46 Factors Affecting Your Airbnb Performance

Welcome back to the Short Term Rental Riches podcast. I'm happy you're here again and.

I'm just excited about short term rentals. I really am. I know it's been years and years, but they're just changing all the time. And there's, there's so many ways to make them better. There's so many ways to improve our management. If you've tuned in for a while, you know that we've been managing properties, including my own personal portfolio. We've managed tens of thousands of guests. We've got over 10,000 reviews, we've got super host status, we've got all that good stuff. We have an amazing team that's, that's at the foundation of it. So I'm really fortunate to have an amazing, amazing team. But there's a lot of factors that affect our short term rental. And so I started listing these out and I was also thinking about it because when we try to compare our short term rentals to a hotel, for example, we can't really do that because hotels are, let's take all the rooms in one hotel, for example. They're pretty similar, right? Maybe they have a suite, maybe they have two queens versus one king bed, maybe they have a junior suite, maybe they have a few different options, but they don't have a ton of different options. They're pretty much the same. And they also don't have their own individual reviews, right? So we can't really compare short term rentals to the way we evaluate hotels. Or it's a lot easier to compare two hotels than it is to compare to short term rentals. It's also a lot easier to compare to long term rentals than it is to short term rentals. Two long term rentals, for example, maybe they're both two bedrooms, they have two baths and they rent for $2,000 a month. They're similar s, but they come vacant, they don't have reviews, all those things. And so I got to thinking and I made this list. It's really long. I don't want to intimidate you, but there are literally endless possibilities and combinations of what is affecting your property, preventing you from comparing it identically to another property. And just to go back to our high school math class for a second, what we're talking about are factorials. And I had to look this up again to refresh my memory. But if we take just 10 different factors, for example, and we come up with all the different combinations of those factors. So let's just say this is, you know, a Property that offers instant book versus one that doesn't, versus one that offers pets or allows pets versus one that's near the ocean versus not near the ocean. There's a lot of factors. We're going to jump in to the most important ones here in a second. But if we just take 10 of these factors, I had to look this up. That creates millions of different combinations. And just for fun, I did it with 100 factors. And that creates a number. Get this, it's 158 digits followed by 24 trailing zeros. I mean, it's literally impossible to compare two short term rentals that have so many different factors that make them unique. Okay, so we're almost there. And before we get into these factors, keep in mind these are not like your base price or your average daily rate or revpar. These are the factors, the levers that you can change with your property. These ones are in regards to pricing that make up those end results that make up your revenue. Okay, so here goes 46 different factors affecting your your property and your profitability. And so obviously I can't go into each of these in detail, but you can go over to Strict. We've got our awesome new bot there that can search all of our past episodes and find these specific topics for you. All you have to do is ask it. So the first one, seasonality. Number two, seasonal profiles. What I mean by seasonal profiles. So on price labs or whatever dynamic pricing tool you're using, you can create seasonal profiles. And so if someone has seasonal profiles set up versus someone that doesn't, and they're just using the average numbers that the dynamic pricing tool uses, well, that's going to differentiate your two properties. Number three, this is an obvious one, supply changes. So the number of listings coming into a market, the number of listings stopping, or the amount of new guests coming in, we have number four, events, number five, holidays. Number six, day of the week pricing. So we know that weekends oftentimes are charging more than during the week. And depending on how you have these factors set up, it's going to different differentiate your property. Number eight, we have length of stay discounts. So this is actually something unique to Airbnb. Some of these factors are unique to to specific online travel agencies. And so that again just adds to the complexity, the number of things that we need to keep an eye on. But Airbnb has the ability to create length of stay discounts. So you can create a discount for two days versus three days versus four days, so on and so on. Obviously we can do this on a long term basis. We've talked about that before. Using our dynamic pricing tools, we can create weekly and monthly discounts pretty easily. But creating a three day discount isn't very regularly available outside of Airbnb. Number nine, we have short term versus midterm stay algorithms. What the heck do I mean by that? Well, we've got these dynamic pricing tools that we're using and they will adjust your prices based on their algorithms. But you can tell their algorithm if it's a short term rental property, if it's a midterm rental property, or if it's more like a hotel, and that will affect your settings. Number 10, this one's also unique to Airbnb, early bird pricing. So this is a way for you to add an additional discount to your days in the future. Again, only on Airbnb. So remember, if you have your prices discounted in the future or however you have them set up in your pricing tools, this is going to get applied. On top of that, number 11, we have promotions. This is also unique to Airbnb. You have the ability to create a promotion for a few days or whatever days you desire and whatever discount you desire. Obviously Airbnb wants you to discount everything because they just want to sell those nights, right? Number 12, super host status. Again, unique to Airbnb. But if you have super host status and your next door neighbor's property does not have super host status, well, then that's going to differentiate your two properties, creating one other layer of really complexity in the whole grand scheme of things. How exactly do you price? Can you earn more with Super Host? Now, we've done a lot of these individual topics. We've broken them down on full episodes. I know this is one we've done. So again, you can head to strict. Com, There is a little bot that we developed. I swear it's really, really cool. It's essentially a clone of myself. And I'm not just saying it's cool because it's a clone of myself, but it's a clone of all of the content that we've produced for the last like four plus years. And so it remembers everything. It can find any episode and it's really cool. I use it myself, which just seems weird. So, number 13, premier host status. This is unique to Vrbo. So similar to Airbnb Supro status, we have the same sort of recognition on vrbo. Again, it's gonna affect your pricing, whether you can charge a little bit more, whether you show up more on BRBO's website. There is A difference between a property that has premier host status and one that doesn't. That is the whole idea of this list. These things, Each One of these 46 factors, gosh, we're only at 13. Change the way your property shows up and the amount of revenue that you can ultimately earn. Number 14, recency. What do I mean by this? How recent was it listed online? We know when we list a property online that it gets a nice little bump. Usually it's like three to five bookings from what I've seen. Number 15, new listing discount. This one's also unique to Airbnb. Again, they like to put a nice big fat 20% discount on for your first three stays. If it's a brand new listing, up to you whether you think it's a good idea. But it is something that's obviously gonna affect your reservations. Number 16, taxes. So long term versus short term, we have to about this. If we're managing properties in a market where there's midterm stays and it switches from being short term to midterm, then the taxes change. And that allows us to change our pricing, our whole strategy. So we got to keep that in mind. Number 17, channel markups. So do you want to favor one listing channel versus another one? Do you like Airbnb more than booking.com? well, if you do, then you could mark booking.com up a lot more than you mark Airbnb up. One other factor affecting your performance. Number 18, channel discounts. So what I mean by discounts. Well, if you have your own direct booking website, which I hope you do, you can discount your stays and still earn more than you would on Airbnb or booking.com because your guest isn't paying all those booking fees. Number 19, deposit charges. Are you charging a deposit on websites like vrbo to booking.com or your own direct booking website to protect your property? Hopefully you're doing something. The other Alternative is number 20. Those are deposit waivers where you can purchase deposit insurance on top of each reservation. Again, this is going to affect the people booking your property. If it's charged them, well, then that's one other fee that might deter them from making a booking. Another fee, number 21 is your housekeeping fee. We've talked about this one a lot. Number 22, pet fees. Number 23. Do you allow pets? I realize those are kind of similar, but you don't have to have a pet fee if you allow pets. Number 24, extra person fees. Number 25, early check in fee. Number 26, late checkout fee. Some of these fees are usually calculated or programmed through your property management software, not necessarily directly on the OTA like Airbnb, including the next one, pool heating fee. Number 27. Number 28, linen fee. Hopefully you are not charging for linens. Hotels don't charge for linens. Right. We're all in the same hospitality industry. I know there's still properties out there that aren't doing probably more internationally than in the United States now. But if you're still charging, go ahead and get rid of that one. People don't like fees. Right. And those have been shown to really hurt your conversion rates. So try to reduce the fees whenever possible. Number 29, processing fees. So are you using an integration like Stripe to make your own credit card payments or to allow credit card payments? Well, they have processing fees and sometimes these are charged. That is going to affect your reservations and your overall performance as well. Again, it's another cost going in the reservation and affects the whole calculation. Number 30, occupancy pricing adjustments. So is your dynamic pricing tool adjusting your property based on your occupancy? That's another factor that could affect your Overall performance. Number 31, portfolio occupancy price adjustments. I know this sounds like kind of the same thing, but this would be for those of you out there that have multiple properties, especially multiple properties maybe in the same building or that are very similar. So instead of creating the occupancy discount for one property, it's creating a discount as a whole on the whole portfolio. Number 32, last minute discounts. This one I think most of you know about. Number 33, far out discounts. So yes, we can discount stays out in the future. Most of the time they're far out premiums. Number 34, gradual versus fixed discounts. So if, let's say a calendar date's coming up two weeks from now, are you applying a gradual discount so that when day zero arrives or tomorrow arrives, you have your largest discount or is it just a flat discount? 15%. Number 35, gap day discounts. Those are those orphan days. We just talked about this one a couple weeks ago. Number 36, adjacent night discounts. I think this one's a little more advanced for most of you, but it's basically a discount tacked on to the following day after a reservation or before an upcoming reservation. Number 37, Gap Day Premium. So we can have gap day discounts, but we can also have gap day premiums. And those could be adjusted based on one, two, three nights, whatever you consider your gap days to be. Number 38. We obviously have minimum night settings. That is crucial. And if your minimum nights are too strict, too high, you could be leaving a lot of money on the table. Number 39, minimum reservation value. So you now have a way in most of your dynamic pricing tools to only accept based on a minimum reservation value. Number 40, far out. Minimum night settings. So these are protecting your calendar essentially. Far out in the future, so you don't get a one night stay in the middle of a five night super in demand event. Number 41, base price. So obviously these aren't in any sort of order. Base price is usually where most of us start with our pricing, but that is the price without any other factors affecting it. Number 42, minimum price. We all know what that is, the minimum amount that we will allow per night. Number 43, Max Price. And yes, sometimes there should be a max price. Remember, there's always a value component to someone's reservation. So if they're paying you $5,000 a night for a place that's normally $1,000 a night, just because demand's gone through the roof. Taylor Swift is in town. Well, they might be really happy to see Taylor Swift, but they're not going to be as happy with the value they got. And that might show in their, in their review. So just keep that in mind. Number 44, average booking windows. So these are the length of time before someone usually books your property and this changes throughout the year. Again, we did a podcast on this one breaking it all down. Number 45, we're getting there. Date, Specific booking windows. So the booking window changes based on specific dates. So again, if Taylor Swift's coming, that place is gonna book out years in advance. If someone knew years in advance. Right. Number 46. Almost there. I really should have broke this up into more episodes, but hopefully you found some value in it. Number 46 is owner aggressiveness. And so what do I mean by that? Well, we have all these factors. We went through 46, and this is by no means 100%. This was just me on the plane kind of brainstorming, really jotting them down to get an overview of a lot of the ones that are out there. All of these you really should know. Remember, these are all levers. The more of these you know, the better you know how to program them, compare them to your market, the better your property is going to do. But one that we don't really think about as much is how aggressive do we really want to be? Are we conservative? Do we just want to meet a certain number each month with our property? And we'll be happy or are we holding out to the last second to get top top dollar? Well, that's what I would call owner aggressiveness. Okay, so if you don't recognize any of those, well, do a little bit of research. They're all important. And again, this is by no means 100% comprehensive. In fact, this didn't cover any of the factors from our physical property. So amenities, all those types of things. These were more pricing type factors and so I'm going to have to do another episode on those. But until then, remember, if you don't know any of these factors, just find out a little bit more because you could be earning less than you should be. And if this happens year over year, or if your manager doesn't know about all these things, ask them about some of these things and make sure that you're not overlooking anything because this is your money we're talking about. And especially if you're scaling, you're adding more and more properties, then this just multiplies exponentially. Right? If you have 10 properties verse one and you only know 30 of these 46 metrics or different factors affecting your property, well then you're not just leaving money on the table with one property, but you're leaving on the table with 10 properties. So there we have it, 46 items and there's more to come. Hopefully I didn't freak you out too much. Hopefully I didn't intimidate you too much. There's a lot of opportunity in the short term rental industry and this is just another reason why. Because there's so many little things that we need to uncover and learn. If you didn't know already, we are helping to manage manage other people's properties and we'd love to chat with you to see if your program makes a good fit with our company. You can head to Strict again. You'll see management services there. Just click on a button and we'll set up a time to chat via Zoom. Until next time. I hope you have a fabulous week.

Want to get on the fast track to financial freedom through short term rentals? Well, it all starts with the properties you acquire. But you want to make sure that you acquire the right, right properties. I want to give you my ebook that will show you how to do just that. There is no charge. It's my gift to you for being one of our subscribers. Just go to restmethods. Com, that's R E S T Methods Com.