How to set up an Airbnb business – the basics

Airbnb’s revolutionary business model — which ranked the home-sharing company third in 2018’s Disruptor 50 list — has now dominated a total of 191 countries.

And with its more than 5 million listings, 300 million customer reservations, and a value of $31 billion, it’s not surprising that a lot of would-be short term let landlords and amateur hoteliers are taking advantage of Airbnb’s rapid growth.

To compete in an already crowded and competitive marketplace isn’t easy though and running your own Airbnb business comes with a lot of challenges and considerations that many people just don’t think of when they first get into the game.

In this article, we’re going to explore just what these are.

Learn How Airbnb Works

Failure to understand how the Airbnb business model works, from both the guest and host’s point of view, is the first place many go wrong. Learning the ins and outs of Airbnb procedure, rules and etiquette, should be the initial preparation before setting it up.

Here are some of the essential aspects every aspiring host needs to know:

1. Registration & Listing

The first step to becoming an official Airbnb host is by registering and listing a property on Airbnb. The process is as simple as submitting photos and writing an accurate description of the space. Once the company verifies the request, it will then appear on their site where potential guests can find it.

Guests can contact and ask the host directly regarding additional details or questions that need further answers. Moreover, remember that Airbnb listings are searched via filters on various categories and criteria as well. These includes:

  • Price
  • Destination
  • Availability
  • Host language
  • Amenities
  • Number of rooms (including washrooms)
  • Facilities (parking, pool, etc.)

2. Fees

When it comes to payment, both the host and Airbnb can charge different fees. The host, for instance, is responsible for the lodging price. They also have the opportunity to charge guests for a cleaning fee, as well as security deposit.

Airbnb on the other hand, sets its prices for the following:

  • Guest: 6% to 12% booking fee.
  • Host: 3% for the transaction charge.

3. Security

For an enhanced security system, the company requires all hosts to provide accurate identification. In addition, asking feedback from former guests (especially if it is a positive review) also aids to build trust and enhance the host’s credibility.

4. Guest Services

For anxious travelers — especially when it comes to payments — Airbnb has provided a secured payment platform which holds the remittance for 24 hours beginning from the time the guests have arrived. There is a 24-hour hotline as well where they can call and report any issues during the rental period.

5. Tax

As part of every country’s rules and regulations, all hosts are liable to a city, provincial, or state taxes for each guest booking. Also, payment may vary depending on the jurisdiction.

Licenses & Insurance

1. Insurance

A business insurance policy provides protection in case of damage to the property (accidental or otherwise). Although hosts should have existing home insurance in place, not all countries — including the UK, US and Canada — offer protection against such incidents for premises used for business purposes.

As such, it’s important to find appropriate insurance in addition to your home insurance policy. Airbnb do render a free Host Protection Insurance policy and will cover the premises for up to $1 million.

2. Business License

Some places in UK require the host to obtain a license to operate first. In London for example, the “90 night rule” restricts hosts from renting out their property for more than 90 days as this is considered a “change of use”. Some boroughs have exceptions to this rule, so check first.

In Northern Ireland, under the Tourism Order 1992, the government bans any form of tourist accommodation business such as Airbnb hosting unless there is a valid certificate issued from the Tourism NI. The same goes with Guernsey and Isle of Man.

For a breakdown of individual licensing rules in your city, town or village, you should consult your local authority or citizen’s advice. This page from Airbnb also lists local rules and regs in various parts of the UK.

Check the Law for Airbnb Hosting

In the UK if a host rents out their property for more than 140 days in a year, he/she is subject to business rates.

In Greater London there are laws as well that restrict people subletting properties for more than 90 nights at a time. If they wish to extend the limit, they need to ask for new planning permission— material change of use, to be exact — from their local authority.

If you are renting then it’s unlikely that you will be able to profit from subletting the property (or sublet at all in fact). If in doubt, you should seek out and ask for advice from the landlord first.

Enhance Host Ranking

Listing a property is not enough to thrive in this industry — hosts need to improve their ranking on Airbnb as well.

Host rankings work in a similar way to YouTube’s algorithm in that search engine rankings are based upon the most popular and trustworthy hosts. This system renders all top hosts the exposure they need in order to attract potential guests.

Securing a high ranking is not straightforward and takes a lot of time and effort. Entrepreneurs need to build and enhance their credibility first ensuring that all their guests are satisfied with the service and are giving positive reviews.

A couple of must-dos when it comes to improving your host ranking are:

1. Verification

To have a space verified is crucial in building trust with potential customers and significantly affects the host’s ranking.

Hosts need to update their profile only, adding essential details such as telephone or mobile number, email address, website, or other online platforms that could prove that the business is trustworthy.

2. Reviews

Reviews are, perhaps, the most crucial part in building trust and enhancing one’s host ranking. Hosts need to provide remarkable service, facilities, and amenities to have positive feedback. Make sure you chase guests for a review if they don’t leave one of their own volition.

This guide has been written exclusively for ByteStart by Adam Kershaw, co-founder of Hopewell, a short-term lettings and Airbnb agent located in Bristol. You can connect with them on Twitter and Instagram.

Last updated: 22nd March, 2022

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