How Does Airbnb Work? The Key to Unlocking Rental Profitability

How does Airbnb work, and how can property owners generate income through its platform?

The increasing demand for short-term rentals in London makes Airbnb a strategic option where hosts earn extra income from property investments. When you understand how the platform works to connect a host and guest, you can enjoy this rewarding side hustle and maximise your property’s earning potential. Whether you have a spare room or a whole unit available to rent, you can take advantage of London’s appeal to travellers, students and business professionals and enjoy a significant property investment return.

In this article, you’ll get the answers to some of the most common questions about Airbnb. This guide will walk you through everything you need to know as you list your property on the Airbnb platform.

How Does Airbnb Work for Property Owners?

Airbnb is an online platform that serves as a marketplace connecting property owners (hosts) with international guests looking for short-term accommodations. You can use it to list your property, set rental rates and control the calendar’s availability. Airbnb, on the other hand, will help market your property, facilitate bookings, process payments, offer payout methods and provide the tools to help you manage all your reservations, special requests and overall guest communications.

Key steps for property owners on Airbnb

To get started, create a property listing where you upload high-quality photos, write an engaging description, provide the house rules and highlight the amenities available to guests. Then you need to set the pricing – choose a dynamic pricing strategy to take advantage of the seasons, market demands and local events. There’s also an option to set a fixed price – if that’s the strategy you prefer. Airbnb will process the guest payments and transfer earnings to your registered account.

This platform also allows you to check your property’s calendar and manage its availability. You can manage the bookings and communicate with guests to ensure that check-ins and check-outs go smoothly. You can also inform them of the house rules while you’re at it. Make sure they know how to check out so there won’t be delays in their travel schedule.

You should also set up the housekeeping and maintenance of the property so guests will arrive at a well-maintained flat. The more you impress them, the higher the chances of getting positive reviews. This will lead to more bookings and higher payouts for your property.

Learn more about Airbnb: What is an Airbnb: A Property Owner’s Ultimate Guide to Investing in an Airbnb Rental in London

What Are the Key Features of Airbnb?

Airbnb offers various tools that would help you manage your rental property through their platform. Here are the key features Airbnb hosts can enjoy.

• Instant Book. This is the default booking option where guests can book without waiting for a host’s approval. As long as they meet the booking criteria you’ve set, it’ll allow guests to book a stay.
• Reservation requests. Airbnb offers the option to review guests, but you need to do it within 24 hours. You can check the guest’s profile to ensure you’re getting a reliable and responsible guest.
• Dynamic pricing tools. Airbnb offers pricing tools that adjust rates automatically based on demand, local events and seasonality.
• Superhost program. This is for exceptional hosts. Once the criteria are met, top-performing hosts enjoy increased visibility and various perks to improve their property’s earning potential.
• Guest reviews and ratings. Leaving reviews and ratings is encouraged. Airbnb makes it easy to provide feedback after guests stay in your property. This will affect your property’s reputation and attract more bookings.

Learn more about the Superhost program: Hosting Tips: A Guide to Become a Successful Airbnb Superhost

What Are the Benefits of Listing a Property on Airbnb?

Having your property listed on Airbnb leads to incredible benefits.

First, you’ll enjoy higher rental yields, thanks to the higher nightly rates of short-term rentals. Airbnb also uses dynamic pricing tools to help you take advantage of peak seasons, market demands, etc.

Airbnb also offers flexibility in terms of your property’s booking availability. If you need your property, you are free to block dates so you can use it. This allows you to use second homes while earning from them while you’re not using them.

Another benefit is the global exposure that Airbnb provides to all property listings. You can attract international travellers and millions of Airbnb users worldwide.

Since Airbnb remains transparent with their reviews and ratings, you can view guests and see if they are reliable and responsible enough to stay in your property.

If you want to improve the whole experience further, you can hire an Airbnb management company like City Relay. You can rely on their in-house cleaning and maintenance teams to prepare your property for the next booking.

Here are three reasons why Airbnb is profitable in London: Is Airbnb Profitable in London? 3 Reasons to Try Short-Term Letting 

How Can You Make Money on Airbnb?

Making money on Airbnb requires a strategic approach. There are several factors to consider if you want to maximise the earning potential of your property – from dynamic pricing strategies and positive reviews to premium property design and unique experiences.

Consider these tips to maximise your Airbnb earnings.

• Competitive pricing. Adjust rates based on your competition, current market demands, travel trends and guest preferences. Make sure your booking subtotal also includes the cleaning fee, service fee, etc.
• Maintain the premium standard of the property. A well-furnished property elevates the guest experience and leads to better reviews and higher rental rates. It could even lead to longer stays if they really enjoy the experience.
• Add special offers. This could be a local area guide, pet-friendly amenities, meal services, airport transfers, etc. Charge extra to add to the booking fee.
• Minimise vacancies. Partner with a property management company to focus on optimising occupancy rates and dealing with guest communications and inquiries.

The ultimate goal is to create a memorable experience that will make guests leave a positive review so others will be encouraged to book a stay. The more bookings you get, the higher the rental yields.

Find out how you can add services to increase your Airbnb earnings: Offset Airbnb Charges: 8 Add-On Services to Increase Rental Profit

How Does the Airbnb Booking Process Work?

The Airbnb booking process is designed to be a straightforward and seamless process.

When guests search for a property, they would use the location, booking date and booking fee as the basis. Make sure your property listing has the right information so the right type of guest can find you.

If you choose the Instant Book option, guests can book a stay without waiting for your approval. If you choose the Reservation request option, you need to accept or decline a booking request within 24 hours.

Once the booking is confirmed, you can communicate with the guests (and vice versa) to arrange the check-in process, if it’s not available in the property description. After the guest pays the booking fee, Airbnb will process it and release the payment towards your account within 24 hours after the guest checks in.

After check out, the guest can leave a review to discuss their experience during their stay. Make sure you create a positive guest experience so people will be encouraged to book your property as well.

Important Airbnb Rules and Regulations

Before you start listing your property on Airbnb, make sure you understand the rules and regulations you need to comply with.

• 90-night rule. Residential units cannot be used as full-time shortlets. In London, you are only allowed to use it as a short-term rental for 90 nights or fewer in 12 months.
• Planning permission. Apply for planning permission if you want to short-let your property for more than 90 days.
• Health and Safety compliance. There’s a long list of energy, fire, gas and other health-related regulations you need to comply with to rent your property in London.
• Tax obligations. Make sure you meet your tax obligations so your property can keep operating as a short-term rental without penalties.

Do your research to find out more about the various rules and regulations you need to comply with to operate legally in London. Airbnb compiled a list to help you become a responsible host in the UK. The platform is very strict about compliance. You can get your account suspended if you don’t meet these rules and regulations.

Use Airbnb to Increase Your Property’s Profitability

Knowing how Airbnb work for owners is the first step to maximising the rental income potential it can bring. The more you know about Airbnb, the higher the chances of getting more bookings, positive feedback and rental yields.

Managing an Airbnb property requires a strategic approach, expertise and a deep understanding of the market and its evolving demands. If you want to market your property effectively and manage it for maximum performance and profitability, you need to partner with a reputable property management company.

City Relay is an expert in Airbnb management with a high-trust rating and years of experience managing rental properties across London. You’ll enjoy end-to-end property management services that include in-house cleaning and maintenance, guest communications and complete compliance.

Contact City Relay to find out how you can help maximise your Airbnb property’s earning potential.