As a host, has Airbnb become so saturated with listings that it is no longer worth hosting?

[Robin4]

The answer to that is…..yes, and no!

In major population areas or tourist locations there is an over saturation of short term rentals (STRs) and many hosts are now either closing down their listings or forced by government regulation to close. In 2018 in the US before the pandemic, occupancy was down to only 11%! That means for every 100 Airbnb hosts, 89 of them did not have a guest on any particular night of that year. And Airbnb is just the tip of the iceberg! With 28 million listings world wide, Booking.com is 4 times the size of Airbnb! So competition is fierce. 

But this is the ebb and flow of business and it is made worse by the fact that Airbnb actively encourage its hosting community to ‘cannabalise’ itself! They are all the time sending their hosts emails telling them that cheaper listings are picking up the business…..’lower your prices to get more bookings’.

Following Airbnb’s advice is a surefire way to put yourself out of business! All it does is make what the host does unprofitable and the host lowers his/her standards to the point where they have an un-rentable commodity. Airbnb are not interested in whether the host makes money or loses it……their sole desire is not to let a potential guest escape to another platform…..give them an offer they can’t refuse! Airbnb own nothing but the linking software between host and guest, and that is what they concentrate on.

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Now having said that, success breeds success, and the Airbnb platform revolves very heavily around the review system. Great reviews are money in the bank and there is always going to be a heavy demand for properties that have a proven track record of giving the travelling public what they want.

We only have one listing, and it’s just an old humble converted garage in the back block of nowhere with over 400 Airbnb listings in the area, but we are fully booked now month after month. I  even had to drop off the other platform I was using because we can’t cope with any more guests. We may start a month with up to 10 nights free but at the end of the month we may have ended up with 2 nights out of the month without a reservation.

The travel market on a world scale is all the time increasing, mainly due to the rapid expansion of Chinese/Asian travelers. If you want to succeed as an Airbnb host you have to give a guest a reason to want to pick your property over another, forget all about the ‘help!!’ that Airbnb provide and host to a standard, not a price, give the guest something they were not expecting and, no matter what the competition, guests will keep coming your way.

The market is saturated but if your good enough the road ahead is paved with gold!

Cheers……Rob

[Ruth413]

@Robin4   I totally agree with you about about giving guests a reason to pick your property.  New hosts need to find their niche in their local str market.

When I started out this adventure 6 years ago, there were probably around 8 rentals in a 3 mile radius, including mine.  Now there are probably more than 50.  

I made my 1st listing dog friendly and that attracted a lot of guests as it also has a large secure garden and no other nearby listings accepted pets. 

Our 2nd listing happened by accident really, it is the product of lockdown and having a husband who was being driven crazy living with 4 females, 1 who was his mother in law and 2 teenage daughters !  So I told him to go out and build something to keep him occupied.  So our Shepherds Huts were the end result.  They are totally hand built and unique and can't be found anywhere else and I think that is why guests choose to stay there.  

And of course with a proven track record and good reviews, it all helps.

[Robin4]

@Ruth413 

Oh how I empathise with Mike!

My father died in July 1973, my father in law a decade later, my only male cousin died young......I have been living in a world of females for 30 + years. If there was ever the epitome of that phrase, 'A lone voice in the wilderness'.....Ruth, that has been me. That's probably why I am a big-mouth.....the years have taught me that's the only way to be heard!

Got a nice message from Molly and Em yesterday. They are heading up the East coast, made it as far as Byron Bay in northern NSW and seem to be enjoying life. I have told them we are always available if they are ever in need. I hope they keep in touch with us.

I hope you both are going well over there, I would love to share a drink with Mike one day, I have a feeling we have a bit in common!!

Cheers.......Rob

[Elaine701]

@Robin4 

Yes, it's quite saturated in many areas globally, but it's also true that tourism continues to grow. 

You speak of booking.com as far larger than Airbnb. This one has always been a mystery to me, since just about everybody I know (including myself) seems to use booking.com as their first "go to" for travel reservations. Because it's so easy, intuitive and comprehensive. Airbnb could learn a few lessons from them. 

But here's the mystery;  in the 4 years we were listed on booking.com (our listing was virtually identical to our Airbnb listing) we never received even one booking. Nothing. Yet Airbnb kept us booked year 'round. Easily.

So if booking.com is 4x the size... And everybody uses them... then this suggests that ratings are indeed very important, regardless of platform.

We were already well rated on Airbnb before being listed on Booking.com. With no ratings on booking.com, our listing didn't stand a chance - at least that's my theory. 

And even now, in our patch, we have loads of competition, yet no problem keeping booked - and about 90% from Airbnb. 

Regarding Airbnb operations, I don't really believe they're consciously "against" hosts, but simply are incompetent at managing that aspect of the business. It's not a simple task, and  in any case, all platforms' host support leaves much to be desired. 

I do think Airbnb often tries too hard to (incompetently) intervene, which leads to causing more problems and even injury. Other platforms tend to ignore hosts (and guests)  to a much greater extent. 

Still, seasoned hosts already know (have learned ) very well that they should avoid platform involvement in anything but bookings and payments - the only two things worth demanding from them. You're better off managing everything else without them - as much as possible.

Cheers, Robin 

[Robin4]

@Elaine701 

Yeah well said, all good points, you are spot on Elaine.

I think Airbnb are more of an irritant to Booking dot com than anything else. In 2022 Airbnb's turnover was a record $8.4 billion.and rose 18% to $9.1 billion in 2023....Booking dot com for the same year had a turnover of $17.1 billion. and in 2023 had a 25% increase to $21.4 billion. Expedia's revenue for that same year was $11.7 billion. The surprise in the 2022 results was VRBO with a paltry turnover of $2.8 billion

In any case, I wouldn't say that Airbnb call the shots in the STR business. But Airbnb do have the best revenue to listing ratio which is sort of born out by your experience and mine!

There is lots I don't like about Airbnb, but the money they put in my account is consistent and as long as they don't upset me too much I will keep letting them get the lions share of my hosting availability.

Cheers.......Rob

[Mike-And-Jane0]

@Robin4 @Elaine701 I suspect booking.com's higher revenue is because they have captured the hotel market. Whenever I have used them it is to find a 1 night hotel stay for a reasonable cost. As such I think Airbnb are bigger than them for 'holiday' rentals (but I can't prove it)

[Robin4]

@Mike-And-Jane0 

That's a very good point Mike, I am annoyed with myself for not thinking of that one. I would like to see statistics on the ratio between the 2.

Cheers.......Rob

[John5097]

@Robin4 

Airbnb has been good at generating booking and 99% of guest love it. 

For me it's pretty much a direct booking service. I don't really need customer service. I would much prefer a simple deposit and direct booking platform this is totally transparent and let AI handle common things that are 99% waste of time.

But as I've been on the platform for 4 years and only plan to host 4-5 more years max I'll just keep adjusting and stay with it.  

I think a good value approach has worked for me but it also can increase risk of less than 1% who don't bother to read the listing at all, etc. 

ETA: Overall the strategy of increasing rates to get better guest is the same thing as saying the most popular listings are at greater risk. For a host that's not really an ideal business model to price yourself out of demand. 

[John5097]

I also just noticed the new badge as well. 

Hopefully they will at least try and retain their top 1% of listings, 



I was planning on adding more listings with a theme that would include things I wan to promote but there is just too much risk for the highest performing host and listings. 

[Elaine701]

@John5097 

It's no secret that  the most problematic guests and most expensive to host - historically  the messiest, cause minor damage, make the most complaints, and often issue frivolous and fraudulent claims against hosts - are very often those who pay the least.

So, competing solely on the basis of price is (generally speaking) asking for problems, and that's also not a wise business strategy.

Price is a tricky thing. It's important to be aware that there are different types of travellers - business, sports (e.g., cycling, equestrian, golf, hiking, etc.) general tourism / sightseeing ...or the type looking for any kind of cheap getaway ... and of course, the party types.

Different tourists seek out different accommodation. Some seek whatever is the cheapest, without regard to the quality of the accommodation. Problematic guests are often of this demographic.

But there is an entire other demographic whose first interest is quality and price is quite secondary. These are the guests that tend to be uncomplicated, respectful and a pleasure to host. And it's just good business to target that demographic.

Also, that demographic often views the lowest prices as "suspect", unlikely to deliver that which they seek, so they may not be interested even if it's cheap.

As long as you maintain a high standard and appeal to that demographic, you can command a higher price, but you need to understand your local market attraction, who are the visitors, and why they're coming to your area. Armed with that, you can better target a more desirable demographic, and support it with prices that facilitate better quality accommodation, which is more attractive to that demographic.

So, as long as you are successfully targeting a "quality" demographic, you needn't worry about "pricing yourself out of the market", which, if not carefully constructed, would indeed also be an unwise business strategy, and you'll discover fairly quickly. Trial and error.

[Helen3]

I agrée i have never competed on price. I'm in the top 10% price wise yet have bookings through to September in an overcrowded market where many hosts are struggling to get bookings @Elaine701  @Robin4 

I focus on designing my listing around guests I've identified as my target market . 

@John5097 the STR market is not as price sensitive as you think I have been adopting this strategy since I started nine years ago and have never struggled to get bookings 

[John5097]

@Helen3 @Elaine701 

Appreciate your insights. I could go up in my rates some. To say there is over saturation in my area is understatement. 

What helps mine in the view, being on a marsh and creek. I keep watch on other listings close to mine that are very similar, also with a marsh vies. One pretty much copied my listing title and only changed two words, and they do charge more than I do. Another is only two houses down. Right now they have higher rates but aren't booked.

I also use request to book which means my listing isn't prioritized.

But I'm far from the lowest. I also don't lower rates if there is a last minute opening. Like right now there is a two night opening next week and it will likely book the day before as guest will wait for last minute discounts, which I don't offer but that's what they are doing. 

Airbnb also posted their Q1 earnings report that might be on interest. Bookings are down in the US, but up for international travel, and the growth is in Asia. Q1 beat earnings estimates but Q2 outlook is soft, meaning slow down. 

https://finance.yahoo.com/video/airbnb-stock-falls-weak-q2-205726664.html

With the high interest rates and inflation that's why I didn't go up in rates this year. For next Spring I would need to plan ahead. For off season rates drop dramatically. We also have tens of thousands of hotel rooms available, and even some of the best cut rates below mine! 

Not sure if I mentioned this but car rental rates are also high. So I'm really competing more with hotel rooms. 

For example a few weeks ago Drew Barrymore stayed at one of the more affordable hotels Downtown. At least that's the location of the video. By the time guest factor in car rental price its close to rates there. 

https://www.tiktok.com/@drewbarrymore/video/7352167553331907883?_r=1&_t=8l7Ohso2NJa

ETA: In the past 4 years I've done will with rates that lean towards better value. There are just so many other listings guest can book. The similar ones to mine usually overprice themselves out of the market, then slash rates last minute. My guest also appreciate the simple approach. 

The problem I'm having recently is guest requesting additional discounts, then if I decline with polite note I get reported, because they assume I'm discriminating against the specific discount they mentioned, which is ridiculous. So I may need to go up more in rates. 

I'm only doing this 4-5 more years max. I really needed the extra income prior to this but now don't. I also wanted to offer a listing like one that I would like. But we really don't have any method to screen guest. If I decline one in two years I get warning. 

For comparison Airbnb is ranked about 125th in SP500 (US top 500 companies) Boeing is about 120 for comparison. So I'll keep owning the stock and really glad to see it replace some of the other companies on the list, but it's become too stressful to host. It used to be wonderful but Airbnb keeps pulling silent changes where suddenly don't get any message at all from guest. It's just really weird that anyone would rent an attached guest apartment and expect zero communication.  Other host may prefer this too, so hopefully I can do this another 4-5 years. 



 

[Elaine701]

@John5097 

There is no obligation to give a discount when a guest requests it. If it's an "inquiry" the only obligation you have is to answer it. That can be a decline. It won't affect anything 

If it's a "request", then they've already agreed to pay your price. There is no obligation to give them the discount they're asking for. But you may be penalized for declining a "request", so you're better off scaring them away, and let them rescind the request. Demanding a large security deposit usually does the trick. 

Regarding prices.. I think the American market may be different than the European market, so what works for me may not work for you. We too are incredibly saturated - to the extent that the government have s considering measures to tone it down. But we have a large segment of tourists seeking high quality accommodation, rather than whatever is cheapest. But to appeal to that demographic, you need to deliver a stylish and appealing look, specifically targeting higher class tourists. And your reviews need to be glowing. But despite our massive saturation, we generally are booked by really top grade guests virtually year-round. 

Screening guests: a few simple, benign questions is the starting point. "Thank you for considering us, may I ask what brings you to our area? Oh, and how many guests will be staying?"..

The answers (or lack of them) can tell you a lot about the character of the guest. If they sound dodgy, scare them away 🙂

[John5097]

@Elaine701 

I would never request some guest to pay an extra security deposit simple to "scare them away". 

They would report me and I would be banned from the platform. (probably another host)  

If guest really wants to book there is nothing can do to scare them off. They can keep sending reservation request or create new account or have spouse create new account. 

Thats why I only mentioned my guest in my area. I didn't compare my listing to a higher end listing and entire house in a different part of the world. 

Thanks for your insights though. 

I guess I'm doing something right as I'm ranked in the top 1% of listings and host. 

I do get guest from all over. Honeymooners from Sweden and Australia, for example, who might be on tight budget.  But most of my guest are still driving from less than 400 miles away.

I just tied to make a separate post but didn't go through. I'll try again.  

[John5097]

Also wanted to add that I'll be fine. I don't have a controlling nature and guest are very perceptive. 

Host don't realize it but it's just human nature. 

I agree about discounts. It's so subjective. That's why I think AI will be a welcome change. Customer service simply can't always have accurate assessment, as they may not have all the information and just looking at one message or simply not like the way a host profile picture looks. That's the age we live in. 

I created a different post about privilege , a false sense of control, and creating more hostile environment with host using all these little tricks, posting negitive review at the last second, etc, but didn't post. It's just human nature that will dictate hosting IMO and no one is really in control. 

This are all things I address and communicate with my guest though and in my experience communicating with guest and addressing any misunderstands has worked well.