Airbnb is already a household name as far as hospitality is concerned, but how does Airbnb work for owners? The hospitality industry is a crucial part of any economy, partly because housing is a basic necessity and due to the exciting dynamic with which it is growing.
According to an UKHospitality report, the United Kingdom hospitality industry generates as much as £130bn. It also employs as many as 2.9 million people, making it the third largest among private sector employers in the country. Therefore, it should be no surprise that private institutions are looking in its direction.
One of those that have taken a serious interest in the sector is Airbnb. Airbnb has transformed how the hospitality industry works. Before its launch in 2007, other players dictated a large part of affairs, and the only options for travellers were hotels and hostels.
Good for you if you’re already letting out your apartment on the Airbnb platform. If you’re wondering what Airbnb is, “how does it work for owners?” and how you can leverage the service to monetise your property, awesome. Here, you will learn everything you need about how Airbnb works for homeowners, whether primary, part-time, or full-time landlords.
At the end of this guide, you can decide whether Airbnb is a good option for you and how best to start your short-term lettings.
Table of Contents
What is Airbnb?
Airbnb is an online platform that connects people (usually travellers) with people who want to provide their homes as local accommodation on a short-term basis. Those looking for housing are called ‘Guests’ while ‘Hosts’ are those providing the apartments.
Airbnb services commenced in 2007 when the co-founders, Brian Chesky and Joe Gebbia, rented their San Francisco apartment to the first Airbnb guests attending a design conference in town.
At that time, Airbnb was known as Air Bed and Breakfast because the idea was to allow guests a good night’s sleep on an air mattress and a homemade breakfast in the morning. In return, they would get money to pay for their apartment from the rent.
This approach marked the beginning of a business that would pioneer a refreshing type of property rental. Today, its headquarters is still in San Francisco, but the company now operates in more than 220 countries and regions across the globe.
It is worth an estimated $40 billion, and there are around 6 million active property listings from more than 4 million property owners scattered across 100,000 towns and cities. Since its launch, it has provided hospitality solutions to over 1 billion guests worldwide, with over 300 million nights and experiences in 2021 alone.
Now you know what the platform is all about; now how does Airbnb work for owners?
So, How Does Airbnb Work for Owners?
Through Airbnb, hosts worldwide can make money by renting out all types of rooms and properties to travellers who do not want to stay in a hotel when they visit. Airbnb’s job is to connect these two sets of people while providing logistics, such as payments, to make the short-term relationship smooth for all parties.
Airbnb apartments can be much cheaper than hotel lodgings. This makes sense for guests. These apartments offer more advantages than hotels, such as access to a kitchen to make their own meals and avoid spending more on dining.
Hosts can put up their entire property, private or shared rooms, special spaces, bed and breakfasts (B&Bs), or hotel rooms on the Airbnb platform. Travelling guests can search the listings in different locations for any one of their choice. Then, they would specify how many nights they want and pay through the platform.
Recently, Airbnb also introduced Experiences and Adventures. Experiences are unique activities that allow guests to live their interests and passions in destinations worldwide. Adventures are more daring activities for those who want to tick some items on their bucket list.
These services were put on hold during the pandemic, but online experiences have been launched to deliver the same service virtually.
How Does Airbnb Work for Owners Signing Up and Listing
When listing your property on Airbnb, it’s essential to research local laws to ensure you’re legally allowed to do so and understand how Airbnb works for owners. Once that’s settled, you need to get on the Airbnb website by typing http://airbnb.com/ in a web browser.
Then, you will be required to fill in important personal and property information. The entire step for listing your property can be summarised as the following:
- First, filling details about yourself and the property you intend to list.
- Adding a description and images of the property.
- Setting rules, booking calendar, and rates.
- Publishing your listing.
The steps are quite straightforward and can be done in no time if you have all the necessary information. We’ll give a breakdown of the steps below.
- Property and personal details
You will see a button close to the top right corner of the Airbnb website with the words “Host a home.” Next, click on the button to load another page where you will enter some basic property information. These will serve as an income estimator that will give you an idea of how much you can earn. Finally, click on “Get started” when you’re done inputting the information.
Another page will load where you’re required to log in or register from scratch. New hosts can log in easily with their Google or Facebook accounts. Otherwise, click the “Sign up” button to register from scratch.
That takes you to a page where you fill in your details manually. You must input your email address, first and last name, and birthday. You will also create a password and will be given an option to choose whether you want to receive promotional messages from Airbnb.
Note that Airbnb hosts cannot be younger than 18 years old. Also, you’re advised to create a strong and unique password for obvious security reasons.
When you’re done with all that, click “Sign up.” - you’re already close to finding out how does Airbnb work for owners.
The next page is where you will answer questions about the property you’re putting up. It is crucial that you already know all the details to fill out this part of the form. That’s because you will have to specify whether you’re listing an entire house, an apartment, a unit, or parts of it. You’ll also say if it’s a living area or a space dedicated for guests.
Also, you will specify how many guests your accommodation can take at a time. That includes mentioning the number of bedrooms, bathrooms, and any other space contained in your property (below). Giving wrong information about any of these will do no good and can attract sanctions.
Then, enter the location of the property and confirm it on the map. Next, you can mention the amenities on offer. For example, you may include television sets, air condition systems, sheets, pillows, towels, toilet papers, soap, etc.
The next step involves the description of shared spaces, such as the kitchen, pool, or gym. Again, it is a bad idea to lie about any of these to entice your prospective guests. Instead, you should focus on having more amenities as that would make your space more appealing to them, and possibly making guests want to return.
- Adding a description and images of the property
Anyone who wants to spend a night in your property will want to see how it looks before they get there. That’s why you must upload images of your property’s interior and exterior spaces. This step is so essential that even Airbnb supports using professional photography.
Some professional rental photographers can help you get perfect photos. However, if you’d prefer to do the photography yourself, ensure you’re using a good camera, shoot the photos from corners to cover the spaces, use good lighting for bright pictures, and take multiple shots so you can have options to choose from.
After adding photos, you will input a summary of your offer in less than 500 characters. You can include information about the neighbourhood, some tips for guests to enjoy their stay, and your availability. Finally, for this stage, you will come up with a title for your property and upload your own photo, which will be visible to guests.
- Setting rules, booking calendar, and rates
Putting rules in place is also important and is nothing tricky. Essentially, you should specify who and what is allowed within your property. For example, Airbnb will ask you if pets, children, parties, smoking, etc., are permitted within the property or not.
Next is the booking calendar. This details how many nights guests can stay, check-in hours, and notifications before their arrival. Any dates you do not want to accept guests can be blocked within the calendar. Managing your calendar is essential and being a host requires making your apartment open for at least 30 days within 12 months.
Now, you can determine how much to charge per night. First, ensure you check Airbnb recommendations based on the kind of property you have. However, you can choose your base price or set a range for Airbnb to help you decide.
Next, Airbnb will ask if you want to offer 20% discounts to your first guests. This is an excellent way of establishing yourself as a host and getting reviews that may attract more visitors. It is highly recommended, and this is the only time you can turn it on.
- Publishing your listing
Now that you’ve entered all the information above, your listing is created and ready for publishing. You can click the “Edit” button to check or change anything. Once you click on “Publish listing,” the property will be available for guests who want to book.
How Much Do Airbnb Owners Get Paid?
If you’re asking “how does Airbnb work for owners,” you need to know how much you can earn being an Airbnb host and how you’d receive the money. All payments are made by guests on the Airbnb platform, after which Airbnb will deduct service charges and pay the hosts.
As a host, you’ll be paid 24 hours after the guest moves in or the reservation starts. There are various payout methods, including PayPal, Payoneer, Western Union, bank transfers/ACH/direct deposit, international wire, AliPay (available in mainland China), etc. The various payment methods mean you can work with what works best for your country.
The payment should arrive in your account, depending on the payment platform rules. For instance, it takes hours on Payoneer, a business day for PayPal and Western Union, and 3-7 working days for international transfer.
How much each Airbnb host earns depends on a number of factors. Some major factors include the property type, how much you charge per night, how many people your property can accommodate, property location, accommodation demands at any given time, and local laws.
Primary homeowners may not make as much as part-time or full-time landlords and investors who can make hundreds of thousands of pounds annually. However, it’s not bad for primary owners; they can make thousands annually with the right amount of work and time.
If you’d like a clearer picture of Airbnb host earnings, you may find out how much similar apartments are charging within your area. You can achieve this by checking Airbnb for similar listings and asking around. The local real estate prices may also help, and the earnings estimator mentioned earlier during registration is another wonderful option. Also, you can reach out to us to get an estimate for your Airbnb property.
How Much Does Airbnb Deduct from Total Payment?
Airbnb operates the aggregator business model like Amazon, eBay, Uber, OYO, Lyft, etc. It is a profitable business model that brings service providers together under a single brand. In the case of Airbnb, it basically rents out properties owned by others for a percentage of the fee.
Whenever an intending guest makes a reservation, they pay service fees that Airbnb says are below 14.2% of the booking subtotal. As for hosts, they are charged 3% of the booking subtotal, which is a sum of the nightly fee, cleaning fee, and additional guest fees.
As for the fee side of how does Airbnb work for owners, some hosts may also pay more than 3%. They include Airbnb Plus Hosts, hosts in Italy, and others with very strict cancellation policies. There’s also a host-only fee for special listings like hotels, serviced apartments, and software-connected hosts. They pay between 14 and 16%, while those in mainland China only pay 10%.
Advantages of Using Airbnb
People have rented out accommodations in the past prior to the coming of Airbnb. Since then, other platforms have also provided serious competition to Airbnb. However, here are the unique perks that makes Airbnb stand out:
- Airbnb does not charge for listing a property
Listing your property on Airbnb is free. All you have to do is set up a free profile and put up the listing with descriptions and images for guests. The guests are responsible for paying since fees will only be deducted after you get a reservation.
- You are exempted from permits and licence fees
Those in the hospitality business, such as hotels and restaurants, are required to obtain a permit in most locations. This is not the case for many Airbnb hosts who do not need expensive licences and permits. You only need to ensure your property is in good shape and take care of the cleaning.
NOTE: This varies depending on your location, so check the rules in your local area. For example, London has specific rules you need to follow, as you can see in our London Airbnb Guide.
- Freedom to set your own rates
When listing a property on Airbnb, you’re allowed to dictate your rates per night. This puts you in perfect control of your likely monthly or annual earnings.
- Airbnb offers host protection
With services like this comes the concerns regarding letting strangers on your property. To help alleviate such fears, Airbnb offers support and covers for hosts in the forms of host damage protection and host liability insurance. Host protection damage provides up to $1 million to cover property damage or unexpected cleaning resulting from a guest’s stay.
Host liability insurance helps you to cover claims of injury or property damage by guests while staying on your property. You can contact Airbnb support in the event of any issue. They also offer mediation between guests and hosts if there is a need. Both support systems automatically apply to bookings.
- Airbnb Experiences and Adventures
Airbnb gives hosts additional ways to make more money through Airbnb Experiences and Adventures. You can take advantage of any of these to offer unique experiences to guests all around the world.
Some Disadvantages and How to Work Around Them
As you may have guessed, it’s not all smooth sailing. There are a few downsides, but you can quickly get around most of them if you do your homework.
- Damage to property
While there are usually no property damages, it is still possible and constitutes one of your most significant risks as a host. Thankfully, you can get adequate compensation for most damages through host damage protection from Airbnb.
You can also mitigate this risk through proper guest vetting, using reviews and providing guidelines in your property. To learn more about how to prevent damage to your property, get in touch.
- Legality issues in specific locations
Legal challenges exist in some locations where local laws are either unclear or unwelcoming to Airbnb’s business model. It is also possible that some areas require permits. Hence, before applying to host guests, you should check local laws to ensure you do not fall on the wrong side.
- Additional fees and taxes
Although Airbnb does not charge you for listing your property, you’ll have to sacrifice a part of your income, even if it’s a side hustle. In addition, withdrawal can attract additional fees, depending on your withdrawal method.
You may also have to pay value-added tax (VAT) or rental income tax in many locations. Ensure you keep your records well, so you don’t have any problems when the time comes.
Frequently Asked Questions (FAQs) for Airbnb Owners
We’ve given you a complete run-through of “how does Airbnb work for owners?” But with so much to consider, we have compiled and summarised the answers to the popular questions on Airbnb hosting so you can be better prepared.
Can you host guests in the house you live?
In most cases, yes. You should have no problem renting out a few rooms even if you live in the same house. However, it’s still essential to confirm local laws for non-prohibition. Airbnb will not be liable since you will agree to terms that say you’ve consulted local regulations.
How does the Airbnb refund policy work?
As a host, you can select from various cancellation and refund policies, from flexible to strict. The refund policy you set for each listing will determine how guests can cancel and if you will give a part or full refund.
- Flexible: This allows guests to cancel until 24 hours before arrival and receive a full refund. Cancellation after that period attracts payment for all the nights they’ve spent and one additional night.
- Moderate: This also involves a full refund to guests, but they can only cancel until five days before the arrival date. Cancellation after that period attracts payment for nights spent, one extra night, and half of the other nights.
- Firm: This policy demands that they cancel until 30 days before arrival.
- Strict: They must cancel less than 48 hours after booking and 14 days before arrival.
- There are also other super strict, long-term, and non-refundable options. Read more about these policies on the Airbnb cancellation policy page.
Hosts can also cancel, but we advise against this due to the implications. Guests make travel plans based on accommodations and would have to go through serious inconveniences when cancellations arise. So, unless there is an extremely important reason, you should never cancel.
How can a host make sure everything goes well?
To run a smooth Airbnb hosting, you should optimise your listing by giving the correct information, setting clear expectations, and giving clear rules. Make sure your guests are comfortable by cleaning the apartment, providing as many amenities as possible, and helping them get around easily.
How can a host get a good rating?
Guests will find your place comfortable if you’ve kept things in order and supplied suitable materials. You can also achieve a perfect rating by putting in a little extra aside from the essentials we’ve mentioned above. Guests will also appreciate a responsive host or one that shows up to welcome them or show them around, even though many hosts do not meet their guests.
Who is in charge of cleaning the property?
Cleaning the property is the responsibility of the host. You can employ a local cleaning company or do it yourself if it’s not too much trouble.
Who should I be expecting as guests on my property?
When registering on a site like Airbnb, it is best to have an idea of those you’re inviting into your home. While there is no way you can get 100% assurance, you can set expectations based on what’s more prevalent.
Over the years, Airbnb guests have consisted mainly of the younger generation, especially tech-savvy millennials. These people are more open to cultural experiences and prefer Airbnb to more expensive alternatives like hotels. This demographic is slowly changing as older generations get used to the platform.
Airbnb Host Guide Conclusion
Now we’ve answered your question, “how does Airbnb work for owners?” it’s important that you note that Airbnb is an excellent platform for people to make money by renting their apartments to short-term and long-term guests.
However, it is serious work and may not be convenient for everyone. If you’re considering signing up as an Airbnb host, there may not be a better time to start. Above is all the information that will help you get started on your journey into Airbnb hosting.
If it all seems overwhelming, consider contacting us at Houst. We offer unique Airbnb management services that will take all the burden off you and allow you more time to do the things you love while earning.