Special events like the Super Bowl present an opportunity for residents of the host city to list on Airbnb and generate extra income, but how do you decide on the right price for your listing? And how do you compete with all the other new hosts who had the same idea?
Margot Lee Schmorak, CEO and Co-Founder of Hostfully, joins Jasper to answer your questions around listing for special events like the Super Bowl. They also cover the recent Airbnb blog and subsequent Forbes article about optimizing search rankings that dispelled several myths regarding what counts when it comes to Airbnb SEO.
Margot and Jasper walk through this week’s Airbnb headlines as well, discussing the Leigh Gallagher interview with Brian Chesky regarding the IPO, the new short-term rental platform called CryptoCribs, and the Asbury Park host who’s challenging new regulations in the city.
- Dispels myths around search rankings
- Superhost status, ‘tweaking’ do not help
- Visits, clicks and level of interest do matter
- Search results highly personalized
Article #2: Asbury Park Homeowner Fights Airbnb Regulations
- City voting to prohibit short-term rentals unless owner present
- Host paying $20K in property taxes, uses Airbnb to defray cost
- Gathered necessary 156 signatures, forcing city council to consider alternative
- If alternative declined, issue goes to voters through referendum
Article #3: Airbnb CEO: ‘We’ll Be Ready’ for IPO
- Declared halfway through two-year project in March 2017
- Will be ready in 2018, but may not go public right away
- Buffet advised Chesky to ‘get rich slow’
- Danger in IPO too early (i.e.: Blue Apron)
- Listing platform, pay with bitcoin or ethereum
- Uses blockchain to store info (public)
- Challenge in attracting supply and demand
- Airbnb on track to make bitcoin a feature as well
Q: I live in Minneapolis, the site of the 2018 Super Bowl, and I would like to list my home on Airbnb for the event. How do I maximize my earning potential?
- Beyond Pricing blog post explains massive increase in supply
- Occupancy went down during Super Bowl in Houston (from 55% to 25-30%)
- Guests expect to pay a lot for lodging (price increases of 50—100%)
- Keep prices high to position as premium listing
- List early to rack up as many reviews as possible
- Consider listing on multiple platforms (including local sites)
- Do your own search as potential guest to see search rankings, competition
- Customize your listing for Super Bowl, brand for teams involved
Article #3: fortune.com/2017/10/25/airbnb-ipo-public/
Connect with Jasper
This episode is sponsored by Aviva IQ. Aviva IQ automates messages to your Airbnb guests. It's also free!
To subscribe to the podcast, please use the links below
Complete Transcript for Get Paid for Your Pad Episode 201
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: I’ve begun using a really cool service from Aviva IQ, it’s made my life so much easier. My guests love receiving all the important details of their stay and I love all the five-star reviews I’m getting on communication. Check them out aww.avivaiq.com
Jasper: Welcome! Another episode of Get Paid for Your Pad. Today, I’m co-hosting this news episode with Margot Schmorak, co-founder and CEO of Hostfully. So, Margot, how is it going?
Margot: Great! Thank you and welcome everybody. I’m happy to be on today.
Jasper: We did a little preparation before we started recording because we had a really interesting question from one of our listeners that we’re going to cover at the end of this episode and it’s about how to price and set yourself up for special events. The Super Bowl is coming up and someone in Minneapolis is excited to rent out their place just for the Super Bowl, so we’re going to talk about that at the end of the episode, but first, we’re going to cover the news of the week, which his extremely cheerful, isn’t it?
Margot: Yeah, no. We really had to struggle to find some interesting things to talk about in the news this week. Some very unhappy things going on in the world of Airbnb, such as guests inflicting violence on other guests, which I don’t think we need to talk about that so much today. We did see that interesting article that was a reflection on the Airbnb blog. But you might have covered that a few weeks ago, is that right Jasper?
Jasper: Yeah, we did touch on that, but it doesn’t hurt to repeat the main takeaways because I think it was very useful.
Margot: Yeah. So, this was an article in Forbes that talks about how Airbnb hosts can optimize their search rankings on the Airbnb platform. I thought it was really well written because what it does is dispel a bunch of myths that people have been talking about with the platform. A few of them were first of all that being a super-host does not help your SEO ranking, and I think that’s a surprise to a lot of people. A lot of hosts work really hard to get that super-host ranking quarter after quarter, and they take a lot of pride in it, and I think that people expected that to be attributed toward more search traffic, what does help is visits and clicks and levels of interest in your listing, so if you’re on a lot of people’s wish lists where people are clicking but not booking, that can help your search ranking. But things like tweaking your list, like making changes for changes sake, don’t necessarily help your listing. I thought it was helpful that Airbnb put out something publicly about how to optimize for that. It was interesting that some of the things a lot of people believed were things that could help you, like being a super-host. Another thing, and this will come into play when we talk about the Super Bowl question at the end, is that Airbnb search results are highly personalized for the user. If a user is logged in and they’re searching for a destination, they’re already going to get a set of customized search returns based on who they are and where they’ve stayed in the past. What you need to make sure to do when you’re looking at your search ranking is to open an incognito window in Chrome, open by going to file and new incognito window, what that does is it erases all your personal search history and log-ins. Your personal preferences wouldn’t be seen. It won’t be influenced by your own personal profiles or search histories on your internet.
Jasper: That’s a good point, I always get a lot of questions from people who are panicking because they can’t find their own listing. It’s good to know there’s personalized search results. Also, if you’re in a big city, like in New York or something where there’s like 15,000 listings, you really have to zoom in on the map of your own neighborhood before you can find your own listing. Another article worth touching upon is about a guy in Asbury Park in New Jersey – the local council has plans to prohibit the renting out of short-term rentals, unless you’re present in the house during the time you rent it out. There was this guy who bought a property a while ago for a good price, and he spent a lot of money refurbishing it, but now the local authorities value it at one million dollars, which means he has to pay like $20,000 in property taxes. His idea was to rent it out to cover those taxes, but now he’s worried he won’t be allowed to do that. He went out on the street and got the required 156 signatures that allows him to force the local council to consider his alternative ordinance. If they reject it, they have to do a referendum on the topic. I just thought it was cool that one person has the ability, has the power to fight back against local authorities, they can’t just create rules. It’s going to be interesting to see if the referendum will be in his favor or not.
Margot: Very interesting. Referendums are very interesting things. In California, we also have this thing where if you get a certain number of signatures and you can put something on the ballot, it’s caused quite a nightmare for the state, because there are propositions that are very complex and override previous ones. So, there’s a lot of legal complexity when looking at state laws, but I imagine for a smaller community, its’ fewer of them. It’s probably easier to navigate. It is really cool how one person can advocate for themselves in such a powerful way. I think it’s one of the great things about the government there.
Jasper: Absolutely, I think so, too. There is an article on Fortune, this is written by Lee Galagher, and she interviewed Airbnb CEO Brian Chesky and she’s written a bunch of articles based on the interview. This particular article is based on the IPO, so she asked whether Airbnb is going to be IPOing in 2018, because in March 2017, Brian Chesky said that Airbnb was halfway through a two-year project that was supposed to get them IPO ready. But, he emphasized in the article, just because they’re ready, doesn’t mean they’re going to do the IPO. He mentions a story about a conversation he had with Warren Buffet to get rich slow, eh doesn’t want to rush it, that’s the same thing he’s doing with the Airbnb experiences where he’s kept the amount of hosts to a certain number, he implicitly wants to communicate that they may not IPO in 2018 and it might take longer.
Margot: Although, the way he is positioning it, it does allow for a lot of PR spin. It’s good PR. IT makes sense. A lot of companies IPO too early when they haven’t established their growth model yet. I think tech CEOs take it slow, which makes sense, I think he’s trying to figure out the slow, careful way of achieving that goal. If he positions it to be that its’ coming up soon and they don’t, the IPO could be affected. There’s a lot at stake there.
Jasper: We’ve seen at least one big tech company that didn’t have a successful IPO. I think it was Blue Apron, a meal delivery company?
Jasper: I think the stock prices are down 50 percent than the IPO?
Margot: the IPO hadn’t really figured out the business model, and IPOs can expose big shortcomings in business. Actually, the company I worked for before this, called Service Source, the stock was around 15-17 before they IPO’d, now it’s been hovering around 3 for the last yen years. There’s a lot more to go after an IPO.
Jasper: Exactly. A lot of the investors and probably the co-founders as well, often with these IPOs, there’s rules when the investors are allowed to sell those shares, so that’s also kind of in their own interest to make sure it doesn’t turn into a disaster because a lot of investors wouldn’t be happy.
Margot: Well, that, but also you can become personally liable if you’re a public officer of the company and you somehow misrepresent the financial expectations of your company. When you’re a private company, you’re conditioned to talk about how things are rosy, but when you’re a public company, you have to balance it. Because if you’re talking about things that unrealistic, investors can sue you. And it’s important to take that really seriously. And it’s all good things, that comes with the new SCC Compliance rules which happened after the 2008-2009 crisis, these are all good things. It’s a lot more accountability to go from a private company to a public company.
AD: hosts, does it feel like you’re spending way too much time responding to questions from your Airbnb guests? Is the fear of a possible bad review keeping you up at night? I recently learned about a really helpful service called Aviva IQ. With Aviva IQ my workload and worries have decreased dramatically. All I had to do was link my Airbnb listings to Aviva IQ, create my messages, and schedule delivery times. That’s it. I can’t believe how easy it was to set up. Now, I can sit back and relax knowing that all my guests receive all the important details on time, every time. Everybody sleeps better! Check them out at www.AvivaIQ.com
Jasper: Another hot topic, probably the hottest topic out there, is the crypto-world! Everybody wants to jump on the train and be a part of it. No one wants to miss out, and we can’t get around talking about crypto-stuff. There’s a platform that just started, Crypto Cribs, and it kind of looks like a clone, an Airbnb clone, but the difference is that you can pay with bitcoin or ethereum, also this platform is planning to use blockchain to store all the information. Everything will be completely public, I’m sure there are people who are fans of that. But, it doesn’t have a lot of listings yet. They just started out. It’s hard to start an online marketplace. There are a few other companies who plan to jump in the Airbnb space and make use of the blockchain, there’s a couple of ICOs to take their place. I’ve personally invested in this company called AtLant.IO. I’m also in contact with the founder and I’m hoping to get them on the podcast, as well as the founder of Crypto Cribs. What are your thoughts, Margot?
Margot: I think you hit the nail on the head when you first introduced it, which is, no matter what currency you’re using, the biggest challenge for building a marketplace is building a two-sided marketplace. It’s about attracting supply and demand. While it might be easier to raise capital in the cryptocurrency market in order to pay to get that demand or supply, it still is really hard. I think it’s clever and I can see how it could be acquired by a booking platform, sort of a short-term acquisition play, but I don’t see them getting a lot of users on the platform. Establishing the mechanisms around cryptocurrency for short-term rentals, that’s interesting. I feel like if Airbnb, HomeAway, wanted to turn on cryptocurrency, they could, they would win.
Jasper: Airbnb has acquired the company with the technology, they hired the team, they didn’t buy the company, but Brian Chesky, he does these things every now and then where people can put in suggestions and both times people suggested being able to pay in bitcoin. They’re on track to make bitcoin payments a feature, it seems, then you can ask what’s the value of Crypto Cribs, but I’m sure the founders will be able to provide some insight into that when I interview them hopefully later this week.
Margot: I’m sure they’ll have something to say about that that’s interesting and more than I can think about. The other thing I wanted to note, a friend of mine, Maxime, is the founder of a travel crypto currency called Lif with an accent over the I. Which, is sort of problematic. But, it’s a token for travel. So, what they’re trying to do is remove a lot of friction between buyers and suppliers in travel. I think that’s a more interesting play because there are a million middlemen in travel as we know, and if you can find ways to reduce that friction or barter instead of paying a portion of the revenue along the way, it might be interesting for travel. They might have the ability to raise a lot more cryptocurrency that way.
Jasper: It definitely doesn’t seem to be very hard to raise some money, take any existing business idea, combine it with the blockchain technology, do an SEO, and you have a couple of million, at least.
Margot: It seems that way. We’ll see how it holds up.
Jasper: let’s talk about the question we got from one of the listeners, because it’s a very interesting question. Kayley, she’s asking, she lives in Minneapolis and they’ll be hosting the 2018 Super Bowl
Margot: That’s my hometown, I want to give a shout out to my hometown, it’s awesome to be answering a question about it.
Jasper: She is one of the people in the area that are now thinking “Hey, I have a house here and if I go away for a week and let some Super Bowl fans crash I can charge a decent amount.” But it might not be as lucrative as you think. Anyway, her question is, how do you maximize your earning potential. It sounds like she wants to specifically rent out for the Super Bowl, but she wants to build up a reputation and rack up some reviews. She wants to know, what should be the minimum night stay and how does she determine prices. This is a fairly complicated question, but we are going to discuss this and provide a little bit of insight and we should probably start by emphasizing that if you look at the past super Bowls, our friends at Beyond Pricing have done some research on this. They have some information about the Super Bowl in Houston, they’ve discovered you might be able to charge a high price, but a lot of people have the same thought. They think along the same lines. They saw a massive increase in supply in Houston to the extent that the occupancy rates during the Super Bowl actually dropped from about 55 percent down to 25-30 percent. That means that a lot of people who listed their Airbnbs for the Super Bowl didn’t get any guests at all. The houses were empty. The average price still goes up a lot. This is a very interesting dynamic. Prices go up 50-100 percent according to the research. And because there are so many listings, a lot of them don’t get booked. What is the best strategy, is the question?
Margot: We spent a lot of time researching this. I just remembered something from my economics major in college, which was like 15 years ago. There’s this thing called conspicuous consumption, and it’s not price sensitive. They want to have an experience that makes them feel like its luxurious. Actually, this is what’s happening at the Super Bowl, in part of that article, people are even less price sensitive, when they’re coming to the Super Bowl. They expect to spend a lot of money. The recommendation of pricing would be almost to keep prices the same or raise them to position yourself as a premium listing. You know the chances of renting out your place will go down, but you know the reason people come to the Super Bowl is to celebrate and have fun, and they’re prepared to spend a lot. There’s an opportunity to capture some of that premium market by potentially raising your price. Sounds really counter-intuitive. That’s what I would try for.
Jasper: There’s going to be a lot of supply, so not everyone is going to get booked. The chance that you don’t get booked isn’t so much on the price, because people don’t really care about the price. If you look at hotels, they don’t care. Let’s not forget that a ticket to the Super Bowl is $5,000 in itself. So, if you’re spending 5 grand on a ticket, are you really going to care about $200-$300-$400 a night, relative to the cost of the whole trip. If you compare it to the total cost, it might not even be the biggest expense, the ticket will be more expensive than the accommodation. The idea is you might get booked, and if you do, you might as well make a little extra money. There’s a few more things we could mention. It also depends on where you’re located. If you’re in a premium spot, right next to the stadium, you’re likely to get booked. I think it’s a good idea to rack up a bunch of reviews beforehand because there’s going to be a lot of people who are going to have a lot of reviews. If you start a few months before and you rent out your house on the weekends and you already have like 5-6 five-star reviews, that’s’ a way to stand out. That has a better chance of improving your chances to get booked than lowering your price, I think. Then Margot, I have to give you credit for this, but listing on multiple platforms could be good advice because not everyone is going to look on Airbnb. There are people who live close to Minneapolis, so they might just google accommodation. It might be worth listing on the local sites. Don’t turn on instant book if you’re listing on all these listings. You might want to see what you get, start with a fair price, then you can drop it last minute. I don’t know if it’s a good idea to drop the price at all —
Margot: I wouldn’t.
Jasper: You might get a good one last minute as well. But, I would pay close attention to what the listings in your neighborhood are doing, to get an idea of what’s available and go on Airbnb yourself and pretend you’re visiting the Super Bowl, where would you want to stay?
Margot: To emphasize that point more, I looked to rent a home in Minneapolis, which is something I’ve done, because sometimes when I go back to visit family it’s just easier for us to rent a house. Two things. One, try some google searches as if you’re a potential guest, so I typed in “rent a home for the super 2018 in Minneapolis,” and I noticed that Airbnb had the fourth search ranking on that. There were 15 other websites that you could look at to see if you would want to potentially list on those that have good search rankings. You can always put yourself in your guest’s shoes when they’re looking for rental properties. Then, back to that original point I made before, make sure you do it with an incognito window in chrome so that none of your search history is being tracked so you can see what the search rankings look like for your region. The other thing, Jasper, is what I was going to say, since you know the customer is looking for a premium, luxury experience, make it all customized for the Super Bowl. Do two different listings, one for Patriots fans, one Falcons fans, make it branded with their team. Make it exciting and fun, including swag during the stay. It sounds like you were going to leave town for a few weeks, if you have that vacation already planned, you want to do everything you can to get that rental. I would go the extra mile and make it personalized for that guest if you can.
Jasper: That’s a great idea. We’re running out of time. Time flies as always, so Margot, thanks for joining me on hosting this podcast with me. To all the listeners, I hope you enjoyed it, and of course we’ll be back on Monday.
Margot: Thanks for having me Jasper, it’s always good chatting.
Jasper: Alrighty. Bye-Bye.