Your Cape Town Airbnb Profitability Depends On If You Invested in A Wower Or A Dragger
Both Investment Types Have Consequences: The One Excel. The Other Fall Short…
Cape Town Airbnb profitability depends on how well you differentiate from the norm. The more you can make your Airbnb unique the higher the demand. High demand means increased rates. And increased annual income.
The problem is that most Cape Town Airbnb investors have no obvious clue if they invested in a dragger or wower. It’s not that obvious. Yea. You have a gut feel.
You want to know how successful Airbnb is or will be when compared to your competitors; are you doing okay, well, or extremely well? If it is not the success you imagined, you’ll want to know why? And what can you do to fix it?
Today, you’ll know the telltale signs you can use to identify an underperforming Airbnb or a highly successful and high in demand Airbnb. And it’s applicable to any Airbnb in any of Cape Town’s suburbs.
To simplify the discussion about Cape Town Airbnb profitability, I intend to define two types of investments. You you got it; a Wower Airbnb and a Dragger Airbnb. The names says it all. But I’ll quantify it for you.
Attracting High-Paying Airbnb Guests: The Power of the ‘Wow’ Factor
Logical reservations are made based on logical, practical considerations such as price, location, and basic amenities. These types of reservations may be more appealing to budget-conscious guests who are focused on finding the best deal. However, these reservations may be less profitable for hosts because guests are less likely to pay a premium for their stay.
On the other hand, emotional reservations are driven by emotional factors such as the unique features or “wow” factor of the property. These reservations may be more profitable for hosts because guests are willing to pay a premium for a one-of-a-kind or exceptionally high-quality experience. These types of reservations may be more appealing to guests who value unique and memorable experiences, and are less focused on finding the lowest price possible.
Overall, it’s important for Airbnb hosts to differentiate their accommodations and create a unique and high-quality experience for their guests. By doing so, they are more likely to attract emotionally driven reservations and command higher prices, leading to increased profitability.
“Don’t get me wrong! Let’s check. Does one-of-a-kind mean you need to fork out millions? No. Just be clever”.
Hopefully, you invested in a unique and highly sought after Airbnb. If not, I want to urge you to take steps to convert a slow performer into a much better and more profitable Airbnb. I intended this article for Airbnb hosts who wish to maximize their income and increase their Cape Town Airbnb profitability. Sensibly.
We are a family run business; the Horak Clan at CapeHolidays.
Because we are trying to be the best Airbnb Management Agency in Cape Town we have very high expectations of each other and our experience-creators (Airbnb hosts). Only the best will do. 5-Stars is just good enough. We are not there yet. But on our way at 4.9 out of 5.
These expectations create regular conflict as we push each other to the limit. And the clan can be loud and verbal when we don’t agree.
Each one of the three do specialised work;
- Elmarie manages finances, liaise with owners and manage the hosting teams,
- Nandi approves guests, writes and responds to guest reviews, basically everything to do with Airbnb, and editing.
- Then myself; I look after pricing, maximising income and the website.
We often run into conflicts when we receive a reservation with a low rate.
- We don’t want short stays at below par rates.
- We don’t want last minute unoccupied days.
- Last minute guests can be an odd lot – they don’t plan well.
The problem gets worse over peak periods because check-in, checkout, and cleaning incidents triple over this period. We pushed everyone to the limit. And tempers flare or worse.
Elmarie would say,
“I cannot send this reservation to the owner! Just look at the low daily rates! We push staff to breaking point with all these change-overs. Why?”
I would try to defend with this meaningless and short answer,
“Why does the place have long unoccupied days last-minute while others in high demand with high rates reserve over 39 in advance?”
Take note: Our average reservation lead time is 70 days. In our case if an Airbnb reserve, as a general rule, say, 50 days in advance or more, it’s a reasonably high-demand place. If it’s way beyond 70 days it is very popular. It’s a Wower. It’s fast! If it reserves, mostly, in 30 days or fewer, it is competing on price in an over-supplied price-sensitive Airbnb segment. It’s slow to reserve! It drags. To get it “out” rates are reduced. As sensibly as possible. But it’s a Dragger.
Let’s continue our story…
Quick bursts of attack and defense fly around and we get nowhere fast.
I cannot call a timeout and explain the NOTE above. No. Emotion and logic are incompatible. Hopefully, defining concepts like Draggers and Wowers will simplify our common understanding of the forces at play. And by explaining it, you’ll be able to use the info below to make your Airbnb more profitable.
Reducing rates just to get a reservation is not ideal. Instead..
- We need a balance between rates, and change-overs,
- In order to explain a situation easily, concepts (Wowers and Draggers), have to be defined.
- And we must find out why some Airbnbs reserve at the last minute and others consistently far in advance.
- Establish what is common between slow-performing Airbnbs and what features ensure Wowers reserve far in advance?
- And what can we do with the owner to improve the demand for slow-performing Airbnbs?
Let me repeat: If you are earning nice money, blindly (you manage one or two Airbnbs) you have no way of know if you are on par, below par or par excellence. How do you know if your average lead time to reserve is good or bad. You have no clue. But from our agent view, across many Airbnbs we know homes with low lead time to reserve (LTR) compared to the average for all our properties have issues. And those with fast LTR, faster than the average, are great.
A word of encouragement:
Even if your Airbnb isn’t performing at its (real) best, it can still make some decent cash. But wouldn’t it be awesome to double your annual income without having to double the size of your Airbnb? Yeah, it’s totally possible! For a small investment. And in future articles, I will share the proof.
Let’s see what we can do…
I am confident. Let’s recap and define what Draggers and Wowers are. Obviously, these descriptions I share can be duplicates; meaning the share of similar concepts:
|Slow to book.||Book far in advance.|
|Can have long last-minute availability.||Limited last-minute availability|
|Rates unfortunately reduce as time run out||Rates increase as far-in-advance reservations occur.|
|Low demand over supply||High demand limited supply|
|Compete on price||Compete on uniqueness|
|Limited differentiation: common features and design||Highly differentiated with sought-after features and design.|
|Average lead time to reserve 25 days or fewer.||Average lead time to reserve 40 days or more.|
|Logic – Budget Conscious||Emotional – Pay Now!|
But we need to figure out what features cause the one to reserve, consistently, far in advance. Compared to the features of Draggers.
From our experience, since 2009:
It’s obviously clear which Airbnbs will excel and which not. Until now we did not know what to call them. But looking back, we can distinguish between Draggers and Wowers.
But calling it names is not enough. We all needed a list of features, A list which shows the common features within each group. And the ones you found only amongst the Wowers. To quantify the features, I weighted each differentiator. Now you tick them off (Yes/No) and you could get a profitability evaluation for your Airbnb. You guessed it; the Wowers score the most points.
The list is long but let me share it with you. The only secret I do not share is the weights (or score I gave each feature).
|How Unique Is Your Home?||1|
|Do you have a pool or a hot tub?||2|
|How expensive are properties in your area?||3|
|How many bedrooms do you have?||4|
|Is Your No. of FULL Bathrooms Equal To Or More Than Your No. of Bedrooms?||5|
|How Far Are Your Airbnb From The Beach?||6|
|How’s the view from your home?||7|
|Do you have an inverter?||8|
|Do you have a sunny area?||9|
|Do you have air conditioners?||10|
|Do you have off street parking?||11|
|Do you have uncapped fast Wi-Fi?||12|
|Do you have sun loungers for each guest?||13|
We have listed more. We discuss these Airbnb differentiators in detail. I’ll also give you advice on how to make your Airbnb better. These insights are available after you did the profitability quiz.
Because a dragger Airbnb competes with the norm these Airbnbs compete on price (daily rates). This is because guests find ample Airbnbs with similar features (the norm). And Airbnb makes it easy for guests to filter out what they prefer.
In other words; guests judge value. It’s mostly emotional when they reserve. If they ignore your Airbnb listing, it will lag. They are getting better value elsewhere. The consequence? Reduce the rates which cause conflicts.
At this stage, I shout!
“Why not make these Airbnb’s Wowers?!”
What Is A Good Price Strategy For A Dragger Airbnb Where The Owner Is Not Willing To Invest In Additional Features?
The first option would be to try to double a dragger’s profitability. If the owner is reluctant then take the consequences and use pricing as the only (and poor) tool.
The aim is to maximise income within the constraints of (limited, common or the norm) features. The idea is to set conservative rates far in advance. Testing the market. And trying to get longer stays. As soon as a far-in-advance-reservation occurs, increase the rates a few notches upward.
The problem is when the slug of unoccupied dates creeps on you. Anxiety kicks in. Every day you miss is a lost opportunity. And the pool of guests in the market for accommodation gets smaller as day zero approaches. It’s a negative place to be.
It’s not a pleasant position to be in. Why not in Wower features?, I shout again.
A Wower is easy. It’s fun. You increase last year’s rates by 20% or more. It is such a pleasure to set high rates, far in advance, and you catch a fish. It’s a happy place to be. The owner smiles and you smile.
If there are takers, we are in the pound seats. And we can adjust rates even higher.
The good news is that if the rates are too high with no interest, you can still get it out by reducing the rates. Even at last-minute stages (unlikely) these Wowers will still reserve at a premium. A pleasure!
Playing the conservative (or is it pessimistic) rates game is dumb. It’s a spiral to nowhere. Every year more and more dragger Airbnbs get listed. Why compete amongst the ordinary? Rather differentiate.
Invest a couple of bucks and get guests to go WOW. Value for money is a reasonable term. It’s logical. But you, rather, want emotional guests! Guests who spend because they feel proud to be associated with your place. Whenever friends see Instagram pictures of their stay with you, they want to make their friends jealous. By saying, I stayed here because I got value for my money! Is boring. It budget! No.
Let’s not beat around the bush any longer. Use this Airbnb profitability questionnaire to see if your Airbnb is a Wower or not. When you do the free profitability evaluation, I’ll not call you your Airbnb dragger – even if it is one. If your place is a Wower, you’ll know. I have 4 Airbnb profitability classifications;
- Massive Opportunity Airbnbs,
- Double up Airbnbs,
- Nearly Wowers,
Then you can read what I suggest you do to make your Airbnb a Wower. Or move closer to being one. You want to increase the demand for your place. Start today.
“If you don’t know exactly where you are, how will you know if you are on the correct road?”
Just another Horak Clan Member At Superhost Cape Town Airbnb Management Agency.