According to Forbes, Airbnb is worth $130 billion as of 2021. This valuation proves its fast growth over the years and exponential rise in demand. Because of its high demand, more and more investors are rushing into the market as Airbnb is currently known as a goldmine. It has now become a topic of the wonder of exactly how much hosts of Airbnb make.
When you look at this form of investment, it is important at the beginning to consider it as more of a side hustle because the rental home market is not so steady. Various factors determine how many guests you will be welcoming over a certain period. If the season is summer, for example, you should be expecting more guests as families, friends, and couples go on vacation and will need places to stay.
Hosts tend to take advantage of the opportunity and increase their prices during peak periods. Prices also depend largely on location. For instance, North America is the highest-earning region for Airbnb in the world because it welcomes the most guests and has the most hosts. But on average, hosts make about $924 per month with an occupancy rate of about 48%.
If you want a scope of the price of an Airbnb home in a particular location, you can make use of their website. All you have to do is go to the website, insert your location, and you will be shown how many guests can be hosted, and the average price the home can be rented for.
How to determine the price of your vacation rentalÂ
As a host, you should know how to price your home. A tip to figure out what you should be pricing is checking for competing prices. Search for other listings on the website and see how they are priced. Also, look into using sites like AirDNA that use real data and give you a good market analysis.
From there, you can draw out a price to suit your location so you won’t price too low or too high from your competitors. In addition to your nightly fee, you could also add a cleaning fee. The cleaning fee ranges from $60 to $105 depending on if the hosts are getting the house cleaned themselves or hiring someone else.
Price strategies for hosts
Lower price: Because an Airbnb investment aims to make money, many people would frown at the thought of lowering their price. This strategy is used at the start to build your ratings and reviews. As the credibility of your listing goes up, you can slowly increase the price. Airbnb’s algorithm focuses upon affordability so those that have a lower price can often be found higher on the search results.
Take note of events: A strategic move to make is taking full advantage of events around your property. When certain seasons or events are approaching, the influx of people booking on Airbnb and Vrbo is incredible. Ensure to maximize this opportunity and charge more than you normally would. But of course, compare the price of other listings to yours before deciding on a price. You can also look into having a dynamic pricing tool that will do all of these things automatically for you.
Vacation homes come with a lot of expenses, but they tend to make a reasonable amount of profit when managed correctly. You must also consider how you’re going to manage everything, whether that be by hiring expensive property managers or by using all-in-one property management softwares. The choice is up to you, but making sure it’s done correctly is essential.  Â
