Airbnb vs the Competition
Airbnb is the poster child of holiday accommodation and has become a household name. It’s the startup that disrupted the hosting platform industry by utilising the sharing economy and focusing on traveller experience. Although a giant, it still has its competitors; platforms you should be considering if you plan on renting out your property as a short term rental. In this blog, we’ll run over the core features of each platform, their differences and our recommendations as to how and where you should manage your property.
If you’ve navigated to this page, it’s because you’ve heard of Airbnb. The hosting platform disrupted the industry back in 2008 by capitalising on the sharing economy wave. Since then, it’s now one of the largest short-term rental platforms currently on offer. With nearly 5 million listings available for booking and it being the easiest site to navigate, it’s clear why it has become so popular.
Airbnb’s pricing model is simple. There’s no subscription fee but instead, there’s a clip of the ticket. The booking fee is 3% and the service fee to guests is up to 20% of the booking subtotal. To encourage transparency, both guests and hosts can leave reviews on each other’s profiles within 14 days of the stay. These reviews affect the listing’s rating and consequently how the property is ranked in search. Moreover, all profiles require a photo, personal descriptions and very soon, compulsory verification with a government-issued ID. The verification process combined with reviews creates an element of trust that makes users feel secure when using the platform.
For part-time hosts, the largest advantage in our opinion is Airbnb’s public liability insurance and the Host Protect. Host Protect can reimburse hosts for damages caused to the property by guests for up to $1 million. For example, a guest may have stayed at your property and stained the carpet with some red wine. Via Airbnb’s resolution centre, you’ll be able to claim back the costs associated with repairing or replacing the carpet on the basis of sufficient evidence. The reality though, is that you’ll rarely need to take advantage of Host Protect as Airbnb claims that less than 1% of all stays involve significant damages.
As a host, if you’re unable to rent the entire property out as a full-time rental (it’s a big job!), you can opt to rent out private rooms or shared rooms. This is perfect for those with a spare bedroom looking to make some extra cash to contribute to their mortgage or rent. You also have the option to list less-traditional homes like tree houses and castles but you’re not here for that so we won’t delve into that.
The next thing to understand is the behaviour and demographics of your guests. Looking at our data, the average length of a stay is 4.2 nights with 4.4 guests per stay. In other words, every four to five days you’ll need to hand over the keys, conduct a property inspection, clean the property and change the linen. 60% of guests are millennials and last-minute reservations are very common due to the instant booking feature. Last-minute reservations are going to be a big source of income for hosts so it’s recommended you have this feature switched on. At the same time, you’ll need to be prepared and have the processes in place to be able to host somebody within 10 minutes notice.
If that isn’t your thing, you can turn on request-based bookings which will involve a back-and-forth between the host and guest before the booking is accepted. The trade-off is less bookings.
Booking.com offers a similar service and also has more properties available for guests than Airbnb. It has been usually given second-thought by those trying to utilise the short-term rental market as it’s synonymous with hotels and traditional forms of holiday accommodation. However, the reality is that it’s still a big player. From our experience, we’ve noticed that guests are willing to pay 30% for the same property on booking.com than Airbnb. Why? It’s an older user-base with most of them being international holiday-makers than the nationals you’d see on Airbnb. Hosts will need to pay a 3% credit card fee combined with a 10 to 25% booking fee with the amount varying based on the booking’s rate and property location and features.
Unlike Airbnb, guests do not have profiles which means there’s no verification process available to ensure the guests are legitimate. This will cause issues for you if you attempt to do this yourself as fraudulent and stolen credit cards are unfortunately a thing with Booking.com and there is no way to detect these. The last thing you want is a guest paying with a stolen credit card, staying in your property and then you having to refund them the stay. The way to get around it is to use a third-party verification system and integrate it with whatever management software you’re using.
In addition to the verification issues, Booking.com does not have an insurance policy equivalent of Airbnb’s Host Protect. So if you want to the peace of mind, you’ll need to modify your existing landlord insurance or purchase short-term rental insurance – something we do for all of our clients. This will cover you for damage caused by short-term tenants (guests), stolen items and liability for if somebody is injured at your property.
You can try and get around all of this by requiring a security deposit from guests to help cover the risk of damage to your property. The tradeoff here is that security bonds are a turnoff for most guests so you will see a drop in occupancy. Hosts can also report any damage via Booking.com’s reporting feature but this isn’t something we don’t have much experience with as our verification systems and insurance have made it redundant.
The Expedia network encompasses a number of rental platforms including Homeaway and vacationrentals.com. As for pricing, there are two models. The first is a 5% service fee combined with a 3% credit card processing fee. The second is a subscription model where an annual subscription fee is combined with the credit card fee. On the other side of the fence, guests pay a service fee between 6 and 12% with no credit card processing fee.
Similar to Airbnb, both guests and hosts can rate the experience at the end of the guest’s stay. They each have 14 days to write a review. After these 14 days, neither the guest nor host will be able to edit their review. Expedia also comes with $1 million liability insurance that covers hosts with liability protection for those stays booked through the platform. Security deposits can also be applied to each booking to attract the right guests and cover for potential damage caused by guests. Similar to Airbnb, guests can also create user profiles with photos of themselves to build rapport. Accounts can also be verified with Google and Facebook accounts.
Last up is Tripadvisor, the website where 1 in 3 travellers will visit first before planning their holiday. Tripadvisor shouldn’t be underestimated when it comes to short-term rentals although you probably turn to it for booking tours and checking our restaurants when overseas. Hosts do not need to worry about credit card and subscription fees but there is a 3% booking fee – the lowest of all the competition. Guests, on the other hand, will pay between 8 and 16% for their bookings. There’s no direct insurance provided by Expedia so you’ll need to look into sourcing your own short-term rental insurance.
Just like Airbnb, there’s an instant book and request option. The request option requires bookings to be accepted within 24 hours so make sure you’re able to respond in time. Unfortunately, there is no guest profile feature which means guests are not verified. This also leaves room for fraudulent and fake credit cards.
Here’s a table comparison to summarise everything:
*Please note that percentages shown are as of February 2019
When it comes to renting your property out as a short-term rental on a single platform, the winner is Airbnb. With guest verification, insurance, the resolutions centre and the ease of use from both the guest’s and host’s perspective, it’s the most complete of the four big players. If you’re unsure where to start and want to enter the short-term market, we recommend you start with Airbnb and then go from there.
However, it’s important to understand that both Booking.com and Expedia were originally geared for full-time rentals in the form of hotels but have only recently have started shifting to apartments and homes. This is why their interface may feel a bit clunky at times especially when trying to list your property manually. But, what they lack in usability they make up for in reach.
As we hinted earlier, guests are willing to pay more for the same property and period on channels like Booking.com. This is due to the brand’s goodwill combined with different demographics. Tripadvisor also remains the most visited platform of the four so you cannot discount their power when it comes to generating an income from your property.
At and chill, approximately 40% of our bookings come through Airbnb with the remainder coming through the competitor platforms. Our approach is to have the same property visible on as many platforms as possible to increase its reach to potential guests. Listing on multiple platforms increase’s the property’s demand which means a higher probability of it being booked and the ability for you to charge higher rates each night.
It’s not an easy feat but with a professional short-term property manager or some free time and property management software, you’ll generate the highest rental income possible for your property. The shortcomings of Airbnb’s competitors are also likely to be addressed in their upcoming platform/product updates so don’t worry too much.