Airbnb Pricing 101
Establishing a short-term rental operation, especially in a vacation destination like Hawaii, will almost guarantee a return on your Kailua Kona real estate investment. However, if you are entering Airbnb’s competitive markets, it is crucial that you list your property at the right price. Pricing too low will unnecessarily squander your profits. Pricing too high will deter renters, leaving you with vacant, idle property and zero income. The right price will provide a return on investment without being prohibitively expensive.
Pricing your Kailua Kona real estate as a short-term rental on Airbnb is far trickier than most investors realize. It is difficult to ascertain your position in the market when all you have to gauge your competition are a few pictures and short descriptions on a webpage. In order to price your investment properly, you must first gauge its market value; then incentivize your rental to establish rapport in the Airbnb community; and finally, increase and adjust your rates to generate profit while remaining competitive.
Gauge the Market
It is difficult to determine exactly how your Kailua Kona real estate stacks up against your Airbnb competition. A property may appear spacious and luxurious online but have unanticipated drawbacks, like a poor location or noise pollution. Likewise, a property of quaint appearance might boast incredible sunset views or on-site activities. Do your research, comparing the size, amenities, and location of your property to those of other properties. Once you have an idea of the pricing of similar properties, you can list yours more confidently.
Be sure to take reviews into account when you are doing your research. If a property appears to be over or underpriced, it is likely that the rental has a special feature or drawback that isn’t immediately apparent on the page. Reviews often clue you in these obscured elements of other rentals. Use reviews to determine what inconspicuous, unanticipated factors can increase or decrease the value of a property. For example: providing snacks and services can go a long way in generating positive reviews and permitting price increases.
Price Low…
If you have just recently listed your Kailua Kona real estate on Airbnb, you may have difficulty attracting renters. Oftentimes renters are reluctant to book a newly listed property because there are no reviews to assure them of the rental’s condition. In order to attract renters, accumulate reviews, and drive up demand, you will need to incentivize your rental.
The simplest and most promising means of incentivizing your rental is to list it at a cheap price. Do your research and examine similar properties in order to gauge the market value of your rental. Then, list your rental at 10-15% lower than the market value. In so doing, you will attract more renters and begin to build credibility in the online community.
It is essential that you encourage your renters to leave reviews on your page. Reviews—positive or negative—are what will differentiate you from other properties of similar size and condition. Once you accumulate several positive reviews, you will be well positioned to increase the price of your rental. Particularly stellar reviews may even allow you to list your property above market value while still attracting renters.
…And Then High
Once you have ten reviews, you should be able to increase your prices to market value on Airbnb without deterring prospective renters. Additionally, many hosts are able to increase their profit margins by listing their Kailua Kona real estate at a higher value through a secondary venue. When you list a higher price with a different service, you are able to remain competitive in the Airbnb market while gauging whether renters will bite at a higher price. A few bookings here and there through another service at a higher price will increase your profits. If your property is in high demand at its higher listing price, you may be able to increase your prices on Airbnb as well.
You can also list a higher price for those booking far in advance. If your property is booked 2-3 months straight, try listing your rental 10% above market value. Early vacation planners eager to secure a rental before booking flights and cars are usually willing to pay that extra margin.
Going Big
Big holidays and events create lucrative opportunities for Airbnb hosts. During holiday seasons, demand for short-term rentals spike, allowing you to raise your prices. Kona is bustling in December, when families take vacations to escape from the cold of the continental US. Thus, Airbnb hosts can raise the prices on their Kailua Kona real estate up to 20% in December and January and still be completely booked.
To incentivize your highly priced rental even further, you can make space available for guests to host events, such as holiday parties or weddings. This works particularly well for hosts with large, scenic properties. Airbnbs with available event spaces are attractive to short term renters because they allow renters to kill two birds with one stone instead of booking an event at an expensive, off-site venue.
Airbnb Experience
You can generate additional revenue through Airbnb without increasing your prices. Airbnb Experience allows local experts to charge renters for experiential services. Consider offering guided hikes or bike tours if you are an avid outdoor enthusiast. If you are well acquainted with nearby cities, you can design a city tour, accompanying your guests to your favorite restaurants and attractions. If you are an experienced surfer, offer surfing lessons.
Airbnb experience is wonderful because it allows hosts to capitalize upon their own unique interests and talents to reap additional returns on their investments. It’s also a great way to make money doing what you love.