Navigating the Airbnb ADR Dip in 2023: A Host's Guide to Thriving

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The Insider @ Houst
Last updated on
September 7, 2023

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Navigating the Airbnb ADR Dip in 2023: A Host's Guide to Thriving

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Are you an Airbnb host concerned about not hitting your expected revenue targets? You're not alone. Many hosts globally find that 2023 is a year of mixed signals, especially regarding Average Daily Rates (ADRs).

This guide aims to break down Airbnb's 2023 hosting revenue performance and provide valuable insights to hosts puzzled by their lower than expected earnings.

Table of Contents

Understanding the ADR Dip 

In 2022, Airbnb's average daily rate (ADR) for Q4 was $153. Although it experienced a 1% dip from the previous year, this decline was mainly due to currency fluctuations. When adjusted, the ADR actually increased by 5% year-over-year. Additionally, new Host Pricing Tools and an emphasis on Airbnb Rooms, part of Airbnb's 2023 Summer product release, have moderated ADRs.

High Supply: A Double-Edged Sword

In Q2 2023, Airbnb saw a record 19% year-over-year growth in worldwide active listings, adding more net active listings than in any previous quarter. Despite this surge in supply, the number of Nights and Experiences Booked only grew by 11% compared to a relatively challenging comparison a year ago, indicating that supply is outgrowing demand. This suggests that the high supply may have a diluting effect on ADR, especially in sought-after destinations.

As shown in the chart below, savvy hosts in London have managed to exceed the average occupancy rates reported by AirDNA. This highlights the importance of a competitive pricing and marketing strategy.

023 Airbnb Occupancy Rate Comparison Chart for London

Ready to elevate your Airbnb hosting experience in London? Explore our Airbnb Management London services and discover how we can assist you in maximising your property’s potential. Whether you’re an experienced host or just starting out, our expert team is here to help you achieve seamless property management and higher rental returns. Find out more about our services and embark on your journey to success today.

Strategic Price Moderation

Airbnb is deliberately moderating price hikes to attract a broader base of consumers. The slight decline in ADRs could be part of a strategic effort by Airbnb to capture market share by appealing to budget-conscious travellers.

The following graphic illustrates the occupancy trend for Paris, where we can see a similar pattern of hosts performing better than the general market. This suggests that Airbnb's strategic price moderation may be working favourably for well-positioned listings.

2023 Airbnb Occupancy Rate Comparison Chart for Paris

Who's Thriving and Who's Struggling? Navigating the ADR Landscape

In any marketplace with varied offerings, there are inevitably winners and losers. The current trends surrounding Airbnb's Average Daily Rates (ADRs) are no exception. The dynamics are complex but identifying what separates a high-performing listing from one that's lagging could be instrumental in adjusting your strategy.

The High-Performers

Listings that are either in premium locations or have specialised features are performing surprisingly well. Whether it's a breathtaking view, a unique architecture, or some form of exclusive local experience, these features can add a 'wow' factor that commands higher prices. These listings have managed to retain their pricing power even in the face of growing competition.

The Underachievers

On the flip side, homes that are relatively standard or could use a facelift are facing a tougher climb. These properties, often without unique features or prime locations, find themselves at a disadvantage in a market that's ever more crowded.

The Takeaway

So, what can you do if you find yourself in the latter category? To gain an edge in this fiercely competitive market, consider leveling up your property. Small upgrades can sometimes result in significant payoffs.

Show Your Property Some Love: Consider some minor improvements like a fresh coat of paint, new fixtures, or updated furniture.

Add a Unique Feature: Think about installing something that makes your listing stand out. An arcade game, a hot tub, or even an outdoor fire pit can be the special touch that transforms your property from 'just another listing' to a 'must-book experience.'

By taking these steps, not only can you enhance the guest experience but you can also potentially lift your ADR, helping you to not just survive but thrive in this shifting landscape. Remember, in a crowded market, standing out is more crucial than ever.

Looking for expert insights on Airbnb management in London? Explore our comprehensive guide to discover valuable tips, strategies, and solutions for successful hosting in the vibrant city.

The Good News: Strong Revenue Growth and International Uptake

It's not all doom and gloom, though. Airbnb's revenue is up, with a projected Q3 revenue between $3.3 billion and $3.4 billion. The company's focus on international markets has paid off with a 16% rise in global cross-border bookings. Urban bookings are also up by 13%. So, while individual ADRs may be lower, Airbnb's broader market is expanding, providing opportunities for hosts who can adapt to these trends.

Even with ADRs facing a dip, the Revenue per Available Room (RevPAR) in London for strategic hosts is on an upward trajectory, as you can see below. This indicates that it's possible to thrive in the current market.

2023 Airbnb Revenue per Available Room Comparison Chart for London

How to Adapt and Thrive

If your revenues are lower than expected, it might be time to strategise:

Diversify Your Offerings: Consider offering unique experiences or bundled packages to make your listing more appealing.

Revisit Your Pricing Strategy: Utilise dynamic pricing tools to adjust your real-time rates based on demand and supply.

Optimise for Longer Stays: Given the travel trends, optimising your space for longer stays can attract different clients who may offer a more stable revenue stream.

Leverage Airbnb's New Tools: Watch for Airbnb's new host pricing tools, as mentioned in their 2023 Summer Release. These could provide ways to optimise your revenue.

In Paris too, the RevPAR trend shown below confirms that individual hosts can outperform the market averages if they adapt their strategies to the new market dynamics.

2023 Airbnb Revenue per Available Room Comparison Chart for Paris

Conclusion

While declining  ADRs and high supply can be concerning, viewing these trends as part of a larger market dynamic rather than an isolated issue is essential. Airbnb's overall growth and expansion into new markets suggest that opportunities still abound for hosts who can adapt their strategies to align with these changes. Rather than being discouraged, use this time to innovate and adjust to better capture the opportunities 2023 offers. Remember, you're not alone in this, and with the right approach, you can continue to thrive in the world of Airbnb hosting.

The Insider @ Houst

The Insider @ Houst

The Insider team at Houst is dedicated to providing up-to-date and relevant information on short-term rentals. If you have hosting inquiries, please write to us at expert@houst.com. For guest inquiries, reach out at guest@houst.com. We are here to help you navigate the world of short lets and look forward to assisting you with your needs.

The Insider @ Houst

The Insider @ Houst

The Insider team at Houst is dedicated to providing up-to-date and relevant information on short-term rentals. If you have hosting inquiries, please write to us at expert@houst.com. For guest inquiries, reach out at guest@houst.com. We are here to help you navigate the world of short lets and look forward to assisting you with your needs.

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David
Account Manager

"I have a philosophy in life called keep it simple. I don't live to work, I work to live. This is the first time I've leased this property on Airbnb. A house allows me to have vision of all the revenue and all the expenses associated with the apartment. They work as a well-oiled machine. They strive very hard to keep both myself and the tenants happy."

Jules
Sales Director

"Honestly, if I didn't have Houst, I don't think I'd have this house anymore. With Houst's help, I can focus on my busy life while they manage my Airbnb listing. Guests call this place the 'magic cottage', and Houst makes it possible to share its special charm without any stress."

Charlotte
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Ahmed
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"Houst has been a game-changer for my Airbnb rentals, significantly boosting my income. Their user-friendly platform and comprehensive management services, covering everything from cleaning to guest interactions, make property management stress-free."

Jim
Construction

"Finding Houst has been like a godsend for my Airbnb venture. It's made the entire process really easy, from the onboarding to managing guests. Their seamless service has enabled me to host successfully without needing to invest my limited time. If it weren't for Houst, I wouldn't be hosting on Airbnb."

David
Account Manager

"I have a philosophy in life called keep it simple. I don't live to work, I work to live. This is the first time I've leased this property on Airbnb. A house allows me to have vision of all the revenue and all the expenses associated with the apartment. They work as a well-oiled machine. They strive very hard to keep both myself and the tenants happy."

Jules
Professional Landlord

"Honestly, if I didn't have Houst, I don't think I'd have this house anymore. With Houst's help, I can focus on my busy life while they manage my Airbnb listing. Guests call this place the 'magic cottage', and Houst makes it possible to share its special charm without any stress."

David
Account Manager

"I have a philosophy in life called keep it simple. I don't live to work, I work to live. This is the first time I've leased this property on Airbnb. A house allows me to have vision of all the revenue and all the expenses associated with the apartment. They work as a well-oiled machine. They strive very hard to keep both myself and the tenants happy."

Jules
Sales Director

"Honestly, if I didn't have Houst, I don't think I'd have this house anymore. With Houst's help, I can focus on my busy life while they manage my Airbnb listing. Guests call this place the 'magic cottage', and Houst makes it possible to share its special charm without any stress."

I hope you enjoy reading this blog post!
If you want my team to just manage your Airbnb for you, just book a call.
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