Case Study: How To Kick Start Your Listing On Airbnb

One of our new listings is not getting the attention the owner expected. It’s winter and supply exceeds demand but if your an owner with a couple of million invested in a home you expects miracles from your Cape Town agent. Not all but some do 🙂

Back Ground: The house in question is situated on the False Bay coast, 5 mins walk from the beach. A delightful place sleeping ten. The place is newly fitted with a beach look.

The rates we agreed on:

Winter rates are from R1600 per night with a minimum of 2 nights.
Summer rates are from R2000 per night depending on demand and minimum lenght of stay. The minimum stay is 4 nights. High demand summer rates are higher and minimum length of stay can be longer than 4 nights.
High Peak Rates 15 Dec to 15 Jan: From R4000 per night with a minimum of 14 nights and number of people.

Sleeping 10 at R160 per person per night during winter is a bargain. The same can be said for summer. R4000 during high peak is on par or just below par. Note: With a pool the high peak rate could have been more than R5000 per night.

The problem: The place is new and has not been rented out yet. What can be done?

Simple: You buy credibility. How is this done? The next story will tell you how we tackle such issues:

The one site we list on is Airbnb. Because they have millions of guest booking they have excellent dynamic best rate forecasts. For sometime I have reduced the rate of this home to their best rate but the supply is still exceeding the demand. See this screengrab.

The question owners need to ask always: what distinguishes my home from the rest?

This is done as follows:

  1. Location. Any home is stuck with its current location. You can do nothing about it. As long as it is clearly explained in the description.
  2. Rates: Competing on rates during winter is the only way. Reduce it to lower than the competition. And even more so with a new home. My next point is relevant.
  3. High number of testimonials (benefits of testimonials); As I mentioned previously; testimonials of paying guests are critical on sites like Airbnb. And only previous Airbnb guests can leave a testimonial. On our site we have more freedom.
  4. Photos and description. We have great photos and the description are excellent.
  5. Features: places with pools and jacuzzi are two, three to four times easier booked than places with none of these. One other main feature is “On The Beach” and this was discussed under (1).

What can we do? And how?

  1. We need to get testimonials via Airbnb by sacrificing the rate.
  2. We can make the rate attractive to more people looking for accommodation: At the moment our rates are geared at 6 or 8 people. We can change this by having rates for 2, 4, 6, 8 and ten people – obviously qualifying the people. For example: there are many more people looking for a place for two than a place for 8 or ten. This is obvious. I suggest we structure the rates to cater for all of these groups; we set a gross rate of R600 per night for two people, R950 for 4, R1300 for 6, R1650 for 8, R2000 for 10. As we get testimonials and more bookings we adapt. These rates are not for high peak or 2016. I suggest this for Sep, Oct, Nov. (We only do this for a limited time to buy testimonials).
  3. Publish these specials to social media.
  4. Long term: This home will generate more income with a pool.

Summary of proposed promotional rates:

Winter rates are from R600 per night depending on number of people with a minimum of 2 nights.

Summer rates are from R600 per night depending on number of people on demand and minimum length of stay. The minimum stay is 4 nights. High demand summer rates are higher and minimum length of stay can be longer than 4 nights.

High Peak Rates 15 Dec to 15 Jan: From R4000 per night with a minimum of 14 nights and number of people.

Will this work?

We have utilised this approach on many many homes we manage and today the owners are laughing all the way to the bank. Yes. It’s not easy initially.

This owner came back to me after my proposal:

We understand the reasoning: we need some momentum, get customers, reviews, etc.
One problem with R600/night is that the breakages, laundry, etc, can quickly overtake the revenue. So, we’d expect you to be super vigilant on the deposit, sensible with the consumables, etc. It’s one thing to have a loss leader but we won’t be happy to go into negative territory. We’re happy to try the opening special for a month from now. End of September, let’s talk again. OK?

You see the concern? You have to break through the ice. It’s a thin layer blocking your way but when you have chipped through it the going gets so easy you’ll never look back at the launch.

To repeat our philosophy:

We rather bank money while we make a mistake with a conservative scenario than making a mistake with an optimistic scenario banking very little or no money. Obviously not at all cost.

The strategy I proposed for this client is now in full swing. And we will learn, adapt and meet our goal of generating between R200 000 and R350 000 during the first year.

Call us today if you want a Cape Town Short Term Rental Agency to market in manage your self catering home not only effectively but showing you commitment to achieve net income goals. If you are flexible to allow us to do what we believe is right then we will both benefit.

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