100's Of Winning Tips On How To: Setting Up A Self-Catering Accommodation Business In Cape Town  | Cape Town Airbnb Management Agency
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100’s Of Winning Tips On How To: Setting Up A Self-Catering Accommodation Business In Cape Town 

Questions and Answers About Setting Up A Self-Catering Accommodation Business In Cape Town   

If you’re looking for a way to make money from your Cape Town holiday home, then read on.

Starting a self-catering accommodation business In Cape Town is all about being informed. But where do you start?

You can start by deciding whether you want to manage and market yourself or use an agency. There are pros and cons of each option so it’s important to think about what will work best for your situation. Talking about cons; what are the risks?

Once you’ve made that decision, the next step is figuring out how much time and energy you have available to dedicate towards managing your property. Do you have enough time? Are there any other commitments in your life that might get in the way? These are all things worth considering before taking on this project.

Read these frequently asked questions for in-depth information about starting up a self-catering accommodation business in Cape Town!

Let’s look at the questions and answers you may have to set up your Cape Town Airbnb accommodation business.

Questions and Answers About Setting Up A Self-Catering Accommodation Business In Cape Town 

Setting Up A Self-Catering Accommodation Business In Cape Town

Table Of Contents: Setting Up A Self-Catering Accommodation Business In Cape Town 
1. Setting Up A Self-Catering Airbnb
2. How To Make Money With Airbnb
3. How To Manage An Airbnb
4. T&Cs | Rules | Protection
5. Only School Holiday Owners

Setting Up A Self-Catering Airbnb Accommodation Business In Cape Town  

There are many benefits to starting up a self-catering accommodation business in Cape Town, but it’s important not to base your decision on purely financial incentives. A successful host, especially a SuperHost, can make money from Airbnb. But you must study it well. Ignorant is no excuse.

New owners are concerned, initially, with the daily rates we set. 

“Setting High Airbnb Rates and I am happy. Rates are my measure of success!” 

For example, I got this email from a new owner, after we notified him of his second booking. 

I would have expected the going rate to be higher late in November….but I know you guys know what you are doing.

Although he says we know what we do, he is concerned. Correctly so. 

And most owners, initially, feel the same way. Only high rates will ease their minds. But after they realise we are stacking snow, hand upon hand, building trust they get the idea

Who can stop a snowball of trust?

Eventually, they happily bank a lot of money as the trust-snowball gets momentum and picks up speed.  

Patience is the name of the game. We must crawl before we walk. 

Unfortunately, rates are not based on fact. 

It’s based on the time for guests to take action (speed to book or lack thereof – more below), the level of trust you established (reviews for example), perception etc. 

At the moment your new house has no reviews and therefore no trust. No guest will take action (book your home) without an incentive. 

Why Would An Airbnb Guest Be Your Guinea Pig? 

Guests do not book willy nilly. They base their decisions on the ratings by other guests – positive reviews, Superhost status. Do they like the features, the photos, and the rates? There are more, like cancelation policies, etc. 

You can have it all but with no reviews, your home will come second when compared to similar homes with many reviews.

Therefore, you really don’t have much of a choice but to make it more attractive and your only ally – competitive rates. 

This means you can bring guests to take action faster with rates you may perceive as uncomfortable

At ground zero you are buying reviews. You are paying a price to get trust. 

Our only aim is to focus on achieving higher annual income. This will change your mindset. You now focus on the long term. One solid hand of snow at a time. 

Let’s talk time/speed …. 

The issue with maximizing rates, in isolation, is it ignores time-to-take-action – speed at which you get or don’t get bookings (more below) . Setting High Airbnb Rates are useless if over time you get no bookings. 

Consider the “slower and faster” time to take action scenario:

  1. Let’s say you set setting high Airbnb rates and after two weeks you have no bookings. Well, you have nothing to bank and have no possible reviews to build trust. This is slow and useless. And you end up like the rest who try to make money with Airbnb. 
  2. Let’s say you set a rate and get a booking for 28 days within a week, then another few bookings. Fast. 

Use Feedback From Time-To-Action! 

We are getting feedback from both above. 

  1. The first one we know we are wasting our time. Zero money. Zero reviews. No launch. 
  2. With the second option, we know people are interested and the snowball is being packed. By getting bookings so quickly we are going to get many reviews quickly. Trust. Even if the rates do not meet our expectations. 

Action speeds up, due to high demand, we can conclude:

Our Airbnb rates are too low and we can now increase. If we cannot increase now we will increase the rates for the same time next year. Slowly over time, as we collect more reviews, increase occupancy we tweak the rates upwards. And the owner is happy. 

If demand slows down we start all over again by reducing rates until guests start taking action faster. And slowly work our way up again. 

On the other hand; if you are focusing on Setting High Airbnb Rates you may impress your neighbors but not your bank manager.  

Allow us to do what we do best; focus on time to take action, get bookings and reviews and accumulate. Based on these multipliers we will get better than competitive rates. Why? As we build trust the time to take action reduces (higher demand) and due to demand, we increase the rates. Over time the tortoise wins the race. 

Patience is the game now. 

 


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Category: About Airbnb

Setting Low Airbnb Rates

The short answer: NO!

This is a common concern for new owners. As we implement our trust-building phase we use competitive rates to attract reluctant guests to stay and get reviews at the new accommodation. 

The Consequences of AirBnB’s Commoditization On Rates

It’s only after new owners become familiar with the painful reality and impact of AirBnB’s commoditization of the short term accommodation market, that they change their mind about our setting low Airbnb rates philosophy. 

After this introduction let me address the concern about setting low Airbnb rates equaling bad guests

When we talk about setting low Airbnb rates to buy trust we are talking about competitive rates only and not Rock-bottom rates. 

As you know, we don’t have the accommodation seeker’s trust yet, and we must use our only effective driver, namely setting low Airbnb rates, to overcome resistance to book. 

The guests who book initially are the same guest who may pay a premium rate tomorrow. But with no reviews (trust) forget it. 

Only a remarkable holiday home at a bargain will do. 

In the market we operate, guests are not poor. 

Let me make a statement based on experience. 

Even if the rates are competitive you still get great guests. 

Now let me share why I say this:

The real risk is not bad guests but rather uneducated guests. With today’s social media profiles guests cannot hide any longer. 

And Forbes did a great job of explaining why guests’ requests to stay are sometimes declined more here.

We started our business in 2009. This was before social media. And many people left homes untidy as there was no recourse. Even owners got away with shoddy offerings. 

Today Your Social Profile Is A Valuable Asset

When a guest book and stay they review us. And these positive reviews made us SuperHosts. Trust! As guests depart we review them. And they establish trusting profiles over time. Today we all know the consequences of a bad review for both parties. 

Let me repeat: Even if the rate is competitive no guests will risk getting a bad review knowing other hosts will not approve them with a  bad previous review. 

The only risk for us is first time users on Airbnb. Unfortunately, they are not familiar with the implications of getting a bad review and how it impacts their future ability to use Airbnb. And some of them, ignorantly, will not leave the property in the same clean state they received it. 

When they get hit with a bad review they never again treat any Airbnb place poorly. And if they do they get blocked. 

Our challenge is to make it as difficult for new guests to book without first qualifying (See Forbes article above) them and then we educate them on what we expect. 

To answer the question: No. Competitive setting low Airbnb rates are not the cause of bad guests. Bad guests are mostly new guests unfamiliar with their responsibility.

How To Make Money With Airbnb Accommodation Business In Cape Town 

You’ll read a lot of different opinions about making money with Airbnb. The following are some of the opinions you’ll likely read, and what they mean. 

What is import? Trust. If you ignore trust with your guests you are going to fail. If your Airbnb guests don’t give you 5-star reviews – regularly you will be just another average Joe. You will read there is, nearly, a direct relationship between the number of reviews and occupancy. Get those reviews in quickly. Why quickly? Airbnb likes action. A dormant holiday home in Cape Town or anywhere is a waste; they’ll dump you to the bottom. 

Obviously, Agency.CapeHolidays Management is biased but we are not really interested in managing a home the owner can manage herself. This should not stop us from giving you advice. So read what we share with this in mind.

Read these FAQ’s on setting up a self-catering accommodation business in Cape Town to profit.

The simple answer is that we manage all unique and remarkable Cape Town accommodation (see the areas we cover here).

We never said it must be luxury. Not necessarily. All we want is for guests to say Wow. Like these reviews (more here).

Airbnb reviews agency.capeholidays.info

But back to your question:

 If we consider peak rates ; our large homes rent for as much as R45000 per day, while small two-bedroom apartments about R2000 per night.

You can see the rates vary a lot. But let me just warn you; don’t get too excited looking at R45000 per night. Outside of peak this home will rent for a lot less. And very few homes will ever rent for R45000 per night.

You can read more on how to qualify your home here.

How to set prices on Airbnb?

Let’s start with what is maximise income?”

“It must be stressed that the concept ‘maximise income’ is a short way of saying; make the home profitable but never at all cost. Only within reason!” Experienced Airbnb Agent

Maximising income is quite simple if you follow a strategy that works. This means you should focus on occupancy and not setting high rates, and on getting more reviews (trust) and  eliminating all resistance to book . Read the FAQ (1) where I discuss high rates and time-to-action (demand).

To set prices on Airbnb it depends on the number of reviews we have and the established demand.

Assuming we list a new property with no reviews and the owner wants to maximise income annually; we go through the following with the owner:

  1. After we have qualified the accommodation as being remarkable we discuss the owner’s income expectations.
  2. It’s critical to know what annual income the owner expects (Read more here on why we  must  know this). 
  3. We use the owner’s annual income, plug it into our income calculator, and see what seasonal Airbnb rates and occupancy are required to achieve it. We start off using 35% occupancy as a guide and we adjust the rates to try and achieve this owner income.  If we can generate the annual expected income at 35% occupancy  and the rates are very competitive we know we have a great opportunity to meet or exceed the owner income expectations during the year one. If during year one, we need 40% occupancy or higher to achieve the owner’s income goal, we know this owner-agent relationship may not last very well. Either the owner should lower her expectations or we would decline.

Airbnb Pricing Strategy Philosophy Part 1 

Airbnb Seasonal Rate Calculator Part 2 

Case Study 1: Airbnb Annual Income Expectations: Simonstown Villa:  

Let’s consider the following email from a new owner with a lovely 4 bedroom accommodation in Simonstown. She would not be able to manage her home or market it. This is what she told me after I asked her for her annual income expectations:

New Owner

The financial data was as follows for the period May 2018 to June 2019 – 12 months. The loft room was booked for 191 nights at an average of 752 rand per night and generated 143697 rands for the year. The garden suite was booked for 181 nights and had an average nightly revenue of 1419 and generated 256921k for the year. Total revenue after booking sites costs was 400618k. New Owner

This is really an achievement. 

Agent CapeHolidays

Interesting. And your logic makes sense. Obviously we need to see the home. And I believe if it gets foolproof remarkable interior with lots of flexibility like 8 single beds (can be made in Kings), for example, then it should exceed our own expectations.

These are the homes we prefer.

Looking at the figures you shared  the owner is doing 50% occupancy  during the year for both properties. Excellent. And a good sign. This means even higher occupancy/rates during summer as winter is relatively dead. The average Airbnb occupancy for this area is much lower. Obviously ours are on average 20% higher and winners a lot higher. But it took about 12 months of building trust with each property to get there.

New Owner

I would consider this a benchmark to use and hopefully surpass as the entire house would now be available at time that we are not there, this obviously also depends on when we plan to use it too.

For now my view is that we should be able to add a further 200k to the value above. To answer your question we would expect to achieve a minimum of what has been achieved historically and add up to 100k on top of this after costs and achieve a gross 550k before your 20% costs. This is a view based on the data we have, I am sure you will have a view, please could you give us your opinion and experience.

Reasonable! Who would argue?

Agent CapeHolidays

Due to various issues (like meeting expectations) we only start off a new home if we can achieve the owner’s goal at 35% occupancy. This does not mean we will not try and beat it. But agreeing to a new house where 50% occupancy is required, to achieve the R550 000 goal, then we may disappoint you before we start. And that’s not fair on you. Agreeing at the  kickoff stage to higher occupancy  than what is our norm will cause pressure to maximising rates rather than  working on getting trust, and adjusting rates to address occupancy based on supply and demand during the first 12 months.[/su_highlight

I must say that I am confident we can achieve 50% and higher occupancy to meet and exceed R550 000 but why make a promise just to keep the owner happy? Why not rather exceed expectations after 12 months?

Our Motto

We don’t have to be the biggest accommodation agency in Cape Town or Simonstown! No. We only want to be the best!

This implies that we   can walk away; as we are not trying to win a deal at all costs. No.  We rather shake hands and walk. Ensuring we will always look the owner in the face knowing we did what was best for both parties.

What do you mean by maximizing Airbnb income?

Meaning of MaximisingHow To Maximise Income

Maximizing Airbnb income is “shorthand”  for our focus on (long-term) profitability over a year. Instead of focusing on maximising daily rates we ensure with our philosophy to:

  1. Build trust – reviews and high ratings from happy guests.
  2. We base our Airbnb rates on demand. And demand depends on seasonality and mostly on trust.
  3. Maximizing Airbnb income does not mean we are unreasonable at any time; our guest will never say the rates are cheap; we are not and will not ever be cheap, but guests will tell you we are reasonable.
  4.  Our model of building a snowball of trust takes longer than a year. Getting 40 reviews needs patience (more here).
  5. But if we are lucky and demand jumps quickly to higher than 50% occupancy we increase rates. Let me add; we always adjust rates depending on demand. Always within reason.

Maximised income depends on trust; high rates depend on high demand.

As a Cape Town Airbnb accommodation agency;

Initially, you pay a price for the lack of trust. And you pay a price to get many positive reviews…… Our income only increases if your home improves at all times and your income improves.  Nothing else.

How To Set PricesMeaning of Maximise Income

How to set prices on Airbnb, within reason, maximise income is quite simple if you follow a strategy that works. This means you should focus on occupancy and not setting high rates, on getting more reviews and eliminating resistance to book. Read the following FAQ where I discus high rates and time-to-action (demand).


Read FAQ (Will I Make Money Setting High Rates On Airbnb)


To set prices on Airbnb depends on the number of reviews we have and the established demand. Assuming we list a new property with no reviews and the owner wants to maximise income annually; we go through the following with the owner:

  1. After we have qualified the accommodation as being remarkable we discuss the owner’s income expectations.
  2. It’s critical to know what annual income the owner expects. The owner, in most cases, tells us; “you are the experts you must tell me!”, this is correct; we are the experts and we will guide the owner but an owner without some expectations is a concern. The owner may want to cover costs, her bond, or make at least what she can do renting it out long term. These are good starts and we can work with that.
  3. We use the owner’s annual income, plug it into our income calculator and see what seasonal Airbnb rates and occupancy are required to achieve it. We start off using 35% occupancy as a guide and we adjust the rates to try and achieve this owner income. If we can generate the income at 35% occupancy and the rates are very competitive we know we have a great opportunity to meet or exceed owner income expectations during year one. If we need 40% occupancy or higher or even higher rates we know this owner – agent relationship may not kick-off very well. Either the owner should lower her expectations or we would decline.

Airbnb Pricing Strategy Philosophy Part 1 

Airbnb Seasonal Rate Calculator Part 2 

Setting Low Airbnb Rates

The short answer: NO!

This is a common concern for new owners. As we implement our trust-building phase we use competitive rates to attract reluctant guests to stay and get reviews at the new accommodation. 

The Consequences of AirBnB’s Commoditization On Rates

It’s only after new owners become familiar with the painful reality and impact of AirBnB’s commoditization of the short term accommodation market, that they change their mind about our setting low Airbnb rates philosophy. 

After this introduction let me address the concern about setting low Airbnb rates equaling bad guests

When we talk about setting low Airbnb rates to buy trust we are talking about competitive rates only and not Rock-bottom rates. 

As you know, we don’t have the accommodation seeker’s trust yet, and we must use our only effective driver, namely setting low Airbnb rates, to overcome resistance to book. 

The guests who book initially are the same guest who may pay a premium rate tomorrow. But with no reviews (trust) forget it. 

Only a remarkable holiday home at a bargain will do. 

In the market we operate, guests are not poor. 

Let me make a statement based on experience. 

Even if the rates are competitive you still get great guests. 

Now let me share why I say this:

The real risk is not bad guests but rather uneducated guests. With today’s social media profiles guests cannot hide any longer. 

And Forbes did a great job of explaining why guests’ requests to stay are sometimes declined more here.

We started our business in 2009. This was before social media. And many people left homes untidy as there was no recourse. Even owners got away with shoddy offerings. 

Today Your Social Profile Is A Valuable Asset

When a guest book and stay they review us. And these positive reviews made us SuperHosts. Trust! As guests depart we review them. And they establish trusting profiles over time. Today we all know the consequences of a bad review for both parties. 

Let me repeat: Even if the rate is competitive no guests will risk getting a bad review knowing other hosts will not approve them with a  bad previous review. 

The only risk for us is first time users on Airbnb. Unfortunately, they are not familiar with the implications of getting a bad review and how it impacts their future ability to use Airbnb. And some of them, ignorantly, will not leave the property in the same clean state they received it. 

When they get hit with a bad review they never again treat any Airbnb place poorly. And if they do they get blocked. 

Our challenge is to make it as difficult for new guests to book without first qualifying (See Forbes article above) them and then we educate them on what we expect. 

To answer the question: No. Competitive setting low Airbnb rates are not the cause of bad guests. Bad guests are mostly new guests unfamiliar with their responsibility.

How To Manage An Airbnb Accommodation Business In Cape Town

A holiday home in Cape Town can be managed by the host. A good host is someone who has a good attitude and is able to talk to guests; banking goodwill.

Managing hosts also need to set expectations for the guests that they are hosting and get five-star reviews from those people.

If you want to have a self-catering home, you should know how to manage time, resources extremely well. If not, it could become a disaster. Guests don’t mind a mistake but they will take revenge (bad review) if you are not responsive.

You need to meet people when they get here. You will show them the key amenities, like where is the pool or laundry room. You will also tell them about any other facilities, like WiFi codes. Setting expectations. If you are timid and afraid they will take advantage. Be firm but friendly.

Read these FAQ’s on setting up a self-catering accommodation business in Cape Town to manage it effectively. 

Our Cape Town Airbnb management services are ideal for homeowners who  can not or are not interested in marketing or managing their own property. 

More on the topic
Should I list CapeHolidays If I Can Do Airbnb Myself?
What do we provide for the commission we take?

Let me ask you a few questions to qualify your needs:

  1. Can you manage your own home and ensure a 5 Star rating for each and every guest staying? Can you enjoy your holiday away while guests demand attention? Can you be very responsive to guests? Are you willing to liaise with guests 24/7? Are you willing to negotiate with guests, resolve conflicts when it occurs?
  2. Do you know how to set  marketing policies to get the best possible return on your investment?  For example; setting the competitive rates, setting correct seasonal length of stays, protecting your home with the best possible cancellation policy?
  3. Can you generate 20% more income than the average Cape Townian using Airbnb? (Our occupancy is consistently 20% more than the average. Most are 35% and higher).
  4. Do you have on-demand maintenance people who will fix things there and then ensure you don’t get guest revenge when you are slow to act?
  5. Can you supervise maintenance work etc to your home 24/7?

If you answered  yes to many of these then it’s better you manage and market your own home.  You don’t need us. 

However, if you cannot manage/market then our management and marketing skills will bring you,  hassle free , at least 20% more income.

Our experience from 2009 will give you a better chance of renting your home for a fair price. 

Compare our management costs with other great Cape Town Agents.

Other Cape Town agent’s commission is as much as ours or more. And they have a monthly management retainer as well.  If these agencies have bookings or not you pay the retainer.  

However, if we don’t get bookings you pay zero.

Zero commission and zero management fees.

Is this fair or would you rather pay us a monthly retainer for doing nothing?

Don’t you think our model, of management fees per incident, ensure we focus on rather renting your home for the best possible deal than collecting monthly retainers?

Our  management function is exclusively available to you at cost .

There is no profit for us on management. Our managers get paid each cent we claim for management. 

Note: guests pays an additional fee for the change over management incidents. It covers about 80% of the management cost. 

No incidents! You pay nothing.

  •  We can unhassle your holiday home .
  • And you have to do virtually nothing.
  • The home will generate a healthy income while it’s maintained and improved at all times; while you focus on peace of mind.

For this, our homeowners choose peace of mind.

BTW: We are striving to be the best but we are not there yet.

If not we would not have grown our portfolio with very many happy owners.

Interesting: Why would our owners send us messages like this if we are not making a difference?

Airbnb agency cape town



 

Self-Catering Accommodation Business In Cape Town: T&Cs | Rules | Protection

Managing a Cape Town self-catering holiday home has its risks, fears, and worries. You read bad press about parties, people occupying houses, theft, and whatnot. Without getting way out-philosophical;

A ship in port is safe; but that is not what ships are built for. This saying has also been credited to Albert Einstein and John A. Shedd..  

You have to address the risks, do foolproof audits, set up systems to reduce risk. Never assume. Fools like hosts who make assumptions.

The following FAQs are for owners who want an agency to manage but you can pick and choose what to read. Adapt it for your Cape Town self-catering business. And make it better.

Read these FAQ’s on setting up a self-catering accommodation business in Cape Town to make it foolproof (if there is such a perfect home – we should try).

When you click this button a new page will open.

How To Short Term Rent My Cape Town Holiday Home During School Holidays Only?

Local Cape Town schools have a six-week break during December and January. For those who own a nice home in Cape Town, this is an opportunity to earn extra income by renting their property while the owner takes a break.

Many Cape Town “school holiday” owners want to rent their home but are worried about the work that goes into it. They’re also unsure of how to manage their home, and whether or not they should charge in a different currency. These people need someone with the infrastructure and marketing skills to help them rent their home on Airbnb. It’s not difficult when renting online but when it comes to pricing and management, guest liaison, checking on guests, parties, etc. they may decide that it’s too much for them.

You may read that it’s difficult to match the expectations of “school holiday” owners, and the impact of expecting guests. When you manage an annually available Cape Town holiday home you have various feedback loops; the house becomes more guest-ready or foolproof. Owners also learn the ins and outs.

I suggest owners ensure they are fully aware; high expectations will be deflated if the owner lives in a perfect world. Read as much as possible. We also share a Terms & Conditions dedicated to “School Holiday Owners” specifically. The T&Cs is designed to highlight the issues you may encounter.

Read these FAQ’s on setting up a self-catering accommodation business in Cape Town for owners with kids at school; meaning the home is only available during school holidays.