According to Airbnb, there are currently over 6 million listings in 100,000 cities around the world. With such a successful business framework in place, it’s no wonder why hundreds of Airbnb owners and operators join this venture every day. If today is your day to join this booming business, there are essential elements needed to start and build your business. In this article, we’ve collectively assembled the best tools for succeeding in the Airbnb business in order to help build your own Airbnb success story.
Before Opening The Door…
Before following any directions, plans you’ve heard of. or want to pursue, consider the “why” behind building an Airbnb business. An excellent business plan, such as offered in this template, airbnb business plan, will put every crucial element of your business into place from the start, including the reason why you are building this business, how you will maintain it, the administrative tasks tied to the business, and the relationships that will result from it. All of these elements will become your essential guide from day one; begin with your business plan before opening the door to guests for the first time.
Obtain Necessary Permissions, Permits and Licenses
Depending on your location, you’ll need to first secure permission from your homeowners association, town council, apartment coop board, or other entities that oversee the Airbnb location. You’ll also need to start your Airbnb business legally, which means you’ll choose from among the types of legal entities, such as a corporation, a limited liability company, or a sole proprietorship to structure the business. Check with a business lawyer to start off in the best position for tax and legal purposes.
In most cities, a business license must be obtained from the county in which the business is located and a seller’s permit may also be required. Check with local authorities to determine what is needed to build your Airbnb business with requirements in place. Determine the insurance coverage needed to protect guests and the residences where they will stay, the liability coverage needed by the business and any additional coverage you personally may need. Setting up these plans prior to building the Airbnb business will protect you against unwanted legal action.
Prepare Airbnb Residences for Guests
In order to open a home, condo, apartment or travel trailer to Airbnb guests, preparations need to be complete. Examine requirements from Airbnb and set in place those that are necessary. Add items to accessorize and complete your hosting responsibilities, such as clean linens and bathroom essentials, keyless locks, bed and breakfast supplies, and schedule cleanings in-between guests. Add amenities, such as snacks, wine, a charcuterie board or other luxuries, according to the budget and location of the residence.
Set Pricing and Guest Instructions
Many of the guidelines for pricing and guest instructions are included in the Airbnb outline, however, some of the best tools aren’t always known. We’ve assembled a short list here:
- Include local and state taxes, as well as the host fee, when creating the price structure.
- Consider the location, amenities offered and your target audience when setting prices.
- Choose to add amenities that aren’t offered by other hosts, such as luxury winery tours, pet accommodations, relaxing spa visits, or other amenities that will suit the target audience. Add these amenities to the total costs.
- Use Airbnb metrics to determine the price structure on a nightly basis. Charge less for weeknights and more for weekends, if the area attracts visitors to venues, use a “minimum night stay” for slower times of the season. These settings will increase profitability even when bookings are slower at such times.
Finally, ensure guests know the “rules of the house” upon entrance and when leaving. Offer clear communication via text, email or in paper instructions so there will be fewer misunderstandings and less potential for unanticipated experiences.
Determine Profit and Loss
After the guests leave your Airbnb residence, add up the true costs of the experience provided. This will include a portion of the monthly mortgage or rent, estimated utilities usage, cleaning costs, property and personal liability insurance, amenities included, and any necessary repairs. The total may surprise you with the “true” costs revealed.
If the total cost is higher than the charges, you may have a lower profit than anticipated. It is time to revisit a general business plan, such as this business plan template, to consider any revisions needed or possible action to be taken to shift goals or increase business profitability by upgrading accommodations, adding additional residences or increasing the value of the offerings or services in other unique ways. One of the best business practices includes looking back as the business moves forward; resetting your vision to build greater profitability and long-term growth makes perfect sense for your Airbnb business.
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