How your business can survive through the pandemic and come out the other side looking better than ever.
These are extremely uncertain and difficult times for everyone across the country and around the world. While many countries are in a lockdown situation or on their way there, it is very difficult for small businesses to be able to survive through the times when consumers aren't consuming and people aren't able to get out and about.
The unfortunate reality is that many people will lose their business, their jobs and their livelihoods during this period of uncertainty. This post has been designed to give people some helpful information about how their Airbnb business can survive the storm and come out the other side. It may not be enough to help everyone but if I can help any of you then that is worth taking the time to put this together.
This article has been written for Airbnb hosts who rent their entire place and are looking for some ways to get through the pandemic and come out the other side.
We're in for hard times
I'm in this position myself. My business is entirely based on co-hosting properties to help people get the most out of their investment and we work on commission. If we don't get bookings, we don't get paid.
As a company we have had to cut back significantly and cutting costs at every step in the process to keep our overheads low so we can continue to operate and help our clients through this tough time.
Right now, in Australia we are in a total travel lockdown. People can't even travel interstate and the government is urging people to stay home. We have not yet been given the order to stay home or receive a fine but we're close. So we are currently working on some ways to minimise the impact of the situation on our clients and I wanted to take the opportunity to share this with you.
We can soften the blow
This situation doesn't have to be the end of your Airbnb business. In fact, it is a great time for you to be thinking about implementing some changes to your business model to help you come out swinging when people start travelling again.
There are a lot of people in this business in very different situations, some depend on Airbnb income for a large portion of their livelihood, others do it as a hobby and can handle the situation with less stress and anxiety.
Some of you are in cities or towns in a total lock down situation where nobody can travel and there is effectively zero new bookings and your old bookings have all cancelled. This is the most pressing and difficult situation to get through and I will address this first.
In other parts of the world you may have already been through a lock down or may have been lucky enough to avoid it but you're noticing a significant drop in bookings because people are afraid to travel. This is likely to be felt by almost everyone in the foreseeable future as even if the borders reopen, a lot of people have lost income and jobs so they simply won't be able to travel.
The flow on effect of this virus will be much larger than the direct impact of the virus itself. As such we all need to be prepared to live with less money for the time being and learn to be more prepared and more competitive in an environment with fewer guests. I will cover this information on how to remain as competitive and protected as possible in the coming months at the end of this post.
3 things you can do in a lock down or travel ban
The very first thing you need to understand in this situation is that you're going to lose money. However, it is up to you how much money you lose. You're not going to get the same nightly rate you were charging last year or last month and if you try, you won't get bookings at all.
Drop your rates
The first thing you should do is go through your calendar and drop your rates and then drop them again. A good guide for the moment is to find out how much you could get for long term rent.
For the next 3 months, while we're in lock down and people aren't moving, we suggest taking market long term rent for your property and adding $50 as your nightly rate, offer a 7 day discount to be market rent plus $100. Month long stays are particularly popular at the moment so it is worth adding a monthly discount to work out to market rent plus $200-500. This is based on a 2 bedroom apartment that sleeps 6 guests. If you have a smaller space you will need to drop further and larger spaces may be able to retain higher prices but test it out and if it doesn't work, drop your rates.
Now, a lot of you might not want to drop your rates that far and I can understand that. You put a lot of time, effort and energy into the property. You love it, your previous guests loved it and they paid a premium for it. Remember we're doing this to help keep your property alive in the next 3-6 months so that you can get back to doing what you do best when the industry starts to wind back up again.
If you're really struggling with this and you don't want to drop your rates, I implore you to calculate how much you're losing by not doing it. We're in lock down, people can't travel but they can 'live' there short to medium term. This problem isn't going to go away if you ignore it. Every day you don't have a booking is a day that you're losing money. How long can you afford to remain unbooked when you could be making market rent + some on top?
Offer share housing
You may or may not be comfortable doing this but there are options out there where you can rent a space to multiple people on a medium to long term basis. Even though we're in the middle of a pandemic, people still need a place to stay and you may as well be the one to help them out.
If you do choose to do this, I would suggest getting some kind of contractual arrangement and a registered lease including a bond. If you're in Australia be sure to follow the rules for tenancies of this kind to keep yourself protected including a properly drafted lease agreement.
I don't suggest taking people on who pay cash, tax and legal issues aside, people are struggling for work at the moment and you don't want to have a cash only arrangement where you have to personally kick them out for non payment.
Advertise your property elsewhere
I have had a lot of success on Facebook Marketplace with generating interest in my properties for people looking for a week by week lease or a month by month option. You can still use Airbnb as your booking platform but be aware that they do charge around 18.5% so keep that figure in mind while you're negotiating prices.
If you don't want to use Airbnb, you can always use your own lease agreement but make sure it is professionally produced and you're aware of the legalities around long term tenancies compared to short term renters.
At this stage in the cycle all we can do is to find some kind of income and ride through the worst of the situation until things begin to pick back up. When things are locked down all you can really do is appeal to people in the area needing somewhere to stay.
3 things to do when there's fewer people travelling
If the virus spreads and sends the world into an effective lock down, the economy is going to take a hit. People will lose their jobs, their businesses so people will have less money and be travelling less for a significant period of time after the virus is under control.
In saying that, there will be a significant drop in the number of Airbnb properties so we can expect that there will be a better ratio of guests to properties even though fewer people are travelling. In saying that, it will still be competitive and you need to do everything you can to get bookings until the economy recovers and people stop panicking.
Go multi channel
If the COVID-19 pandemic has taught hosts anything it is that you can't rely on any one booking channel for your bookings. If you do, you're stuck with the decisions they make and the consequences of those decisions.
Before the pandemic, hosts were more than happy to rely solely on Airbnb as they always promised they would 'have your back'. unfortunately, it is now clear to all hosts that this wasn't the case.
In times where competition is fierce it is paramount that you go where the guests are. Most people don't know just how small Airbnb is in the overall scheme of things. booking.com receives 6x the number of monthly users. That means 6x the number of eyeballs on the properties listed there.
If you're only on Airbnb you're getting viewed less and therefore, people are less likely to book. Of course, there are some intricacies on how to manage properties across multiple channels but these can be overcome without too much difficulty.
I won't go into detail here about exactly how to get set up on the other booking channels but I will have an entire blog series set up to make it simple and easy to understand.
Get your own website
The best way to be able to decide if a guest is entitled to a refund or not is to take direct bookings. That way it is your contract they sign and you have the ability to make the rules and enforce them. The other amazing thing is no booking fees! Almost all booking channels take between 15% and 20% of what guests pay.
That means you can give guests 10% off their stay and still come out ahead. This means that the next time there is a pandemic and everyone wants to cancel your deposits don't get refunded unless you want them to.
Here's a quick tip, if you have an Airbnb and you give it a very unique name and then build a website with the same name in the URL you can piggy back off the Airbnb search engine to get direct bookings. People see your place on Airbnb, then google the name and find your site. They get 10% off, you get the terms you want and everyone is happy.
You can create your own website for under $100. I wrote an article about it here and if you want to get started with your own website I highly recommend having a read. I didn't mention this in the previous point but if you do have bookings across different channels, it is a good idea to use a channel manager. These help keep communication and bookings all in the same place to avoid double bookings and make updating rates etc very simple. If you shop around there are some channel managers that can take your existing information and create a website at the click of a button. It takes two minutes to get set up and the best part is that it costs you nothing.
Reach out to previous guests
This is even more powerful if you have your own website but even if you don't you can still do it. If you have been operating for a while, you will have a long list of prior reservations and hopefully happy guests. You can still reach out to them either in the Airbnb inbox if you don't have your own website. Now if you do have your own website, you can instead either call them or send them an SMS with an offer to come back and stay at your place when they book using your coupon code.
This helps you reconnect with your happy customers and give them an incentive to come back and visit again. You can find some options out there that can help with sending bulk SMS messages but be careful of spam laws if you choose to do it in bulk. However if you reach out to them individually and give them the offer and ask them to share it with their friends you will be amazed at the response you can get.
If you want to take it to the next level then you can use these phone numbers in the Facebook ads manager to create an audience. Now if you've never run a Facebook ad before this won't make any sense at all but if you have, this is for you. Once you've got their phone numbers, you can import these into Facebook as a custom audience. It is even more effective if you can segment the data by location. For example, if you get a lot of bookings from people in a certain city and you put them into a list this will be a highly targeted audience meaning people will be more likely to 'click'.
I encourage everyone who is struggling for bookings even after the borders are reopened to start reaching out to previous guests to extend them an offer. It doesn't all have to be in one go but you can break it up maybe do 5-10 of an evening as you sit in front of the TV. However you want to do it is up to you but you've got to do it when people are allowed to travel again.
How to win when life goes back to normal
After the pandemic is under control, the borders open up and life goes back to normal we will inevitably see some of the people who left the industry coming back as it becomes more lucrative. This means you need to be prepared to stay on top when the new listings start popping up again.
Overhaul your property
Take a good hard look at your property and ask yourself if you would stay there. Better yet, ask that friend that is always blunt with you if they would stay there. Be honest, if you've been operating for more than 6 months it is probably time to give it a freshen up.
This doesn't have to be expensive either. You can do a simple change of decoration, go for some artwork, plants and other decorative items to change the look and feel of the room. We would suggest getting someone to come and professionally stage your home for the added wow factor that most people just can't achieve on their own.
You can take it as far as completely replacing furniture, carpets or go as far as you want to. However, we do suggest that you keep it simple and try not to invest too much money. As a simple rule, if it costs more than 10% of your annual gross revenue it isn't worth your time.
After you've styled your home, do yourself a favour and pay a professional photographer to capture it in the best possible light. This is the only way to stand out in your online property listing and to make people take notice amongst the long list of other options.
As a bonus, you now have a load of professional photos you can sprinkle in amongst your other online content to help market your home and your direct booking website.
Start marketing your own property
If you took the recommended steps above and created your own website then you may want to start driving more traffic there to get more bookings. This is especially easy to do if you live in the same area as your property. That way, you can document your daily life whenever you go to a café or a restaurant or bar to show people how amazing your area is. Mix a fair amount of that in with some nice photos of your space after it is cleaned and prepped and you have a recipe for people starting to follow your page.
You can pay for marketing but unless you're good at it I don't suggest going down that path as it can get expensive if you aren't using the right strategies.
Get smart with your pricing and minimum stays
So many people get stuck with the simple seasonal pricing model that they are leaving thousands of dollars on the table each year.
We implement a series of measures to ensure our rates and availability are as enticing to guests as possible without limiting your options.
As a minimum you should have different rates for weekends vs weekdays. A lot of people don't and it is a sure fire way to maximise your revenue.
Don't be afraid to lower your rates to capture last minute bookings. Remember that every night you're not booked is costing you money.
Set a variable minimum night stay policy to ensure you're getting longer stays further in advance but you're open to shorter stays closer to check in. This helps fill up your calendar with long stays 90 days + in advance but still allows you to capitalise on the shorter stays to fill in the gaps.
Change your rates daily to get the most out of the Airbnb algorithms as well as to react to supply and demand for the local area. There are some great software solutions out there that can help you do this but remember that if you set them up incorrectly they can cost you more than they're worth.
Never, ever us Airbnb smart pricing. It is the best way to lose 20% of your top line revenue. We consistently get booked at 80%+ occupancy at 10-50% higher rates than Airbnb smart pricing. Please do yourself a favour and just don't use it!
Surviving the Pandemic
We're in for a tough 6-12 months and I know I'm going to be doing everything I possibly can to weather the storm. To handle the complete lock down and then get ready to fight for the few people that start trickling in after that. I hope this post has provided you with some valuable tips and tricks for you to take home and implement in your own business so that you can not only survive the pandemic but also come out in better shape than before.
If you take all of these initiatives and implement them properly, you can and will survive. I wish you all the best during this time and hope to see you on the other side.
P.S. If you're looking to take your Airbnb earnings to the next level and implement the same strategies the big hotels have been using for years to dominate the market...