According to our post on ‘Hospitality and Food Service Business Ideas’, the hospitality industry is one of the fastest-growing industries in the world. New jobs are added to the hospitality industry every two seconds. Some hospitality business ideas include resorts, hostels, hotels, and nightclubs. Let’s check out How to run an Airbnb.
People interested in working in hospitality, but don’t want to build their own establishments can try listing private properties at the online rental marketplace Airbnb. Through Airbnb, hosts can rent out single rooms, houses, or other property types to travelers looking for private accommodations. To join, all users must do is apply to Airbnb as a host, then add their listing. Below, we’ve provided a few tips that can help you run a successful Airbnb rental.
How to run an Airbnb
Sort out the legal stuff
Depending on where your listing is located, you may have to face certain restrictions or rules regarding subletting. India requires hosts to maintain a guest register for check-in and check-out records. According to the Foreigners Act, 1946, and Registration of Foreigners Rules, hosts that welcome foreigners are also required to submit C-forms to the Bureau of Immigration.
C-forms help authorities locate foreigners traveling the country to ensure their security and safety. And since Airbnb counts as a business, your listing may also be subject to certain business taxes. Taxes you should take note of include the transient occupancy tax, sales tax, VAT, GST, and income tax. Airbnb also automatically withholds and remits 1% of your gross earnings to Indian tax authorities.
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Scope out the competition
Before you start your Airbnb concept, try to see what other properties in your target area have to offer. You can use the Airbnb app to check out other listings in your location. It will also show you what amenities your competitors offer. By scoping out the competition, you will have a better idea of what you need to do to make your property stand out. Studying competing listings will also show you how much renters are willing to pay to stay in that area. This will help you estimate how much profit you’ll generate from rentals.
List down upfront costs
First, list down all items you might need to purchase to make your property a liveable space. This includes furniture, decor, electronics, appliances, utensils, consumables, and other amenities. Extra amenities, such as a Netflix subscription, free Wi-Fi, board games, and smart devices, can impress your guests and boost ratings. Ensure not to forget the basics, such as bathroom and kitchen supplies, unless you want to leave your guests unsatisfied.
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Take note of any costs you might incur outside of furnishing your property. The Airbnb website charges a service fee for posting your listing and providing customer support. You might also need to take into account the cost of maintenance and cleaning services.
Make a comprehensive budget
To make sure your Airbnb project is feasible, it’s important to have a comprehensive budget. AskMoney shows that the components of a budget include projected expenses and forecasted revenues. By forecasting your revenue and getting a good estimate of your expenses, you can get a clearer picture of how to spend your money. This will also help you figure out how to reach key financial goals, such as maximizing profit.
When making a budget for Airbnb projects, take a look at your list of costs. Compare the total with your projected revenue. Then, ask yourself how you can adjust spending to maximize returns. Or, you can use your budget to determine which areas need bigger investments, and which areas you can cut back on. For example, you might be able to invest in luxuries like a smart TV if you purchase cheaper furniture and utensils.
Write a creative property profile
On the Airbnb website, you will be tasked to create a profile of your listing that includes a list of features, a short description, and pictures of the property. Airbnb host Scott Shatford recommends hiring a professional photographer to take photos of the property. High-quality photos can help your property stand out from other listings. Your photos should highlight what the property has to offer, such as its location, amenities, decor, and character.
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It will also help to write descriptions that focus on experiences more than property facts. Your description should highlight what makes the property unique. For example, rather than saying, “Beachfront bungalow with porch,” you can say, “Retreat to a cosy bohemian getaway after a morning stroll along white-sand beaches.” When you help guests imagine their stay at your property, they will be more compelled to book a rental.
Respond to guest
Airbnb aims to create a guest-friendly experience. Responding quickly to guests can build your authority in Airbnb’s eyes. Hosts with low response rates get bumped lower down Airbnb’s search results. By responding quickly, you can also increase the chances that a potential guest will book your property. Guests will be more likely to give you good reviews if you guide them through the booking and renting process. You can also save time by creating a list of frequently asked questions, then writing up prepared responses for future guests.
Open a business bank account
When running any business, it helps to have a bank account separate from your personal one. Business Standard’s article on the types of bank accounts in India explains that the best type of bank account for business activities is the current account. Current accounts let you frequently transfer money. They also have a helpful overdraft feature, which allows you to withdraw more money than what’s in your account. The overdraft feature can help you access any necessary funds during low-profit periods.
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In particular, business bank accounts are helpful for Airbnb projects since they make it easier to keep track of expenses specific to your rental. This way, you’ll have a clearer picture of your rental income, and what you might need to pay in taxes. Running an Airbnb rental property is hardly an easy endeavor. However, with enough preparation, you can turn your rental property into a lucrative side-income project or business.
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