Running a successful Airbnb requires discipline, especially when it comes to finances. If you’re just starting and find the short-term vacation rental industry challenging, having some precautions and systems in place will help.
The first thing to do is understand the Airbnb regulations in your city. The platform itself offers a lot of resources on this so you can be prepared and operate legally. Once you have that sorted out, follow our recommendations below to run a successful Airbnb – and take care of your money.
Separate your money from the business’s revenue
Mixing personal and business incomes is one of the most common mistakes Airbnb hosts make, especially those who are just starting. So, first of all, make sure you have a separate bank account for your Airbnb revenue.
You can set up a savings account to start with, for example. It doesn’t have to be complicated. This separation will make it easier for you to visualize how your Airbnb business is performing and help you make any decisions.
Understand what is profit, income, or expenses
Once you have a separate account for the business, it’s time to understand what is precisely profit, income, and expenses. Indicators such as fixed and total costs, revenue, profit margin, and nightly rate should be closely monitored – weekly or even daily if you have a high occupancy rate.
You can use a spreadsheet to monitor such indicators; there are a ton of free resources and templates online.
Invest in growing the business
If you have complete knowledge of the business's finances, you can make decisions and determine investments to grow it. With an annual budget in place, you can determine how and when to upgrade appliances, for example.
You can map out redesigns and remodels and set aside a budget to take professional photos to spruce up your listing. You can also take in suggestions from guests’ reviews and decide when and how to implement them. You can plan ahead if you know how much money is coming in and out.
Be aware of what channels provide the best ROI
If you use a channel manager such as Hostaway, Hostify, or any others, you can advertise your properties in pretty much all booking channels out there. But that doesn’t mean they’ll all work for you or even have the best ROI (return on investment).
That’s what you need to be on top of news and trends, understand which channels are getting more traffic from potential customers, and on which ones your listings perform best.
Reassess your rates
Pricing is tricky, but it doesn’t have to be overwhelming. You should analyze your competitors constantly, see what they offer that you don’t and how your listings stand up to theirs. With that information, plus how well your properties are performing – meaning their occupancy rate – you can assess your rates.
This is something to do frequently.
For quickly and frequently booked properties, ensure you have a competitive price for your area. For those where you struggle a bit, consider promotions and deals. In fact, you should be considering those in a couple of scenarios; read more here.
Work with the right partners
Running a successful Airbnb is not a one-man job. Choosing the right partners is critical for your revenue and business to grow. A good property management system will give you a wide array of tools: from channel to revenue management to marketing and guest communications.
That’s one part of the job taken care of.
Technology has been evolving rapidly and affecting the industry significantly – in a great way. Gone are the days when you had to be physically present to welcome a guest or supervise a cleaning to ensure everything was done correctly.
Today, with software like TIDY available, you can run your Airbnb business from anywhere and ensure your guests are always checking in to a clean and organized rental. Plus, you can book jobs automatically between check-ins and check-outs, manage and pay service pros and even talk to your team in a shared inbox.