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Over 200 million people will have stayed in an Airbnb by the end of 2017. Not bad for a little company that began in August 2008. Originally it was about the lowest of the low budget travellers trying to squeeze a few extra miles into their travel plans by sleeping on couches. In fact, the name Airbnb evolved out of the concept of an “air mattress B&B”. Now, in less than a decade it has become a powerhouse in the travel industry worth £23.5 billion. That’s a lot of zeroes. Using the proliferation of fast Internet and smartphones to its advantage, it has empowered everyday people to generate an income from their property.
Airbnb hosts can now be found in over 191 countries and in more than 65,000 cities across the world. There are more than 3 million listings online and this number continues to grow as demand outstrips supply in many key locations across the globe. Like the Uber of the travel world, Airbnb provides travellers with a greater variety of options at a wider range of price points. But more importantly, it allows you to turn anything – from that spare bedroom that your kids used to use to that investment property “up in the mountains” – into an income generator.
Airbnb is a community-driven and moderated marketplace where hosts are empowered to advertise their spare space to potential renters. That space could literally be a sofa bed in your lounge room, a boat moored to a jetty or an entire castle. Hosts and renters are both reviewed on their space and behaviour accordingly. Airbnb continues to expand and offer new features, such as Airbnb Trips and Experiences – rolled out over the last year to enable locals to offer unique experiences and activities to tourists – and Airbnb for Business.
Listing your property on Airbnb is free, and you can opt to offer your space for any price that you desire. Airbnb acts as the middleman between the host and the renter, mediating any issues, governing over minimum requirements, offering protection and providing the forum through which both parties can rate and review each other. In order to sign up to be an Airbnb host, simply head to the page, click the sign up button and follow the prompts.
When someone books your room, Airbnb charges a standard host service fee of 3% of the listed price. This can slide up to 5% depending on the cancellation policy you set. So, if you set a cost of £300 for a room per night and someone stays a single night, you will receive £291 and Airbnb will receive £9. Airbnb also charges a guest service fee to the person who rents the space. This is between 5% and 15% depending on the length of the stay, the characteristics of the listing, the final subtotal and other undisclosed factors. This fee, however, affects the guest only, not the Airbnb host.
There are plenty of benefits to being an Airbnb host, but also a couple of negatives that you need to be aware of.
Letting a stranger onto your property always comes with an element of risk and fear. Airbnb seeks to guarantee peace of mind for hosts with protection in place, for free, for all bookings. The Host Guarantee ensures that any property damage caused by a guest of up to £600,000 is reimbursed.
Note: The Airbnb Host Guarantee does not replace insurance that may cover your valuable contents, your pets or even yourself. The Host Guarantee does not protect any cash you have in your home, any animals, your personal liability or any damage to property in shared or common areas. That last point is particularly important to remember. If you have items in your house such as jewellery, art, technology or similar, then proving that these were damaged by your guest can be hard. You should retain your current home and contents insurance policy to ensure that these items are fully covered.
There is a secondary program that Airbnb Hosts are also enrolled into as soon as they list their property. That is the Host Protection Insurance program, which protects you from claims made by your guests of up to £600,000. This could be in relation to property damage or bodily injury, for example, a guest falling down the stairs and breaking their leg.
With Airbnb, the host is free to charge whatever they feel is right for their space. Airbnb is effectively a middleman that then takes a 3% commission from the amount you, the Airbnb host, set. Airbnb will send you your money, via the payout choice that you have selected, 24 hours after check-in time, unless you are a new host. For a new host, there is a 30-day buffer in place before the first payment can be made. So if you have a reservation on the first day that you sign up to be an Airbnb host (unlikely!), you will have to wait 30 days to get paid. If you have your first booking 31 days after you sign up, then you will only have to wait the standard 24 hours.
However, even after Airbnb has made the payment, other elements can delay the process. For example, weekends or public holidays, or other processing delays. Processing delays will occur for:
A much sought-after reward for any Airbnb host, a Superhost badge is a privilege granted to those who go beyond simply offering a space for people to stay and fully take on the role of being a host. There are four boxes you need to tick, which are evaluated at four intervals during the calendar year:
As well as the badge, which is an indicator that guests can look for when searching for a place to stay, there are other perks. Perhaps most importantly, guests can search using the Superhost filter, which helps push your property to the top of the list and allows you to charge more of a premium for your listing. You can also get access to new features first, as well as invites to exclusive events, priority support and, if you maintain your Superhost status for more than a year, a travel voucher.
It’s safe to say that if you are setting yourself up to be an Airbnb host, then you are not looking at renting out your property – at least in its entirety – in the traditional fashion to a tenant. If you are looking to buy an investment property for the purpose of Airbnb, it’s wise to consider the location of that property. While the Airbnb service thrives in many locations around the country, in others it does not, especially those that are off the beaten track. In these locations, renting out your investment property to a tenant would probably be a better source of income, and you should do your due diligence in understanding the number of travellers that could potentially come past your desired location. Does demand outstrip supply? Do you supply something unique to the area, such as the best view, the best proximity to popular sights or an awesome feature like a spa under the stars?
It’s never easy to work out what something dear to you is actually worth to an impartial eye browsing through all the listings in your region. Seeing your property from the perspective of a guest – potentially a foreign guest with different cultural values – takes plenty of research and lots of listening. Here are a few factors to consider:
Anyone can request to be an Airbnb host as it is free to sign up, but if you are renting the property that you plan to list, you’re entering a grey area that you’d be wise to negotiate correctly. Subletting through Airbnb is permissible by the Airbnb host program, but may not be through your lease, landlord or another organisation related to your property. For example, an apartment building might set its own rules that landlords and therefore tenants must follow.
If you’re considering subletting a property you rent through Airbnb, there are some simple steps you can take to ensure that everything stays above board.
You could also consider the Airbnb Friendly Buildings Program, designed for those who want to sublet through Airbnb but have come across resistance from other involved parties. The concept involves complete transparency of the process and, potentially, a revenue share. The program organises and ratifies the agreement between a landlord and a tenant, or potentially a number of landlords who own properties in the same complex or apartment building.
This is a great way for a property owner to retain a long-term relationship with a tenant, while finding a way for both of you to make some extra money from any spare or unused space.
The number of businesses and companies turning to Airbnb for their travel requirements is growing at quite a rate. In 2016 alone, the number of bookings made for business trips either internationally or domestically tripled. Over 250,000 companies now use Airbnb to book accommodation for staff. Hosts can list themselves under the Airbnb for Business category if they meet certain criteria that lend themselves well to this kind of traveller.
Some of the factors that Airbnb looks at when deciding if a host can list under the Airbnb for Business category include:
Over the last couple of years, in a measured rollout across the globe, Airbnb has begun to offer a new Airbnb host service called Experiences. These are guided activities offered by an Airbnb host in order to show guests the surrounding area from a local’s perspective. It could be a driving tour to a nearby national park or a walk through the local markets. Maybe it’s dinner at a “local’s only” restaurant or a fishing trip in nearby waters.
What Airbnb particularly likes to see is hosts using their own skillset or career as a chance to show guests a unique, once-in-a-lifetime experience or activity. Something that they can’t find in a Google search or a travel catalogue. They like this because it makes Airbnb look like a service that delivers beyond its competitors. For example, a horticulturalist might take guests on an informative walk through the local gardens that they work at or a lifesaver might offer a surf lesson at the beach they patrol.
Airbnb charges a 20% service fee to the host on all booked experiences. So if someone booked your £500 experience, you would receive a £400 payment.
If you were thinking of renting your dog kennel out to a poor backpacker, think again. It’s Airbnb’s aim to be considered the best online destination for great and unique accommodation options at the best price. In order to deliver on that, they need to set and stick to a certain standard. The core principle of that standard is trust, and the company breaks trust into five key areas that make up the minimum standards and expectations for a host. Here is a guide to Airbnb’s host standards, most of which are fairly obvious.
When your guest has left your space and finished their trip they will review you in five main categories: communication, check-in, accuracy, cleanliness and overall experience. In order to get those great reviews, here are some helpful tips:
If you run a professional hospitality business, such as a motel, estate, hostel, eco lodge, timeshare, boutique hotel, wedding venue or retreat, and you want to book guests through Airbnb, you will be happy to know that this is possible. However, Airbnb does look for some specific features in such listings, most notably:
Airbnb is an expanding service with more hosts joining up every day. Popular social media tools like Instagram are also helping to bring tourism to areas not pushed by traditional travel agencies by showcasing images and stories for the world to see. As an Airbnb host, however, your bread-and-butter is going to be tourists visiting typical landmarks across the country or travellers on business, a romantic getaway or a family vacation.
London is Airbnb’s leading market in the UK, along with other cities including Manchester, Liverpool, Cardiff, Edinburgh and Glasgow. Many other locations across the United Kingdom also prove popular on the site, including Canterbury in Kent, Bristol, Cornwall and the Lake District.
You don’t require a business bank account to operate as an Airbnb host, although you might find it helpful to open one. This way you can keep your personal finances separate to those involved in running you Airbnb hosting operations.
Depending on your personal circumstances, if you get to a threshold where you need to pay tax on your Airbnb rental income, using a business account to receive your Airbnb payments and process any expenses related to the property’s upkeep should make it easier to work out your tax bill at year-end. Some business accounts even have tools that will calculate it all for you. And with several fee-free business bank accounts on the market at the moment, it’s worth taking a look.
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