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Increasing Airbnb Income: Managing Airbnb properties in Cape Town since 2009 has taught us valuable lessons about pricing strategy. This case study reveals how conventional wisdom about high rates often leads to lower annual Airbnb income, and why building trust matters more than daily rates.
The email landed in our inbox on a typical Cape Town morning. A new property owner, concerned about what he saw as worryingly low rates, reached out with a question that we’ve heard hundreds of times before. The question gets to the heart of a fundamental misunderstanding about how Airbnb’s success works.
"Does this booking mean we're earning "next to nothing" per night for a 3-bedroom house in a prime location?"
This email from a new property owner reflects a common concern. His beautiful 3-bedroom home in False Bay had just received its first booking. The rate seemed low—too low.
He was right – and wrong.
Raw data tells stories that opinions can’t touch. When the owner questioned our pricing strategy, we showed him the market conditions affecting his property’s performance. These weren’t projections or estimates—they were hard numbers from the current Cape Town market that every property owner needs to understand.
Let’s look at the actual market affecting Airbnb Income:
Oversupply. How do you win the game?
These 800 listings are available at “last minute” availability in the same larger area of False Bay within a 20 km radius of Paul’s house.
This is November! Summer. Why is this lovely property sitting empty at a low rate of R2000 to R2200 per night? It is a supply demand story.
We have said it. It’s scary! Do we hope for better days or take action?
After 15 years of managing premium properties in Cape Town, we’ve learned that what feels right often isn’t what works best. Many owners believe high rates act as a shield, protecting their properties and attracting a “better class” of guests. Our experience tells a different story.
High Airbnb rates feel safe. They feel like they protect your property and attract “better” guests. Some owners believe high rates are a winning strategy. Well, our data since 2009 shows otherwise:
Many owners fear “low rates” more than empty properties. This fear costs them money. Our experience managing Cape Town properties shows that vacant properties create a damaging downward spiral that’s hard to reverse. Here’s what happens when your property sits empty:
Success in the Airbnb market isn’t about hoping for the perfect guest to pay top dollar. It’s about building a systematic approach that creates sustainable, long-term Airbnb income. We’ve refined this strategy over thousands of bookings across hundreds of properties:
Every property owner faces this crucial decision point. It's a moment that separates those who succeed in the long term from those who struggle with empty properties and sporadic bookings. When Paul reached this crossroads, we presented him with two clear options.
One starts bumpy. The other is safe to nowhere! We gave Paul two options:
Building lasting success on Airbnb requires strategic thinking and patience. Our data-driven approach focuses on creating sustainable Airbnb income through systematic steps that build your property’s reputation and ranking:
Setting arbitrarily high rates might feel safer, but our decade-plus of market data shows this approach typically leads to:
In a market crowded with similar properties, standing out matters more than pricing high. We’ve seen this repeatedly in Cape Town’s competitive market – properties with distinctive features consistently outperform their “standard” counterparts, regardless of size. The data tells a clear story:
A 2-bedroom with a pool often outearns a 3-bedroom without. Of the 800 competing properties, only 50% have pools. Pools sell. Some owners may tell me, “Do you see that big blue bay?” They don’t need a pool. Again, if you want to clever, that’s fine but if you are looking to maximise your return invest in a pool.
How many bedrooms do you have? Did you know properties with bedrooms equaling ensuite bathrooms make more! There are various other differentiating factors you can implement easier than adding more ensuite bathrooms.
Reviews in the low season build trust for the high season. Don’t be empty. Obviously, you are not looking for ridiculously low rates, but momentum is part of the game.
BTW: In Airbnb’s marketplace, it’s not just about collecting reviews – it’s about how quickly you collect them. Think of it like a snowball rolling downhill: each review adds size, but speed adds force. A property that gets five reviews in one month has more momentum than one that gets ten reviews over six months. The algorithm notices this velocity, and so do potential guests.
Each booking improves your ranking among those 800 competitors
Reviews on Airbnb are like compound interest – the faster you earn them, the more powerfully they work for you. Ten reviews earned quickly create more momentum than twenty reviews spread yearly. The platform’s algorithm rewards this velocity, and guests instinctively trust properties that are actively collecting positive feedback.
Strip away all the theories, opinions, and guesswork, and three core elements consistently drive success on Airbnb. Today we know and our long standing owners results proves that daily rate isn’t even in the top three factors. Here’s what actually determines your annual Airbnb income:
Guests don’t believe you. You can show and tell. They may like your place but don’t want to be your guinea pig. If you are not willing to buy them at very competitive rates (in this oversaturated market with 800 competing properties), your zero reviews and arbitrarily high rates are a fast way to nowhere! Get reviews! Get them quickly and continuously!
Why would Airbnb rank you high if guests look at your property and reject it? Airbnb measures people’s reactions to your property. If they look and leave, another look and leave, they realise you will not make THEM money. Why promote your place amongst 800 to the first place when guests search? High rates are nothing but arrogance or ignorance or plain dumbness. Yes, you want high rates. But learn to walk first – learn that trust (reviews matter) first. Then demand increases, occupancy increases and rates follow.
High rates are useless if you have zero occupancy! Simple as that.
I hope you clicked on the + to read more. It’s critical. If you have, are you still interested in pushing high daily rates to make money from day one?
Sometimes, the best evidence comes from property owners themselves. After considering our approach and the market realities, the owners decided. Their response reflects the shift in thinking that successful Airbnb hosts often make:
Trust doesn’t come easily in property management. It requires owners to step back from conventional wisdom about pricing and embrace a proven, data-driven approach. When property owners shift from focusing on daily rates to understanding the power of momentum, magic happens.
The owners’ response: “We have discussed this and feel we do need to trust the process as well as you and your team. We look forward to future good ratings and a steady income.”
“The two most powerful warriors are patience and time.” – Leo Tolstoy
This wisdom applies perfectly to Airbnb success. Patience to trust the process, combined with strategic timing in the market, creates unstoppable momentum.
The real measure of success in Airbnb isn’t found in daily snapshots but in annual results. The owner set a conservative target of R250,000 yearly net income; we agreed that it could be beaten easily—we were building on years of proven strategy, conservative, and slow, but determined to beat the market.
Success in Airbnb is a marathon, not a sprint. While others chase high daily rates, we build sustainable Airbnb income through strategic pricing and consistent bookings. This approach has repeatedly proven itself across hundreds of properties in our portfolio.
The scoreboard isn’t your daily rate—it’s your annual income. Our target for the owner is R250,000 in net annual income.
We could have taken the easy route: set high rates and wait for bookings that might never come. Instead, we chose the harder path that works.
“Price is what you pay. Value is what you get.” – Warren Buffett
This mirrors our philosophy perfectly: focusing on total value (annual income) rather than price (daily rates) leads to superior long-term results.
In the world of property management, the difference between success and failure often comes down to commitment level. Like the old story about the breakfast ingredients, true commitment means being all in – not just involved:
Someone once asked: “What’s the difference between commitment and involvement?”
The answer: “Think of a bacon and egg breakfast. The chicken was involved. The pig was committed.”
At CapeHolidays, we’re not just involved in your property’s success – we’re committed to it. When owners choose arbitrary high rates, we’re merely involved. When they trust our process, we’re committed to proving them right.
It would be easier for us to set high rates and blame the market when bookings don’t come. But that’s not who we are. We’re here to win – as measured by your annual income, not your daily rate.
At CapeHolidays, we go beyond the "set and forget" approach. Our Cape Town Airbnb Pricing strategy and optimization is a dynamic, ongoing process that ensures your property remains competitive and profitable year-round. Here's what sets us apart:
We continuously monitor market conditions, guest feedback, and booking patterns. Our Lead Time to Book (LTB) analysis helps gauge demand, allowing us to adjust rates strategically and attract quality guests who plan ahead.
We continuously monitor market conditions, guest feedback, and booking patterns. Our Lead Time to Book (LTB) analysis helps gauge demand, allowing us to adjust rates strategically and attract quality guests who plan ahead.
We continuously monitor market conditions, guest feedback, and booking patterns. Our Lead Time to Book (LTB) analysis helps gauge demand, allowing us to adjust rates strategically and attract quality guests who plan ahead.
We continuously monitor market conditions, guest feedback, and booking patterns. Our Lead Time to Book (LTB) analysis helps gauge demand, allowing us to adjust rates strategically and attract quality guests who plan ahead.
We fine-tune minimum stay requirements and adapt our approach seasonally. This balance maximizes your income during peak periods while maintaining flexibility in slower times, optimizing your annual revenue.
We keep you informed about our strategies and market trends. This transparency ensures you understand how we're working to optimize your property's performance, creating a true partnership in your Airbnb success.
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