“…I am not sure Airbnb’s million-dollar insurance policy would cover rebuilding an eighteenth-century manor house.”
Would you believe that British and Irish aristocrats are chewing over the risk/reward ratio of renting their castles on Airbnb—and several are taking advantage of the short-term rental site to cover the cost of upkeep on their stately homes?
Today Jasper is on the line with Nicole Prentice Williams, VP of Strategic Partnerships for Hostfully, to discuss the pros and cons of hosting modern travelers in somewhat antiquated accommodations. Surprisingly, it is more affordable to rent space for 16 in Wardhill Castle than it is to book an RV in Oregon for the solar eclipse! Jasper and Nicole address how hosts in the path of totality are taking advantage of a surge in visitors to make extra money.
In other news this week is the shutdown of Roomorama, a major player in the short-term rental space, as well as Airbnb’s deployment of the disaster response tool to help victims of the terror attack in Barcelona. Jasper and Nicole also cover the fact that Airbnb is no longer offering free professional photography services in major markets, notable because there is no associated news article or press release. Last but not least, they answer questions from an aspiring Airbnb host in Toronto who is considering renting an apartment exclusively to list on the platform. Listen in for advice around potential earnings, seasonality and how to approach the landlord.
Q1: I am interested in renting an apartment in Toronto exclusively for Airbnb. Are the listing prices that appear on Airbnb reliable? What else should I look at as I research potential earnings?
Q2: What about seasonality in a market like Toronto? Can I charge more for weekends? What do I do in winter when demand drops?
Q3: What about the legality of short-term rentals in an apartment complex?
Article #2: cnbc.com/2017/08/18/airbnb-free-housing-for-people-impacted-by-barcelona-attack.html
This episode is sponsored by Aviva IQ. Aviva IQ automates messages to your Airbnb guests. It’s also free!
Complete Transcript for Get Paid for Your Pad Episode 182
Jasper: Welcome to Get Paid for Your Pad, a definitive show on Airbnb hosting, featuring the best advice on how to maximize profits from your Airbnb listing as well as real life experiences from Airbnb hosts all over the world. Welcome.
AD: Before learning about Aviva IQ, I used to spend so much time managing my guest communications manually. Now, with Aviva IQ’s automated service, my workload has reduced by 80 percent. Did I mention its free? Automate your Airbnb messages now at www.AvivaIQ.com.
Jasper: Welcome to another episode of Get Paid for Your Pad. This week, I am discussing this week’s news with the one and only Nicole Williams, she’s of course the vice president of strategic relationships with Hostfully. Nicole, how are you?
Nicole Williams: Hey Jasper, I’m good. How are you?
Jasper: I’m good. It’s very cloudy today, so I couldn’t see the solar eclipse that happened today. Did you get a chance to see any of it?
Nicole: I tried. There was only a partial eclipse where I am and where you are, too. I had my NASA live feed going, it was pretty amazing.
Jasper: Awesome. There’s a few places in the US where you could see the eclipse really well, and some people were trying to make some extra profit because of that. I saw an article on Oregonlive.com and I guess there were a few places where the price was ten-fold what it usually was. Some people tried to charge $1,500-$2,000 for a single night. Occupancy levels went up like 30x. It seems like some people are taking advantage of this event and making more money than they would in a month.
Nicole: Good for them. Sometimes those places are in hard-to-rent areas. Like, I saw that listings jumped in Casper, Wyoming and somewhere in Idaho, it was the path that went across the US. It’s not always the highest tourist traffic, so good for them.
Jasper: Some people got creative. I saw some RVs that were up for rent as well for this occasion. IT’s pretty smart if you have one. You just put it somewhere and rent it out for $1,000 a night.
Nicole: Some people were renting out patches of grass for $100 a night. No tent, no outhouse, just a patch of grass.
Jasper: That’s an expensive patch of grass. Well, I’m sure everyone heard about the attack that happened in Barcelona. Airbnb is asking hosts to offer free housing for people who have been affected by the attack. You can sign up at AirBnb.com/disaster/Barcelona. You can select whether you need a place or you can offer your place for free. Airbnb has been doing this since 2012 and it’s a way for Airbnb and Airbnb hosts to give back to the communities and help out when people need it most. I encourage everyone in Barcelona, if you have a few extra days, you can provide a home for people.
Nicole: I can imagine there’s going to be some empty rentals. Airbnb is such a good role model in this aspect. That article was saying more than 60 times in the last four years they’ve used this disaster response tool. It’s such a good example to see this positive and hope it rubs off on other businesses and corporations to reach out to the community and do the right thing.
Jasper: I think specifically in Barcelona, this is a good thing to do – it’s been the city that’s been the most critical of Airbnb I’d say. They’re very strict. They have a team going around trying to shut down Airbnb’s, hopefully this will also help to improve the relationship with the city. There’s a platform that people probably have heard about it’s called Room-o-rama. It’s been around for a while. It seemed like they were getting some success. It was set up in 2009 in Singapore. In 2012, they merged with Lofty.com and it was boasting over 300,000 properties. It didn’t manage to make a good profit and it’s shut down now. This is the second time I’ve seen one of the major players to shut down. There’s another company from Singapore that shut down as well. This one is one of the bigger names and I was looking in the Facebook group and they were listing on Room-o-rama, and others were saying they never got any bookings from it. The question was how many bookings did it lead to? The answer was not that many.
Nicole: They didn’t have good operations apparently and they weren’t getting the bookings.
Jasper: How many of these other platforms are going to be around in five years from now? Obviously, the network effect of these platforms is huge. Once you have the attraction for Airbnb and HomeAway, and it’s very, very hard to compete with them, so the question is, are we going to see more consolidation or are some of the other platforms, like Nine Flats, are we going to see those go bankrupt as well or will they be scooped up by one of the bigger players? It’ll be interesting to see how that evolves.
Nicole: They have a lot of inventory that could be lucrative, it’s about getting the right people managing and getting the word out to get the guests in.
Jasper: I wonder if there were a lot of hosts just listing there. I can’t imagine that because fewer hosts, why would you not list on Airbnb as well? It doesn’t make a lot of sense to me Unless there’s markets where Room-o-rama has a significant part of the market share. That could be the case. I’ve noticed in different places different platforms are popular. Airbnb tends to be the most popular, but you’ll get to places where HomeAway has more listings or a local player does. In any case, no more Room-o-rama. There’s an interesting article that I found on a website called The Daily Beast, interesting name. It talks about some of those really old castles and mansions in Britain and Ireland.
Nicole: I love this story, I read it from top to bottom. I love it.
Jasper: I’ll let you share it then.
Nicole: These owners of these big estates and manors that they’ve inherited from 1,000s of years ago, they’re renting them out on Airbnb to pay for the taxes. One estate costs 120,00 a year in taxes and to run it, and someone said they have a six-acre roof they have to maintain. So, they’re resorting to Airbnb so they can help off-set the cost to keep up the estates they’ve inherited. Some enjoy it and some don’t. It’s funny that some sleep 16-21 people per $1,000-$3,000 a night. They’ve had Angelina Jolie, but it’s really interesting and now that I know it’s available it’s on my bucket list.
Jasper: These places are pretty huge. They’re old, a lot of them are 100-300 years old. Back in the day, you didn’t have all the comfort and amenities that travelers demand these days. I read one of these places has a lot of rooms and hallways, but in order to get from your room to the shower, you have to walk the whole way. And in the winter, they’re obviously not very well insulated.
Nicole: One owner had an ancient, horse-hair mattress. And he’s like you have to have the full experience and guests were not into it.
Jasper: Ancient horse, ancient horse.
Nicole: who knows how much dust was in there?
Jasper: I have a friend who had a start-up a while ago with a couple of friends and their idea was to rent out some of these old castles. They thought the idea was great, but in the end, they went bankrupt because of these challenges. It costs a lot of money to turn these into livable properties. It might be the reason that some of these castles are listed at a reasonable price. If I calculate it correctly, that’s $67 a night per person (for $1000 for 16 people), and that’s reasonable, given that you’re staying in a castle.
Nicole: The other thing that would make it costly is the insurance. I’m sure a lot of these castles are not up to safety and building codes. So how do you get it insured? How do you restructure so that it’s safe enough to insure?
Jasper: The article mentions someone who refrained from listing on Airbnb and he mentions the risk-reward ratio wasn’t right. They have open fires everywhere. It would only take a small mishap for some idiot to put the wrong kind of timber and what policy would cover rebuilding that? That’s another concern.
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Jasper: Did you see any other interesting news stories?
Nicole: I thought it was interesting, it doesn’t seem that Airbnb is offering their free photography service anymore?
Jasper: I was recently notified of this by one of the members of the Facebook group – I didn’t know about this. Airbnb had always offered a free photography service to hosts in selected areas, but in a lot of places it was available. I’ve used it twice. I loved the service. And if you read about this history of Airbnb, back in 2008 when Airbnb was struggling to get more users, one of the things they did, this was a device given to them from a start-up in San Francisco. They told them to go door-to-door in New York to visit their Airbnb hosts and that how they found out most of the pictures weren’t good. Most of the hosts didn’t know how to take pictures and they started offering the service. They took some pictures themselves first to help hosts get more bookings, and that was the turning point for the company. The pictures improved and it helped get more users on the platform so I’m a little surprised they started charging for this. I don’t think they announced it and I didn’t see any press releases. It seems like it’s not free anymore, there’s a get a quote button. You’ll see the cost depends on how big the place is and where you’re located. It’s kind of surprising.
Nicole: I thought as soon as you listed you could schedule a booking. It’s weird also, I did a google news search to see if there was an announcement, but there wasn’t. Like they decided to change their policy and not tell anyone. They’re just rolling it out. At first, I thought it was an extra service, so I was thinking this was like something you want to do after you’ve been in business for a while and you want to get better pictures. Because they will only come once. Our pictures are 5 years old. Maybe this is from scratch, you have to pay for this one-off service.
Jasper: The cost of providing the service might have been too much for Airbnb as they move toward an IPO. They want to show some strong profit to get more investors, so that could be it. I’ve noticed that in general, when Airbnb changes something, they announce it if they’re excited, but if they’re not going to like it, they sneak it in there and don’t talk about it.
Nicole: That’s one way to do it, I guess.
Jasper: An interesting question I received from someone who is looking to do Airbnb, not currently doing it. The name is Dennis. It’s an interesting question. I think a lot of people have had this thought before as well. If you’re looking to do Airbnb, but don’t want to rent out your own apartment, you could rent an apartment just for the purpose of putting it on Airbnb. There are some challenges and questions about how you do this legally, figure out how you make a profit, there have been a lot of questions. So, I thought it would be helpful to go over these questions. The first question would be like if you’re looking at a place to rent and you want to know how much you can make, if you’re not making more than rent, there’s no point. This person is located in Toronto, if you look at prices that others are using, are those prices reliable? Are these the prices people used to stay there or are they just advertised prices? I think in most cases those are the prices people use to book. In my experience, hosts generally don’t provide discounts and a lot of these places are instantly booked, so you can book without messaging the host. I think those prizes are reliable, I think it’s about occupancy. There are ways to find out what the occupancy is, and you can look in people calendars and see what’s booked. On average, Airbnb tend to get booked, about 1/3 of the bookings will come in three months of the date, and about 50 percent of them will come in the last month. So, that kind of gives you the idea of how to estimate the potential occupancy you could reach. There’s a useful tool called Air DNA, little shout out to Scott, the owner and a good friend of mine. Air DNA tells you how much people are making on Airbnb. The second question is around the seasonality, can you charge more for weekends? The winter months? I imagine Toronto is pretty seasonal, in the winter it’s probably about -5 degrees, so you probably have to stay inside or buy six jackets or put on one of those wool Russian hats. I’ve lived in Chicago and I know what a cool winter looks like, but I’d think you’d see the occupancy drop a lot. I think weekends depend on who you’re targeting.
Nicole: They have the film festival in Toronto so you could put the rates up then, just see when events are going on in your area, you could raise the price then.
Jasper: That’s a good point. Another thing to mention, I do know some people renting in Toronto, and I’ve heard winter is a drop in the demand. I’ve heard they rent out in summer and during late fall, the winter months and the early spring, they rent out their units to students. The students generally aren’t in town in the summer months, but in town during fall and spring. That’s another option to consider. A last question is about legality. A lot of buildings have a no- Airbnb rule or restrictions. Either the home owners’ association, whatever it is. Typically, it will state in your lease you’re not allowed to rent, sub-let under 30 days. You can do it anyway, which I don’t really want to recommend, because I think you’re going to get caught pretty soon. People are very aware of Airbnb these days. Four or Five years ago, you could get away with it because no one knew what Airbnb was, but now, it’s such a hot topic, everyone knows about it, I’d imagine you’re not going to get away with it for long. They might end your lease, maybe you’ll get away with a warning, but there’s some financial risk. I’d find a place where it’s legal, where there’s no restrictions, get a landlord on board, it could be interesting for them because you have to keep the unit clean and maintained, you might think of doing some profit-sharing. If you could find someone who is cool with it, I’d say go for it. Also, check out a podcast I did with Eric Mueller who has been running a business for many years and he’s been subletting rentals on Airbnb, that’s episode 175, so if you’re interested, check that out. I hope that answers the question. Anything to add, Nicole?
Nicole: I agree with your first statement, the prices you see are the prices you get. Across the board, Airbnb hosts are that way. Every time we’ve negotiated a price down, which we don’t do any more, it’s always a bad experience. You want to find a guest who is willing to pay the price you have advertised. I’d say it’s a true price, and if you’re leasing, be up and front with the landlord. You’re not going to get all the building rules unless you own the condo or apartment, so how would you know what rules you’re breaking? So, if you’re leasing, you definitely want to be on the same page with the landlord who would be more privy to all those rules.
Jasper: All right Nicole, thanks for joining and co-hosting this episode with me.
Nicole: Absolutely, thanks for having me.
Jasper: It’s always a pleasure. I’m sure we’ll talk to each other again in a few weeks. For all the listeners out there, thanks for listening. Make sure to join the Airbnb News Facebook group where we share all the news stories that come out every week. If you want to stay updated, make sure you join. Thanks for listening. Until Monday!