Airbnb hosts aim to stand out from rising competition

Yahoo Finance's Ines Ferré speaks with Airbnb hosts about competition, listings, vacation rental demand, and more.

影片文字轉錄稿

INES FERRE: Michael and Christine, thanks for joining us. So first, let's start out with you've been almost a year now Airbnb hosts and you have a property in California. I had seen a video online that you guys had done about the property. I also have been looking through comments of your Airbnb hosts online.

And some of the comments that I've seen is that there may be a little bit of a lull happening or a little bit of a slowdown when it comes to guests going on Airbnb. Do you-- I know that with you guys, you may not have comps from last year, right? So tell me a little bit about that? And why do you think what may be some of the reasons.

Is it increased competition? Is it that there's more Airbnb's online now? Is it because you may be seeing consumers sort of slowing down a bit when it comes to traveling?

- Yeah, so I mean, there's a couple of factors that will play into this. One of them is I think we had this during the pandemic, everybody just wanted to get out of the house, right? So after we saw this big influx of people wanting to go somewhere close enough to home that they could drive, but far enough away that they felt like getting away. And so we saw this big influx. And so we might have seen when we first started--

- It was like the tail end, I think, of that--

- Yeah.

- -everybody still working from home and working remote and being able to go travel and also work from wherever they're on vacation at, right? So I think what we saw at first with that boom when we first started was also Airbnb pushing our listing, because they push new listings, and the tail end of everybody still working from home.

- Yeah, and now we've hit this period of people are more willing to travel further now. So those drivable destinations might not be as hot. As far as a low, we definitely did see a low. But we are in a seasonal climate. We're in the desert-- in the high desert in California. And I mean, I think that just comes with each Airbnb, each investment property, short-term rental is going to have its own unique calendar ups and downs cycles, if you will.

If you're in a big city, there could be a conference-- a major conference coming in. Like if you're in San Diego, they host comic-con. So you might-- so you're at the risk of the market.

And right now, the market has definitely slowed down. But in no means are we empty. Every weekend we have had booked for the last, I don't know?

- The whole year pretty much.

- Yeah.

- Just during this summer, we saw a bigger dip in bookings.

- And lead time, too. Lead time has gone way down. People are not planning as much as they used to. It's more, from our perspective, it's more of snap second decisions. We see bookings come in at night.

People maybe have a glass of wine and they're booking, you know, oh, next weekend let's go out of town.

INES FERRE: Are you seeing more competition, more supply online of Airbnbs? Because during the pandemic, Airbnb's just really skyrocketed and the listings have grown year-over-year. So I'm just wondering if locally if you're seeing that there's more competition and that you have to up your game with the listing?

- Yeah, of course. Every single house on our street that's sold within the last year is becoming an Airbnb or has become one. And we were one of the first in our neighborhood, actually, that did that. And so there's going to be even more of an influx.

If we think there's a lot of Airbnbs now, they're going to skyrocket within the next six months, I believe, because we have so many new builds and a lot, like I said, the homes in our area are all turning into Airbnbs.

- Yeah, and that's just like from our local block every time we drive to our place, we're seeing-- and we're in a destination area. We're by the National Park in Joshua Tree. So it has that appeal to it. But--

- What we've upgraded in the house.

- Oh, yeah. So one of the things that we've seen is with the influx is, yeah, you have to differentiate yourself somehow. And that's one of the things that we've been capturing on our YouTube channel is like just sharing the process and like learning from it and being like how can we make our listing competitive and how can we do the best that we can? And the one thing that I will say is with this influx of new hosts, the reason is because as millennials-- we're millennials-- we're looking for ways. The economy is crazy right now and we're looking for more than one stream of income.

And I think that that's what everybody wants just so that you can live a comfortable life. That's the American dream. And so we, like most hosts, we're like is this an opportunity for us to have a job, have some steady income on the side? And a lot of people that thought that getting into this was just going to be like printing money, I think they're starting to find out that it's a business. Just like anything that you do, it's a business and you got to put your heart into it.

And your first year, you might, in any business, right-- the IRS knows that your first year you'll probably take a loss starting a new business. So that's the mindset we're going into it with, that like this is a business. We've got to learn every month. You know, how can we grow, how can we be better?

INES FERRE: And do you find that you have been profitable in the first year? Because a lot of people think you're an Airbnb host and you're just printing the money. But what's the reality?

- Yeah, I mean, the reality is I think we did on our six month-- we haven't tallied up because we just hit a year-- but on our six month, we averaged, because we had good months and bad months, we had like one long-term stay where somebody messaged us and was like, hey, can I stay there for a month? And we did it off of the app and we made more money that way. So it goes up and down.

But I mean, we definitely have-- I'm trying to, because I don't have the exact fingers in front of me, but we definitely have made money every month if we average it out.

- Probably like $1,000 over our mortgage every month.

- Yeah.

INES FERRE: And what about the costs, because are you concerned of energy costs? Are you concerned about taxes? I mean, have you guys had it long enough to see your costs rise?

- I mean, we definitely have. We've gotten contacted from like local companies saying like hey, have you noticed energy surging? Because with Southern California, Edison, we're at the mercy of them if they decide to double the electricity rate and our guest are there during the summer, you know, cranking the AC.

- Yeah, we've seen about a 15% increase in our utilities from last September, October, November. Those were the three months I looked up before doing this interview were those months. And there's about a 15% increase. So not too huge.

- Yeah, but that's just utilities. I mean, the biggest area we've seen an increase is building materials. So we have all these big lofty plans. We want to build a nice pergola in the backyard and we want to do all this stuff with wood. But the cost of lumber is so high right now that it's deterred us and moved our focus into other things.

INES FERRE: And what about the way that listings appear? Because I understand that there was sort of a change in the way that listings appear. And now also Airbnb wants to make-- wants to keep Airbnbs affordable because there's been folks out there that have complained like hey, these fees are so high that it's even more expensive than staying in a hotel. So how does all of that play with your listing?

- Yeah, I mean, Airbnbs are not hotels. So when you're booking a hotel, you're booking a room and a bathroom. And when you're booking an Airbnb like ours, it's a two bedroom house with a garage and a backyard and a kitchen-- a fully stocked kitchen that we have to pay the cleaners to clean an entire house versus a room and a bathroom.

So there are definitely different types of people. People that want to stay at a hotel, that are super, like-- you know, they can leave the room messy and it doesn't really matter. But when you're staying at somebody's home, at least in our case, like when we travel and we go to an Airbnb, we're like, oh, this is somebody's home. We're going to treat it like a home.

- Yeah, so you'll find your respectful guests. And the majority of all of our guests have been really respectful and kind.

- Yeah.

- We did see in May they rolled out a brand new website. And that was when all of our bookings stopped. And they took off from the site and the algorithm, they kind of categorized you, they didn't give you any control at all over your listing. It was kind of like we were just SOL in it with everybody else. And Reddit and Facebook was going crazy. All the hosts were like, what is happening? I have zero bookings. I'm usually 90% booked.

So the algorithm changed in about May and we saw zero bookings for June. In mid-May, we were like, what? And we were booking out like a month or two in advance usually. So that was something that changed.

And now we're seeing Airbnb kind of backtrack and they are fixing some things. And have--

- Well, I just want to clarify, we got bookings. They were like-- they were like a couple of days before. And we were so concerned because we had zero bookings on the books once the new changes happened during Airbnb's summer rollout--

- Yeah.

- And they've since backpedaled on not a lot of things, but the big one is the categories. And it hurt us at first because we didn't think to include Joshua Tree in our title. And so it didn't categorize us as Joshua Tree--

- Or like a desert destination. Because initially on the app, or on the website, you were able to brand yourself. So that was kind of our logic going in, was OK, our house is called the Seventh Ray house. We'll brand it as that, say we have a pool. And like our amenities, really highlight those in the titles. And that totally got wiped from us.

And we had already had maybe like 30 or 40 bookings at that point or reviews on our page. So we're still fairly new in the game and building.

- Well, yeah.

- Yeah. Yeah, so I think that it completely shifted. And the thing the only thing that we can do is, I mean, we can complain all we want. But we could be bitter or we could do better. So our goal has been to find out what's working now, and how the algorithm works, and adapt to it.

Because I think so many of us hosts could just be mad that things were working or we could adapt, because this might be a better model.

- Yeah, and if you were-- Oh, sorry. Go ahead?

INES FERRE: Yeah, no, no, no. And I was going to ask you about also there's been a little bit of a backlash too. I don't know if you saw Airbnb bust online on Twitter. What do you say to those folks that are sort of annoyed at the short-term rental space. What do you say to them?

- Well, ultimately you have to take a look at yourself and be like, why am I doing this? Is it because you want to make money? Is it selfish? Or is it are you trying to cater an experience and make memories for people, offer something that they've never done before?

And I think that's the heart of what Airbnb has transformed into is, obviously, it started as like stay in a room. But I think it's transformed into this, like, how can a family or how can me and my friends go and stay in a tiny house in the woods that like we never would have got to do before? And so I think that hosts are going to have to look and be like, why am I actually doing this?

And if it's just for the money, that's fine.

- Then that's your Airbnb bust, because it's not working for you anymore.

- Well, if you're just in it for the money, figure out how you can make more money with what you have and not be mad at an algorithm.

- Or create your own site, like we have.

- Yeah, I mean, a lot of hosts have done that. They've made their own direct booking website. So there are options out there. And branding yourself like we, we were like let's just make a YouTube channel and document the journey. And it's definitely helped us branch out and reach more people.

INES FERRE: And what about the next year, going into next year, and the economy and the sort of uncertainty with the economy. Are you guys concerned about that and what it could do to short-term rentals?

- I mean, sure. I think that we are definitely going to see a slowdown of buying and Airbnbs coming onto the market just with interest rates going up and more people being more hesitant to buy. But are we concerned? Not really, because, I mean, even during the slow months, even during the summer we got booked over every weekend. And I mean, we wanted-- we're millennials and we're in LA right now and the housing market is crazy to get into.

So we saw this as a way that we can start building equity and get into the market. And we've both looked at each other and we're like worst case scenario, we have a home that we can move into.

- Pack up and go out to the desert.

- Yeah, or we can rent it out long term, find some great tenants. And I think that people are just going to have to be open to shifting with the tides.

INES FERRE: And lastly, you mentioned a revenue, stream of income, different streams of income. So do you feel that that's important for you and that you're going to be growing this also stream of income? Are you going to perhaps get more Airbnbs in the future or more homes out in the desert to rent out?

- I mean, it's definitely something that we want to do. If you've been following our YouTube channel, we DIY pretty much all of it.

- Yeah.

- So it was a pretty heavy lift on both our careers, even tried our relationship a little bit. But I mean, we definitely plan to. And we want to do it if the market for that still exists in a year. We'll see.

Nobody really knows what the market's going to do. But it's definitely something, because we've seen-- I mean, reading the reviews, we have a guest book, like, some of the things people say, it's like this is why we do it. Because we love going out there and we love spending time at our vacation rental.

- Yeah.

- And so seeing people doing that, that's why we do it. And I think that if more hosts can insert some love into it, they might--

- See a change.

- See a change. Yeah. But multiple revenue streams, I mean, I think if you talk to any kid now, that's what we all want. We all want to be making money doing what we love. And I think that's really the future of jobs.

If you look at kids being YouTubers, like, you know, affiliate brand links, and posting their videos, and side hustles, like, it's huge on YouTube right now because people want to work for themselves. And I think that trend is only going to continue.