Airbnb Rental Income vs. Airbnb Occupancy Rate: Which One Should Lead Your Investment Decision?

Owning an Airbnb business is much more fast-paced compared to traditional real estate investing tactics.

But, this does not make one strategy better than the other; it all depends on what you want and what business plan you have set out to achieve in the short- and long-term. Both real estate strategies have their costs and benefits. The trick is to choose the strategy that is more rewarding for you in the long run and one which outweighs your costs and gives back high returns. The Airbnb rental strategy has quicker cash flow returns and gives Airbnb hosts more liquidity, whereas traditional real estate investing is very much illiquid for a long time.

Maximize Your Airbnb Rental Income

For tourists and Airbnb guests, location is everything when it comes to staying in an Airbnb rental property. And for Airbnb investors, a high Airbnb occupancy rate is the crux of a successful Airbnb business. To make money in this short term rental business, you must capitalize on the right location to attract a high Airbnb occupancy rate and set a competitive pricing strategy for maximum profit.

As an Airbnb host, you must strategize to increase your Airbnb rental income through:

Increasing your listing price (if your rental property is in fairly high demand)
Increasing your Airbnb occupancy rate

To touch on the first point, if you have more than 30% of your nights booked three months in advance, consider raising your price ASAP. It’s simple math; the more Airbnb guests rent your Airbnb rental, the more money you will make.

Also, make sure to set two different pricing strategies for weekends and weekdays. This way, you maximize your Airbnb rental income. If your property is located in a popular vacation spot that attracts weekend visitors, then you want to set a higher weekend rate.

4 Ways to Maximize Your Airbnb Occupancy Rate

1. Set a Proper Pricing Strategy

Setting a competitive pricing strategy is the crux to maximize your Airbnb rental income. Without a smart pricing strategy, real estate investors will not reap the full profit potential of their Airbnb business. Also, make sure to set two different pricing strategies for weekends and weekdays.

Weekend Price Vs. Weekday Price

If your rental is slow during weekdays, consider lowering your prices during this time to incentivize guests to book your rental property. It all depends on your Airbnb rental location; if your Airbnb rental is by the beach, you will set a higher pricing strategy during the weekend. Whereas if you live in the heart of the hustle and bustle, consider upping your weekday price to appeal to business travelers.

Long story short, think about who your audience is and who your Airbnb rental appeals to in order to set the pricing strategy accordingly to maximize your returns.

2. Customize Airbnb guests’ experience

With all the cutthroat competition, Airbnb hosts must gain a competitive advantage in getting Airbnb guests to book their rentals to maintain a steady Airbnb occupancy rate. It is all about the value you are offering your guests and what makes you stand out from the other thousand Airbnb listings in your area. Capitalize on customizing and personalizing your Airbnb rental to increase Airbnb guest conversion and guest retention. One example is to offer a welcome basket with local specialties and a handwritten note of the places you recommend. This makes a good impression and will surely make your Airbnb guests very happy.

3. Smart bookings lead to higher Airbnb rental income

Being fully booked does not insinuate that you are maximizing your profit potential and Airbnb rental income. If you set a low pricing strategy, be rest assured that you will be getting demands and reach a high Airbnb occupancy rate. But this does not do anything to your bottom line.

Let us assume the following;

Scenario 1: Greg is fully booked because of his one-size-fits-all pricing strategy

Nightly rental price: $80

Airbnb occupancy rate: 100%

Airbnb rental income: (30 x 100%) x $80 = $2,400

Scenario 2: Abe is partially booked with a more expensive pricing strategy

Nightly rental price: $130

Airbnb occupancy rate: 75%

Airbnb Rental Income: (30 x 75%) x $130 = $2,925

This is a clear example of how pricing has direct repercussions on your bottom line. More bookings do not correlate to a higher Airbnb rental income. Be strategic in your pricing respective to your location, your guest audience, and time/day.

4. Cultivate positive Guest reviews

Having positive Airbnb guest reviews makes Airbnb hosts more trustworthy and incentivizes other Airbnb guests to choose your rental property over the other options. More reviews correlate to a higher Airbnb occupancy rate. Also, hosts gain leverage in setting higher prices if they cultivate positive reviews on a consistent basis. Mitigating negative reviews is key to cultivating higher occupancy rates throughout the year. Try to avoid negative reviews; one negative review can do more harm to your Airbnb business than five good reviews.

Building trust is the epitome of a successful Airbnb business. If you can make your current and prospective Airbnb guests trust you, you set yourself apart from your competition. However, with this said, building trust takes time; so don’t panic if you are not seeing results overnight.

Answering guest reviews is also important. Don’t ignore the negative reviews; try to respond in the best way you can. Even if the guest is at fault, you must be smart in how you respond. Airbnb guests do base their decisions on other Airbnb guest reviews. They won’t risk booking your Airbnb rental if your Airbnb listing is flooded with negative feedback and guest reviews.

Conclusion

To capitalize on the right Airbnb rental property in the right location, real estate investors/Airbnb hosts must conduct a comparative market analysis, access Airbnb data, and use Mashvisor’s Airbnb profit calculator to guarantee their returns and measure the profitability of their prospective investments. To increase your Airbnb rental income, focus on increasing your Airbnb occupancy rate and/or increasing your listing price to lead your investment decisions and grow your overall Airbnb business.

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