So hosting strangers in our home isn’t weird to us — in fact, we thoroughly enjoy it. We love getting to meet new people — especially travelers, who usually have great stories to tell — learning about their lives, and helping them enjoy their trip to Boston.
But we have friends and family who think we’re insane. You might, too, and I don’t blame you. Others think it’s great that we do it, but would never want to themselves. So make sure you — and your partner — are cut out for this sort of thing.
If you still want to make some extra money, but you’re more comfortable letting strangers into your car than your home, why not try driving for Uber?