Airbnb vs. Renting: Income
Airbnb is an online platform that enables homeowners to list their properties and rent them out on a short-term basis to travelers. Airbnb charges a fee, but it markets Airbnb listings and handles the payments in return.
And if you choose traditional renting, you’ll need to make your property available for long-term rental for at least six months. You’ll be responsible for promoting your property and collecting the monthly payments.
If we compare Airbnb vs. renting income, we’ll notice that different aspects may have a direct impact on how much money you can make. Keep in mind that both approaches have their advantages and disadvantages.
Don’t forget about the third option—Airbnb long-term rental. It’s usually the least lucrative and the most convenient approach.
Pricing
If you choose traditional renting, you’ll have to follow the lease agreement and won’t be able to change your pricing during this time to adapt to demand. You’ll receive the same amount of rental income, which means a steady cash flow, but it also means less potential to maximize your revenue.
Airbnb hosts can be more flexible with their pricing strategy. They can adjust their prices daily, depending on various factors, including the day of the week, season, and demand. For example, you can raise rates around major events in your location and charge more for weekend bookings. Besides, you can sell extra services to Airbnb guests and generate extra money on top of your rental income.
Setting up effective pricing for your Airbnb requires thorough research and constant monitoring of the local STR market. It can be challenging because you need to ensure that your rates are competitive and allow you to make a profit. Most hosts use automated tools to implement a dynamic pricing strategy that adjusts nightly rates based on real-time market conditions, such as demand, competition, seasonality, holidays, and days of the week.
Dynamic pricing has become essential for STR hosts looking to optimize revenue and stay competitive in today’s market. The good news is that if you opt for Hospitable, you’ll be able to take advantage of our built-in Dynamic Pricing without paying additional fees. This feature is included in our Host, Professional, and Mogul subscription plans.
If you enable Dynamic Pricing for your properties, Hospitable will combine your settings with real-time market data to automatically adjust your rates, maximizing revenue generation. Our dynamic pricing tool works for all your connected booking channels, including Airbnb, Booking.com, Vrbo, Adoga, and your direct booking website.
Demand
Airbnb rentals can have a low occupancy rate during a down season, which means lower income. However, on the other hand, short-term rental hosts can earn money more easily during the high season due to higher guest turnover and increased prices. Additionally, you can diversify your booking sources by creating your own direct booking website with Hospitable.
Still, it’s unlikely that your property will be in high demand as you are just starting on Airbnb. You’ll need to earn a good reputation among guests and receive some 5-star reviews, as Airbnb users rely heavily on reviews to evaluate properties before booking them.
The higher your Airbnb ratings from previous guests, the more likely you are to attract new ones. Initially, you may have very few reviews. This means that you may need to offer your property at discounted prices initially or provide incentives to attract travelers to stay.
Keep in mind that you’ll need to ensure perfect communication with your guests and respond to their inquiries as fast as possible to get good reviews. When you receive numerous bookings, it may seem like a full-time job. So, a good solution is to automate conversations with your guests and other aspects of your short-term rental business.
Long-term Rental vs. Airbnb: Factors to Take into Account
Now that we’ve covered the fundamental differences between long-term rental vs. Airbnb, here are some tips on what to consider when deciding which strategy to choose for you.
Consider your property location. You will only be able to enjoy high occupancy rates if your Airbnb property boasts a great location that attracts many tourists throughout the year. There must be a compelling reason for travelers to want to visit your location. And if your home or apartment is not in a major city or a popular vacation destination, it must offer something very unique.
Take local laws into account. In some cities with stringent short-term rental ordinances, traditional renting may be the wiser option. You should also make sure there are no laws that prohibit short-term rentals in your area—you don’t want to face steep fines or other penalties.
Think about the workload. Keep in mind that managing and maintaining your Airbnb can be a time-intensive task. Additionally, something in your life may change, preventing you from properly caring for your property.
You may be able to save time and effort by hiring a cleaning service and a property manager to handle all of these tasks. However, hiring a property manager would also add to your operating costs. That’s why many smart hosts choose short-term rental software like Hospitable to streamline their operations and automate routine tasks.