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The Pros and Cons of Airbnb Hosting: Is It Right for You?
Founded more than a decade ago, Airbnb’s popularity is showing no signs of dissipating. It boasts millions of active listings in over 200 countries. In 2022, the platform reported that more than 393 nights and experiences were booked. These impressive numbers show that it’s clearly equally loved among guests and hosts.
What makes it such a popular choice for property owners is that it gives them an opportunity to make some extra money by sharing their space with travelers. Some have even managed to turn it into a full-time job.
Before you take a leap and start your own Airbnb business, there are several pros and cons of Airbnb hosting that you’ll need to consider. The business model isn’t right for everyone. Just like some travelers still prefer a hotel room over renting a short-term rental.
From the financial benefits to the more intangible advantages to the potential drawbacks, the following information, and iGMS’s powerful tools, will help you to decide if it’s right for you.
Overview of Airbnb Hosting
It’s important to take a moment to understand Airbnb’s backstory before you weigh the advantages and challenges against your goals and lifestyle. Its mission statement and values play a huge role in the experience the platform is trying to create for potential guests. If you don’t share this vision, other short-term rental platforms might be a better fit.
The idea behind Airbnb was born in San Francisco when two people opened their space to three guests. Fast-forward many years and while the core concept has stayed the same, the mission has grown. Airbnb’s goal is to create an end-to-end platform that has the ability to handle every aspect of travelers’ trips.
Convenience, comfort, and authentic experiences are what help to set it apart from other platforms. With the help of Airbnb, any traveler, irrespective of their gender, language, sexual orientation, etc., should find a place where they will feel welcome and safe for the duration of their stay.
For property owners, it offers a flexible online booking platform that they can use to leverage the profitability of short-term renting. You can set your own rates, determine the length of stay for each guest, and there are no long-term commitments or leases.
Plus, Airbnb offers a variety of features that make managing your property easier and safer such as a two-way review process and host protection insurance.
On the other hand, there are also some challenges to consider when deciding if hosting is right for you. Because you are offering guests a private place to stay in your home or building, this means that you must be available on-site to welcome them and answer any questions they might have. Depending on where you live, there may also be zoning restrictions or local laws you need to be aware of before making your listings live.
By understanding both sides of the hosting experience before taking the plunge, you will better equip yourself with the necessary knowledge and skills needed for successful rentals—allowing you to make an informed decision on whether this opportunity is suitable for your lifestyle and goals.
Airbnb Pros
Airbnb hosting has some big upsides that make it very appealing. Here are four of the major pros of going the Airbnb route.
More flexibility
Airbnb rentals offer you more flexibility compared to traditional renting. As you won’t necessarily host a long term rental, you’ll have more control over your property. This makes property maintenance easier. Plus, if your property is located in a place that you would also like to visit from time to time, you can block dates on your calendar for when you would like to enjoy it yourself.
In terms of pricing, it also gives you more flexibility. Instead of being locked into a year contract, you can adjust your nightly rate regularly. This way, you can take advantage of supply and demand and increase your profitability.
A source of passive income
The time investment is entirely up to you and will depend on how involved you want to be in managing your listing. The more time and effort you put in, the more successful your Airbnb will likely be.
However, you can hire a professional property manager or enlist the services of a co-host for a more hands-off approach to your investment property that requires minimal effort on your part.
By entrusting day-to-day tasks such as screening guests and responding to guest inquiries to an experienced third party, running an Airbnb rental can generate extra income on the side through service fees and rental income.
An alternative to getting a third party on board is to invest in a third-party software solution like iGMS. It can help you to take care of multiple responsibilities and automate many of your daily tasks:
- Synchronize reservations across multiple platforms to eliminate double bookings.
- Create and coordinate cleaning tasks and cleaning fees with live tracking to completion.
- Securely process payments via integration with Stripe.
- Manage direct bookings using a direct booking management toolkit.
A diversity of tenants
In addition to the potential monthly income, hosting on Airbnb can also offer other forms of wealth. It will give you an opportunity to learn about different cities and cultures. In the process, new friendships can also get formed.
If you’re solely interested in the financial gains, renting out to a diversity of guests can also offer more benefits than renting out to just one long-term tenant. If a long-term tenant fails to pay rent on time or falls behind for a few months, the financial impact will be much more severe.
However, by hosting on Airbnb, you have a number of tenants that can offset the impact if one booking’s payment falls through. In other words, each Airbnb guest is responsible for a smaller percentage of your Airbnb income.
Less marketing is needed
As mentioned, the Airbnb website attracts millions of website visitors. If you’re new to the game, you can ride off Airbnb’s popularity, making it much easier to land your first booking and build your rental business. That said, having a direct booking website is still a good idea.
However, that’s not needed right from the start as the Airbnb database gets more than enough traffic. Instead of turning your attention and resources immediately towards how you can market yourself, it gives you time to focus on how you can improve the guest experience and set yourself apart from other hosts.
Airbnb Cons
When it comes to deciding if hosting on Airbnb is the right choice for you, it’s important to know and understand the challenges that come with it. It can be a very rewarding experience in more ways than one, but it’s not all sunshine and roses. Here are some of the potential drawbacks:
Strict laws and regulations
Some cities have strict rules about renting properties for short-term stays. You should always make sure to check the laws in your area before deciding to host on Airbnb, otherwise, you could find yourself in some serious legal trouble in the future.
Even if it’s legal, there might be restrictions that could make it hard to run a profitable Airbnb business. If this sounds like too much hassle to you, rather opt for long-term renting or try to find an alternative city that’s friendlier towards Airbnb hosts.
Difficult guests
While you’re so busy trying to attract renters, you probably didn’t consider that you could attract the wrong kind of Airbnb guests. Having unruly guests can be a major headache for an Airbnb host and cause a lot of stress.
While you can place screening measures in place, there’s always a possibility that you end up renting your property to guests who cause problems or damage your investment property.
If they don’t disturb the neighbor’s peace, they might rob you of your own peace of mind or, worse, your new flat-screen TV. This is why you need to screen potential guests and maintain the peace.
More maintenance
Being an Airbnb host also means that you need to take care of all the maintenance tasks related to your rental investment property. This includes making repairs when necessary, restocking amenities when needed, and keeping the place clean between each guest’s stay.
These are all tasks that require time and energy from the host, so it’s important to factor that into your budget and decision to become an Airbnb host.
High startup costs
You don’t necessarily need to own a property to become an Airbnb host. If you have the blessing of your landlord and the local rules and regulations allow it, you can explore the Airbnb rental arbitrage model and sublease a property.
That said, even if you don’t need capital to buy a property, the other costs involved can quickly add up to a pretty sum. You’ll be responsible for initial expenses like repairs and upgrades or improvements that make your space more attractive to guests and increase your chances of booking.
You’ll also need to ensure that it’s fully furnished. In addition to these startup costs, you’ll also have ongoing operating costs such as host protection insurance.
A big time commitment
Hosting guests through Airbnb can give continuous income but can also be time-consuming due to the various responsibilities involved. This includes cleaning and maintenance, communication with guests, paying for professional photos annually, managing reservations, and dealing with issues that may arise.
Hosts need to be prepared to devote a significant amount of time to managing the property, communicating with guests, and resolving any issues that arise. However, despite the time commitment, hosting through Airbnb can be a rewarding experience for those who are willing to put in the effort. You can also enable Instant Booking to alleviate some of the strain from running your investment property
Wrapping Things Up
Being an Airbnb host can be a wonderful business opportunity if you’re ready and willing to put in the necessary work and are up for the challenges that come with an Airbnb rental. Just like any other industry, it offers a unique set of pros and cons that are important to consider beforehand.
If you’re looking for an exciting and unique new way to make money, Airbnb hosting may be the perfect fit for you. Keep in mind that hosting with Airbnb takes time, dedication, and interpersonal skills.
Taking the time to understand the hospitality space and develop strategies to manage your rental is the key to success. If it will be your primary residence it can encroach on your personal freedom, but the flexibility that it gives you compared to other jobs will make up for it.
At the end of the day, only you can decide if the pros outweigh the cons of Airbnb. Everyone’s goals, lifestyle, and situation are different and so let these guide you instead of the popular opinion.
Of course, the right kind of help can help alleviate a lot of the cons.
iGMS‘ vacation rental software is a great tool for hosts to manage their listings and automate the day-to-day tasks involved in managing a vacation rental, making it easier to provide a high-quality experience to guests.
