What is an Airbnb?

An Airbnb is a small accommodation business that is rented out to travellers on a short-term basis. Usually an Airbnb is a unique property with special qualities that make it different from a normal hotel, motel, or bed and breakfast.

This might include quirky architecture (treehouse, luxury tent, boutique apartment, igloo etc) or unexpected location (wilderness, secret city spots, underground etc). Sometimes, an Airbnb is simply someone’s home or room that they want to rent out.

Airbnb properties are listed for rent on the Airbnb platform, where travellers of all types from around the globe can browse and book a stay. Generally, if you want to list on Airbnb, you need to apply and be approved first.

In this blog we’ll tell you everything you need to know about starting an Airbnb property and how to succeed long-term.

Why should you start an Airbnb?

Starting an Airbnb property can be a great way to get a foothold in the hotel and hospitality industries if you’re looking for a new career or business opportunity. It can also be a nice supplement to your main source of income as a side gig. Or, it might just cover your expenses when you go on your own holidays, business trips, or other types of travel.

Basically if you’re looking for a reliable revenue stream that can help support you on a full-time or seasonal basis, you should start an Airbnb.

However, not anyone can simply start an Airbnb and begin earning big money. There’s a lot that goes into, from having the right location and space to having the money to launch it.

If you’re starting from scratch, you’ll need to account for some expenses…

How much does it cost to start an Airbnb?

The cost of starting and setting up an Airbnb will very much depend on your specific set of circumstances. Sources have the average cost at around $6000. If you are starting from scratch and need to purchase a space, the cost will be significantly higher. If you have an existing space that doesn’t require much refurbishment, the cost may be lower.

Generally, there’ll be a few expenses to consider. Keep in mind these might not all apply to you:

  • Property price
  • Price of renovations or decorating
  • Property insurance and taxes
  • Installing amenities and facilities
  • Utilities
  • Consumables and essential items
  • Marketing and other services (photographer, cleaner etc)
  • Whether you are planning to manage your Airbnb yourself or hire staff

Additionally, there will be a small price to pay if you want to manage your listing successfully online. Making sure guests can find and book your property easily, and that you can perform all your admin tasks simply, requires Airbnb management software.

However, this is only a small expense in the grand scheme of things and is hugely beneficial to the longevity of your business.

Is having an Airbnb profitable?

Having an Airbnb is certainly a profitable business investment for many, and can be for you if you create a solid business plan and set up good management practices.

The amount of money you make will depend on how many rooms you have to rent out, your nightly rate, and your occupancy rate throughout the year. 

Airbnb listings with 51-100 reviews on average earned $21,569 in the US in recent years, which is a nice chunk of pocket money. Note that most Airbnb listings are side gigs, so if you treat it like a business and you have multiple listings with high occupancy, you can earn significantly more.

You can also increase your profitability by:

  • Monitoring your competitors
  • Optimise your listing with full details and high quality images
  • Achieve superhost status
  • Encourage reviews and positive word-of-mouth
  • Be strategic with pricing throughout the year
  • Manage your listing and property yourself
  • Maximise bookings and revenue by using hotel software

Before you start counting cash in your head, there’s one more consideration to be aware of…

What percent does Airbnb take?

It’s important to remember that Airbnb will take a percentage of your revenue for every booking you take on the platform. This is known as a host fee and is usually between 3-5% of the booking subtotal. 

This fee is lower than other major online travel agents like Booking.com, which typically charge 15-20% commission on bookings.

So while it’s free to host on Airbnb, not all the money is landing in your bank account, as it would be if guests were booking directly on your own website.

Now we have all the context out of the way, it’s time to learn exactly how to start an Airbnb.

How to start an Airbnb business

Starting an Airbnb can definitely be quicker and easier than starting a full scale hotel or B&B business, but there is still significant time and effort involved in getting up and running successfully.

Here’s a step by step guide setting up an Airbnb business.

1. Find and prepare your space

It makes sense that you first need a property or a space to rent out to guests. Your budget, destination, and specific location will dictate what type of space you prepare to list on Airbnb.

Some options you might consider include:

  • Renting out your spare room
  • Listing your entire property
  • Purchasing an existing property to rent
  • Making your houseboat, yacht, or campervan available to book
  • Converting a non-accommodation space to an accommodation space

Of course, if you are an established hotel, hostel, B&B, motel, or guest house you can simply apply to list on Airbnb. This will help expand your reach and booking potential. If you are doing this and are connected to multiple online channels, make sure you use a channel manager so the process is hassle-free.

Once you have a space, you need to ensure it’s appropriate for someone to not only stay in, but have a positive and memorable experience. This will come with some requirements including:

  • Creating a welcome book
  • Equipping it with all the essentials a guest will need
  • Creating host rules
  • Putting any necessary security measures in place
  • Establishing cleaning services
  • Creating official pages and contact details for your business

2. Create your marketing strategy

To inspire guests to stay with you, you need to know how to describe yourself. Are you offering a cosy country getaway, a stunning nature escape, or an inner city adventure? What will you name your property? Which types of guests will you target?

Understand what makes your property unique and be sure to highlight this in your property’s description and images. This will allow your ideal guests to imagine themselves staying in your accommodation.

Once you have this established you can decide how many online channels you want to connect to, create business pages on Facebook and Google, and even create your own website for direct bookings.

3. Set your price

A lot of thinking has to go into what nightly price you list your property at. Too low risks you being left short-changed or underbooked due to perception of poor quality. Too high risks you being underbooked due to affordability or receiving negative feedback if guests don’t feel they got value for money.

So when setting your price, think about:

  • The current economy and what your target market can afford
  • What similar properties are charging
  • How much you need to break even and/or profit
  • Qualities that make your property special and worth a little more than average
  • Seasonality – remember once you set your price doesn’t mean you can’t alter it

3. Create your Airbnb listing

Finally, you’re ready to list your accommodation on Airbnb. We have a full guide to listing on Airbnb so make sure you check it out. The general process is as follows:

  • Sign up to create an account with Airbnb from their home page or the hosting page
  • Select ‘add listing’ and input the basic information about your property
  • Specify how many guests your listing can accommodate, and what city you are located in
  • Describe what type of property your listing refers to
  • List the amenities you offer
  • Upload photos and provide a description of your property 
  • Review Airbnb’s basic guest requirements, set any rules, or give any additional special details 
  • Officially set your pricing, and choose whether to opt-in to Airbnb’s smart pricing tool

Be as detailed, professional, and honest as possible when setting up your listing. This will help you get more bookings and entice better guest feedback.

Airbnb hosting guide: Manage and grow your business

Once you’re up and running, it’s crucial that you’re doing all the right things to help your Airbnb business prosper. Being a good host is about covering all bases. This means:

  • Improving your listing over time to improve search engine optimisation
  • Updating your listing when you have new photos to add or something has changed
  • Giving guests multiple ways to book with you, including on your own website
  • Asking for reviews and responding to the feedback you receive from guests
  • Setting rules and policies to protect guests and your property

Most importantly, you need the time and resources to make sure your business runs smoothly. If you’re doing all your admin manually, while also trying to communicate with guests and maintain your property, it becomes too much to juggle. This is when mistakes happen or you simply don’t get everything done in a timely manner.

However, there is a very simple solution…

By Dean Elphick

Dean is the Senior Content Marketing Specialist of Little Hotelier, the all-in-one software solution purpose-built to make the lives of small accommodation providers easier. Dean has made writing and creating content his passion for the entirety of his professional life, which includes more than six years at Little Hotelier. Through content, Dean aims to provide education, inspiration, assistance, and, ultimately, value for small accommodation businesses looking to improve the way they run their operations (and live their life).