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Is it worth it to turn your property into an Airbnb shortlet? Yes, it is!
Airbnb has proven several times that it can bring huge benefits – especially for London property owners. According to Airbnb’s 2024 highlights, London is one of the top destinations for group travellers, specifically in July, August and September. Because of this popularity, London Airbnbs enjoy an average occupancy rate of 80% – something you can take advantage of if you list your property on Airbnb.
While the high demand makes this a profitable opportunity for your portfolio, you must understand that Airbnb comes with a price. To ensure this will be a profitable experience, familiarise yourself with the fees that Airbnb will take from your earnings.
In this article, you’ll learn about the Airbnb fees and how you can grow your income despite the charges.
An Overview of Airbnb’s Fees
Most Airbnb booking fees are charged 3% of the booking subtotal as a flat fee. This is the base commission that Airbnb gets from every host in exchange for listing their properties on the website. The subtotal includes the nightly rate and other fees (e.g. cleaning fee, additional guest fee, pet fee, etc). This does not include taxes. If you add booking details like the Super Strict cancellation policy, this will result in higher rates.
For instance, you have a nightly rate of £200. The guest booked your property for 3 nights and they declared 1 additional guest and their pet dog. If you charge an additional guest fee of £30 (per night), a cleaning fee of £50 (per booking) and a pet fee of £30 (per booking), the booking fee will be calculated as follows:
Booking subtotal = (3 nights x £200) + (3 nights x £30) + £50 + £30 = £770
Assuming you don’t have additional booking restrictions, your Airbnb charge will be:
Airbnb fee = 3% of £770 = £23.10
This means from the £770 earnings, Airbnb will take £23.10 so you’ll get a payout of £746.90 for that 3-day booking.
To read an in-depth analysis of Airbnb’s fees, check out our article Airbnb Fees: Decoding Hosting Costs to Maximise Profitability.
3 Strategies for Airbnb Income Growth Despite the Fees
While there’s no way around paying Airbnb fees, there are ways to maximise the income potential of your Airbnb property despite the fees taken from your payout. It involves knowing your guests and analysing certain market trends. The goal is to determine the changes or add-ons that will improve your property’s appeal so guests will be willing to pay more.
Among the strategies include increasing occupancy rates, maximising your nightly rate and setting up new income streams. Here’s a more comprehensive explanation of how you can implement these strategies.
Increase occupancy
The first strategy involves increasing your occupancy rates. This measures either the number of nights your property is booked, the average percentage of rooms occupied over a specific period or the number of rooms booked at any given time. There are a few ways you can increase the occupancy in your Airbnb.
You can improve the property listing with high-quality photos or targeted descriptions to attract more people to book a stay. You can also set competitive pricing strategies to make the property affordable.
Enhancing guest communication and responding promptly to questions and requests will boost the experience of booking at your property. This will set the foundation for a positive stay and it will increase the chances of rebookings or 5-star reviews.
Speaking of reviews, this is another way to boost occupancy rates. Use guest reviews to your advantage by collecting them and giving incentives to past guests so they’ll leave a good review of the property. Of course, this will have to be backed by exceptional service. If you can gather enough positive reviews, you can use it to promote your property on social media channels.
All these efforts can increase your occupancy rates to give you a higher rental income.
Maximise daily or nightly rate
One of the best indicators of an Airbnb’s performance is the average daily or nightly rate. The higher it is, the greater the income you’ll get. You can use this metric to spot areas in your property that you can improve. Focus on the things that can increase the value of the property so it justifies the rate increase.
The key to increasing this metric is to focus on what makes your Airbnb stand out. Just like the occupancy rate, you can improve your property listing by revising your marketing strategy. You can target a specific niche who are willing to pay a higher rate because they value the features and amenities you offer.
You can target group travellers, business professionals, pet lovers, students, families, etc. By focusing on a specific market, you can highlight the features that are important to these people. For instance, you can add pet-friendly amenities like a pet bed and food/water bowls. These may not seem much for a business traveller but pet lovers would be willing to pay a higher amount to avail of these features.
You should also improve your pricing strategy by keeping an eye on your competitors. Look at the listings near your Airbnb and make sure your property stands out.
Set up new revenue streams
Finally, you can come up with new revenue streams to improve your rental income despite the Airbnb fees taken from it. These should be additional services that your guests would want to pay extra for.
This includes free breakfast (or any meal of the day), early or late check-in/check-out, airport transfers, transportation (e.g. bikes, scooters), meal deliveries, etc.
You can tie up with local businesses that can provide these extra services. For instance, you can partner with a nearby convenience store and set up a grocery delivery. Or a car rental that can provide the transportation (maybe even a driver for hire). Just split the extra income with them.
If there are tourist hotspots, you can also offer local tours. You can do it like the “Rent a Dad” business in Japan where elderly men act as the tour guide of guests. They are kind-hearted gentlemen who will take guests around the city and make them feel the love of a father. It’s quite unconventional but a unique way to get people to pay more when booking your Airbnb.
When coming up with these unique offers, make sure you understand the needs of your potential guests. This will ensure that they will avail of the new offers that you’re setting up.
Find Out How to Boost Your Airbnb’s Earning Potential
Giving your rental property a boost of income is possible despite the fees that Airbnb takes from it. But first, you have to understand what fees are being deducted from your payouts. The knowledge will allow you to set up your property profile in such a way that’ll maximise the fees being taken from you.
You can also implement strategies to boost the earning potential of your short-term rentals. You can focus on improving the occupancy rate, increasing the daily/nightly rate or upselling services to guests. You can even choose to do all three!
Whatever you choose, it’s important to pay attention to the guest experience. You want existing guests to have the best experience during their stay in your property. This is how you can get more stellar reviews that can make your property attract more bookings.
To provide the best guest experience requires commitment and dedication – something that a property management company like City Relay can do for you. City Relay offers end-to-end property management services that include marketing, guest relations, customer support, cleaning and maintenance – and so much more.
Find out how we can improve your property’s performance. Contact us so we can brainstorm to boost the income potential of your Airbnb.
