Things I learned as an Airbnb host 2021-2022

Introduction Link to heading

This post summarises the things I learned while I was an Airbnb host between Nov 2021 and Dec 2022. I did the short lets for my old flat in Shoreditch as an alternative to leaving the property vacant while I was trying to sell it.

It has taken until now to publish the post, because I wanted to complete the sale first (and therefore be sure I wouldn’t relist on Airbnb), but encountered various issues, e.g. Covid, a sale falling through during the September 2022 mini-budget economic crisis and falling victim to estate agent fraud¹. I know many things have changed in the short let space since 2022, but I think some points will still be relevant and potentially useful.

The Airbnb listing Link to heading

It was first listed from Nov 2021 to Apr 2022, during which time I had 16 bookings. It was then relisted from Nov 2022 to Dec 2022, during which time I had 8 bookings.

Main points Link to heading

It takes quite a bit of time and effort Link to heading

The big lesson, which I suspected at the start, is that it takes a fair bit of time and effort to be a host. If you live nearby that can work fine, but the problem I had was that I lived nearly 1 hour away.

I did engage a company to do both the cleaning and the laundry, which helped. Ideally I’d have visited before the cleaning/laundry, so I could see how each guest left the place, and after the cleaning/laundry, to ensure everything was ready for the next guest. But given that would have involved around 4 hours of travelling for each guest, I settled on just going after the cleaning/laundry. That meant that I wasn’t able to give such accurate guest reviews, and when things went missing (more below) I couldn’t be sure if it was the guests or the cleaners.

Plus when guests needed assistance, e.g. locking themselves out or requesting additional facilities, that would be another 2 hour round trip, often with little notice. For the 16 bookings for the period Nov 2021 to Apr 2022 I ended up making 31 two hour round trips, i.e. around 62 hours of travelling.

Increasing the price doesn’t reduce bookings, it just reduces your value for money scores Link to heading

One of the first questions new hosts have is how to price their property. Consensus on the hosting forums is that the prices Airbnb suggest are way too low. In my case I looked at similar listings in the area (bearing in mind that my place had 50% more floor space than most other 2 beds in the vicinity), and started out lowish while I built up experience and feedback.

Given London has a 90 day annual limit for short stays, and that I didn’t want to use all my 90 days up at the start of the year, I began to increase my prices, expecting the number of bookings to decrease. But curiously, however much I increased my prices, I still remained pretty much fully booked. The only change was that I started getting some 4* scores for Value for Money instead of 5* scores.

Those “I got rich quick off Airbnb without owning any property” schemes use “Airbnb arbitrage” Link to heading

After a month or so of hosting, I got an Airbnb alert on my listing page saying “Start hosting longer stays. We’ve seen a recent increase in guests looking for weekly and monthly stays close to home”. I thought an increase in people wanting to stay close to their homes (rather than their places of work) sounded suspicious, but I clicked anyway to get more details. Airbnb recommended a 63% discount for a month long stay, although (as per the comment above on pricing) the Airbnb pricing suggestions are usually pretty wacky. Basic economics suggests that if demand is increasing but supply is not increasing then the price should increase too, so why on earth would Airbnb suggest I significantly reduce the price? All that said, I did briefly set up a reasonable monthly discount.

Within a few hours I’d received a booking request for a 2 month period, from an established “Superhost” who had dozens of properties listed (including several which looked like duplicates, possibly relating to London’s 90-day rule, and all with 5 star reviews within short time windows). Now there were lots of red flags, like the “Superhost” wanting to book on behalf of a single “corporate client” but not allowing that “corporate client” to book directly, and wanting to take the discussions offline (i.e. meet in person), etc. So I did a bit of research.

I quickly found out about something called “airbnb arbitrage”. If you search the internet for that phrase, or something like “make money from airbnb without owning property”, you will find a lot of sites about it. The gist is that the arbitrageur takes a longer let at a greatly reduced price, and then sublets at significantly higher prices, e.g. if they let for a month at Airbnb’s suggested 63% monthly discount and then fully sublet at the normal price then they could triple their investment without having to actually own any property.

In my case I know my mortgage terms specifically prohibit me from allowing my tenants/guests to sublet, but even if it didn’t I wouldn’t be comfortable hosting a potentially large number of people I couldn’t vet, not to mention disliking the dishonesty of surreptitious subletting. Furthermore, the subletter would have no incentive to screen guests, because any damage guests do wouldn’t be to the subletter’s property, and they could guarantee every guest a 5* review irrespective of any issues they might cause.

I had thought that Airbnb might turn a blind eye to this practice, given subletting would mean they’d get two lots of fees for the same property at the same time, but to be fair the account that originally contacted me does appear to be suspended now. It does make me suspicious of the “Superhosts” with dozens of short-lived properties listed though.

Once you lose your 5* status you’ll never realistically get it back again Link to heading

I remember once reading an online discussion about online rating systems and their potential flaws. One of the comments I remember was that not giving a host a 5* rating on Airbnb was incredibly bad.

I was doing fine at first, with my first 8 ratings being 5*. Then my 9th was 3* (long story, but short summary is that I don’t think it was a reasonable reason, especially given all my attempts to meet their demands). Having the occasional guest with unreasonable expectations does not sound uncommon.

The overall score is worked out with the following formula:

Star rating	No of reviews	Total (rating * reviews)	Average (total / reviews)
5	8	40
4	0	0
3	1	3
2	0	0
1	0	0
0	0	0
Totals	9	43	4.78

So eight 5* reviews and one 3* review gets an average of 4.78. That means, in order to get my overall 5* rating back, i.e. an average of 4.99 or higher, I would need:

Star rating	No of reviews	Total (rating * reviews)	Average (total / reviews)
5	199	995
4	0	0
3	1	3
2	0	0
1	0	0
0	0	0
Totals	200	998	4.99

i.e. to have the next 191 consecutive reviews all 5*. That, of course, isn’t ever likely to happen, even if it was to be a long term project and there wasn’t the 90 day London limit. Maybe it needs something like the truncated mean to make the score robust to a single outlier judge.

Fortunately the next reviews were all good, so I did just manage to achieve the 4.8 average required for Superhost status while my last guest was staying. Unfortunately, I almost immediately lost Superhost status because, while the last booking gave it 5* ratings in all categories and a glowing review, they decided to give it a 4* overall for some reason (maybe a finger slip?)!

It appears quite lucrative on the surface, but there are a lot of additional costs Link to heading

Estate agents estimated that it would achieve around £615 per week (£2,665 per month) as a long let. On Airbnb I got between £3,298.82 and £4,849.88 per month². That was without trying to optimise earnings, e.g. I set 1 night preparation time before and after each listing, blocked the calendar for the odd days when I wouldn’t be available, etc. If I had optimised I suspect I could have got nearly double the income from the short lets compared to long lets.

However, there are a lot of additional costs for short lets that aren’t incurred on long lets, for example:

• £375 to £900 per month energy bills (these were around double during the global energy crisis).
• £165 to £275 per month excess cleaning costs (I charged guests £45 for cleaning, but total cost to me was £99.48 or more each time).
• £185 per month Council Tax.
• £25 per month water bill.
• £23 per month broadband.
• £23 per month for the key storage and management solution.
• Travelling costs (all those 2 hour trips don’t come at zero cost).
• All the toiletries, coffee and biscuits and so on which I left out for the guests, cleaning products for the cleaners, etc.

I reckoned that the additional costs more than cancelled out the additional gains. In my case I still think it was worth doing though, for the additional flexibility (a long let could have delayed a potential sale significantly, or reduced the price dramatically given that very few people would want to buy a property with a sitting tenant).

Additional points Link to heading

The Airbnb party worry still hasn’t completely gone away Link to heading

Before listing on Airbnb I was particularly concerned about the party risk. It was partly because my flat was an unusually large one in Shoreditch, which is a popular area for nightlife. It was also partly because we’d already had a bad experience with Airbnb in the block. A neighbour had listed their flat on Airbnb a few years earlier and had a guest host a large party. Not just a party, but one with professional DJs and a bouncer checking the guestlist outside the block (residents had to prove they lived there to get into their homes). Needless to say it was very loud so no-one who lived nearby got any sleep that night. There was also apparently a lot of damage to the flat afterwards.

Most of the time I got a reasonable degree of comfort from looking at previous reviews of the guests before I accepted a booking. But there was one guest who booked for 20th December with a new profile and so no reviews. I decided to give them a chance, especially since their photo suggested they weren’t from the typical demographic and I like to try to be tolerant. Usually after I accepted a booking there’d be a bit of communication, but in this case there was none. This I put it down to the user being new and unfamiliar with the normal booking protocol. It however got to the day before and they’d still not responded to any messages. Then out of the blue I got another booking from someone saying:

“My son had told me about a social gathering that would be occurring on the 20th of this month and he showed me an image of this exact apartment. … The hosts have also distributed the address around. As a mother I would like to respect your home and hopefully my son and I do not get involved in this”.

Long story short, Airbnb do seem to have experience dealing with such cases, and I got the booking cancelled, plus alerted the neighbours to the risk of trouble if people showed up trying to get in.

On the Airbnb host forum afterwards, there were other hosts who claimed there are still people who try to make money hosting parties via Airbnb.

It is difficult to run environmentally friendly holiday lets Link to heading

I did try to make the property environmentally friendly. The listing advertised that all the heating and water was from 100% renewable energy. The problem I found was that many people did go wild with the energy usage, and some of that was just waste, e.g. leaving all the heaters on full blast with the windows open after check-out.

I also opted for larger multi-use containers of toiletries like shampoo and shower gel, rather than those small single use plastic ones you get in hotels. On the whole that worked okay, but there were several times these did go missing, and (because I rarely visited both before and after guests) I didn’t know for sure if it was the guests or cleaners.

For the Nespresso coffee pods, I also got a fairly expensive tin of compostable pods from a local shop, where you could buy low-packaging refills. Again the tin had to be replaced several times, and I don’t know if guests took it as a souvenir, or if the cleaners found the tin empty and binned it.

Give people the benefit of the doubt, because there might be things you don’t know about Link to heading

Just because someone behaves in a certain way doesn’t mean they always behave in that way, and there might be something going on in their lives that temporarily affects their behaviour. This is something I was already aware of, but did get a useful reminder of as a host. A guest started giving very brief messages, and not acknowledging or saying thanks to responses to previous requests, so I was starting to think about marking them down for communication. However, just before submitting my review I found out that she’d come over from the US for her daughter’s wedding but her daughter’s fiancé caught Covid just before the wedding so the whole thing was postponed.

Some things are better left unknown Link to heading

A bit of background on this one. Whenever I visited between guests I took some spare toilet rolls. When I visited by public transport I would just take a few rolls, but when I visited by car I would take a brand new 16 pack. Before one particular guest I happened to go by car and so took a brand new 16 pack, but after they’d left I couldn’t help but notice that there were just 4 rolls left from the 16 pack. That was 12 rolls of toilet paper used in 2 nights. Now they could have stuffed some in their cases or something, or it might have been the cleaners, but still. Just to make it clear, I didn’t normally count how many toilet rolls each guest used, but I found out in this case by chance.

Conclusion Link to heading

So I’ve learned a fair bit from the experience. Some things I was expecting, like the amount of time and effort it takes, but some things were surprising, like the “Airbnb arbitrage” risk and the rating idiosyncrasies.

If I lived nearby, and was not just doing it as a short term thing, I might have enjoyed it - meeting lots of interesting people, having a good excuse to try out local restaurants and attractions to recommend (or otherwise) to guests, and (at the risk of sounding glib) helping people form some hopefully happy memories (my children still talk about some of the places they’ve stayed at on holidays from years ago). That is of course leaving aside all the concerns about the impact of holiday lets on local communities.