The Role of Airbnb Lead Time to Book

 

How do you know if your Airbnb is a success if you don’t know your how fast guests will reserve your Airbnb in advance?

You know what you bank. It may be good enough. But who is happy with good enough? No. You want speed. I believe reservation speed is a critical issue with Airbnb profitability. The faster and the further in advance guests reserve today, the better.

What increases speed? Emotion!

What decreases speed? Logic!

Who wins the fight at home? The emotional one. I’ll not tell you who that is.

My intention is to show you how speed to reserve classifies your Airbnb in high demand or low demand Airbnbs; into draggers aka cookie-cutters or the ideal high demand wowers.

This metric is called Airbnb lead time to book (LTB).

We’ll discuss what it means, where to get it and how to use it to your advantage. And then, remember to monthly check and plot how fast your Airbnb reserve in advance…

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What is Airbnb Lead Time to Book and Why is it Important for Hosts?”

As an Airbnb host, it’s important to understand the factors that drive demand for your property and affect your profitability. And how to measure it.

The most important Airbnb measures are occupancy, number of 5 Star reviews (being a Superhost), annual income and LTB.

Defining Airbnb lead time to book…

Airbnb Lead time to book is the time between when a guest books a home and the start of their stay.

A longer (average) LTB can be a sign of high demand for your property, as guests reserve popular Airbnbs far in advance. We will discuss how this allows you to command higher rates and increase your annual income.

An Airbnb with a shorter (slower) LTB is a reliable indicator of a low demand Airbnb. These Airbnbs compete on price, leading to lower profits. To explain it, this example may assist.

The Familiar “Impact” of Lead Time to Book on Hotel Pricing Strategies

Many Airbnb hosts are familiar with the phenomenon of last-minute bookings, leading to lower rates.

For example, what happens when a guest reserves a hotel room months in advance? The hotel may have set a high price to check the market. If the guest “buys” at the high future rate, it validates the optimistic rates. And the perceived demand for the property. The hotel knows it has time on its side. And you could say it’s a take-it-or-leave-it attitude.

However, if the same guest shows up at the hotel today, and finds that there is availability for tonight, the dynamic changes; the hotel owner is at a disadvantage because time has run out. And they will take what’s on offer. The hotel may say (softly), make me a reasonable offer and I’ll take it.

The same principle applies to Airbnb accommodations.

How to Measure Airbnb Lead Time to Book and Use it to Your Advantage

You don’t need to measure LTB. Just go to your Airbnb host dashboard; Insights > Performance > Conversion.

There you can find the LTB for the last 7, 30 days, and 360 days. If you have more than one Airbnb, you can also drill down to each Airbnb listing you have.

I suggest you keep track of how the LTBs change from month to month for the last 360 days.

You want to know which of your Airbnbs have long LTBs and which have short LTBs.

If you only have one Airbnb, then compare it to “Similar Listings” under Insights. If your single listing has a LTB well below the average for similar listings, you are into dragger territory.

Obviously, the LTB changes from season to season (see graph above where May is our winter), it’s not reliable for Airbnbs listed recently and a listing with many private (off Airbnb) reservations.

“The Relationship Between Airbnb Lead Time to Book, Demand, and Pricing Strategies”

Wowers Demand High Rates

Airbnb properties, with a long average lead time to book, imply they are popular as guests know there are few available. They command higher rates. And the decision to reserve is based on emotion. The scarcity principle is playing havoc. And, as you know, scarcity is the perception that your Airbnb is more attractive when guest consider its availability as limited. Guests are likelier to reserve and Airbnb if they fell that it’s the “last one”.

It makes guests run.

How Easy Is It For Guests To Get To The Last One?

Way too easy!

The internet (Airbnb) makes it easy to filter out the cookie cutters. And the more you differentiate, the less likely your Airbnb will get dumped on the common heap. Unfortunately, or fortunately, depending on your wower status, most Airbnb hosts assume their Airbnb is unique. It’s not. And you don’t really know if it’s unique because you don’t compare like a guest compares.

It’s an obvious and easy mistake to correct. Differentiate and use his to learn more. I hope we classified you as a B or an A. If you are not then fix it by making sure you have most of the differentiators. We don’t want guests to filter your Airbnb out.

Pricing Strategies For Wowers:

You can take advantage of a long LTB by setting optimistic rates far in advance.

If you’re still getting far-in-advance-reservations, even with higher rates, you can then marginally increase the rates even more. Continue doing it.

With this approach, you have time and confidence on your side. As your occupancy increases, increase future rates and, therefore, your annual income (as long as your occupancy does not decrease).

If a wower has availability at less than its LTB, it could mean the rates were too optimistic. Dial it down. Luckily, because it’s in high demand, it should get a reservation soon.

Turn Draggers Away From Discounts and Lower Profitability

As you gathered, Airbnbs with a shorter average LTB have lower demand.

Short LTB Airbnbs run out of room to adapt. It has some last minute unoccupied dates. And the only way to recover is to discount the daily rates to get some return. You are at a disadvantage.

Who wants to use price as the only differentiator? No. This leads to lower profits.

Why? Guests are finding too many similar Airbnbs to choose from. There is an overwhelming supply of very nice cookie cutter Airbnbs. Therefore, the supply exceeds demand.

Setting Rates For Draggers:

It’s important to set far in advance rates as competitive as possible. With this approach, you increase your chances of getting future reservations. Rather, set a competitive rate months ahead than wait and get into the squeeze, for a discounted last-minute reservation – like the disadvantaged hotel manager.

Sitting with last minute low to zero occupancy and no income is not an ideal place to be.

The best alternative to differentiating on price is to make your place more unique. Differentiate!

Radically Differentiate Until A Dragger Draws Far In Advance High Paying Guests

Draggers‌ may not have many unique features, which can make it easier for guests to use the negative filter. As a host, consider how your property compares to others on features. And ideally, not price. And stop fighting the pricing war where the lowest price wins. Not ideal.

You can still make decent money with a low demand Airbnb but you are leaving a lot of money on the table. Do the free quiz and check your status. Then do everything possible to increase your LTB.

Summary On Airbnb Lead Time To Book

You get two types of Airbnbs: fast wowers or slow draggers.

Speed, as measured in LTB, is crucial for determining the demand for and profitability of your Airbnb. Measure it. It’s easy. Plot the interval between a guest’s reservation and the beginning of their stay.

You know the demand, occupancy, and income (price) for properties with a long average LTB is high because of the many differentiators the host invested in, whereas the demand for properties with a short average LTB is low because there are many common cookie-cutters.

Let me repeat: earn more by differentiating more. This will create scarcity. And guests will reserve on emotion. Emotion wins the race. Or your Airbnb’s LTB is short, fix it or you need very competitive in pricing.

That’s it for today. I hope you found this article interesting. And if you have anything to add or if you disagree, please let me know. And leave a comment below.

Have fun

Johan Horak; just another experience creator at CapeHolidays.info. Where we prefer to turn you down today than disappoint you tomorrow.

“…the more scarce a resource is, the more people will give will give up in order to get it. And the more common a resource it the fewer people will give up to get it.” Read this interesting article on scarcity.

Are your Airbnb scarce or common?