The Rise of the Service Industry and Airbnb
A classic example of the services economy is Uber. It doesn’t own any vehicles, yet it’s valued at over $64.22 billion. Airbnb, similarly, owns no real estate but has a market capitalization of about $107 billion. These companies have been able to grow their businesses by using technology to match buyers (or renters) and sellers (or in this case, homeowners) efficiently.
As such, in less than a decade, Airbnb grew from a website that connected guests with hosts who rented out space in their homes to a traveling juggernaut with around 5.6 million listings worldwide. The company’s success reflects the ongoing shift to a sharing economy, where people are increasingly willing to rent out their possessions — from power tools to cars. In fact, in a recent report from Statista, an estimated 40% of all jobs in the United States are tied to the service industry.
According to LABS, Airbnb is “undergoing the biggest change to travel since the arrival of commercial flying”. At-home workers no longer have to be confined to their offices and ”millions of people can now live anywhere”.
What does this mean for all Airbnb platform users (property managers included)? It means they are now blessed with a new stream of potential guests, ‘the work-from-home travelers, who are choosing to stay at short-term rentals for not just a couple of nights but for weeks, months or even throughout an entire season.
Despite the harsh impacts the pandemic brought on the service industries for the past two years, Airbnbs short-term rental services are expected to exceed its targeted goal this 2022.
Increase in Demand for Airbnb properties = Increase in Demand for Third Party Property Management Companies
As the popularity of staying at Airbnb grows, property management companies are increasingly being engaged by hosts to manage their short-term rentals. While this means more business for PM firms, it also means they must start adopting changes in their operations to meet the increasing demand. But why? The problem is that these PM firms have to take care of dozens of different properties, each with its own unique needs. This makes it harder for them to keep up with short-term tenants who expect top-notch service while they’re away from home vacationing.
Property managers are no longer able to handle everything themselves. And unfortunately, if there are multiple Airbnb properties in their care, it’s physically impossible for one person to handle all of the:
- Customer Inquiries
Property managers face high levels of pressure on a daily basis. This issue can cause them to poorly delegate essential tasks, leading to a lack of attention to detail in all aspects of their Airbnb business.
As a property manager, you are aware that your employees’ interactions with customers represent one of the most important aspects of the business. Thus, it is crucial for you to create and foster an environment where employees are consistently providing excellent customer care services and not one where they are distracted trying to cope with the many unattended tasks.The ability to delegate effectively is a critical factor in determining your success and your Airbnbs future.
Furthermore, if you want to convert as many new guests as possible into returning customers, then you need to make them feel at home. If you’re unable to offer what they need, then someone else will — that’s your competition.
As a result, the reputation of their Airbnb rentals may suffer and guests will go elsewhere if they fall short of meeting their basic expectations i.e. the rate of response at which their questions are being answered.
Let’s begin by evaluating the internal and external factors affecting your short-term rental service.
THE DIFFERENT FACTORS THAT AFFECT YOUR AIRBNB BUSINESS
Why do some property managers struggle and others excel?
The answer is simple: great property managers have a system in place.
You could be the best property manager on earth, but if you don’t have a system in place, you will constantly be dealing with chaos. You need a system that provides a structure, allows you to track important data, and keeps everything organized and running smoothly.
With the Airbnb business evolving even more, it’s time property management companies managing Airbnb rentals, like yourself, consider a few changes to ensure:
What is SWOT analysis?
A SWOT analysis is a strategic planning tool that helps a business owner identify their strengths and weaknesses, as well as any opportunities and threats that may exist in a specific business situation.
The strength and weakness categories are internal factors. These are things that are within the control of your organization. The opportunities and threats categories are external factors. These are things in the environment outside of your organization that you need to be aware of and plan for.
Used in a business context, it helps property managements companies to develop a profitable market position by analyzing the opportunities presented to them and taking full advantage it.
While Airbnb’s strengths enabled the company to develop a competitive business model it also gave its hosts an advantage over other travel accommodation companies such as:
- Strong brand recognition and expansion. The company has a global brand name and is recognized as an industry leader. This reputation helps Airbnb:
– attract more hosts for the platform
– attract more guests for its hosts
which gives it a competitive edge over other hospitality and short-term rental companies.
- Diversification of offerings. Airbnb has expanded from strictly offering short-term private-room rentals to offering a variety of other types of lodging facilities such:
– Bed and breakfasts
– And even yachts for various traveler segments.
- Immersive experiences. These one-of-a-kind experiences go far beyond tours of famous sights that most hotels offer. They focus on in-depth learning, hands-on activities, and insider access, so guests walk away feeling like a local — even if it’s their first time in the city.
- Airbnb website and mobile applications are easy to use. Their search function is also very flexible, allowing users to specify precisely the type of accommodation they want to rent. They provide step by step instructions for each service offered in addition to links to additional resources.
- Airbnb rentals is generally cheaper than hotels in many locations. This, combined with its flexibility in the number of people staying and length of stay, makes it more attractive than a hotel for many travelers.
- As the tech industry grows so does Airbnb. Airbnb and other companies in the sharing economy are benefiting from the increasing popularity of digital platforms that connect consumers. Technological advances have resulted in greater availability of cheaper and more efficient sources of goods or services.
- Sharing economy trend. Airbnb and other companies in the sharing economy (e.g., Uber, Lyft) are benefiting from the expansion of online marketplaces that match service providers with consumers.
Airbnb is one of those platforms that seems to have come just out of nowhere and taken the world by storm. This is the classic example of a startup that focused on the user experience by adapting to changing conditions and finding huge success.
Due to its model it has brought much success to all parties involved – the platform, hosts and guests.
Despite its popularity and growth, Airbnb isn’t without flaws. Like any business model, it has certain weaknesses that open it up to competition. Let’s take a look at the top three ways in which competitors can gain an edge over Airbnb:
- Lack of Quality Control. Unlike hotels, guesthouses, or even bed and breakfast accommodations, there is no standard for quality or safety at Airbnb properties. There are no rules that property owners or management companies must meet to list as an Airbnb host. Airbnb has a rating system to weed out poor hosts, but their ratings don’t mean much since many hosts have only one review.
- Loss of Quality Customer Service. Airbnb became so focused on growth that it started to forget to keep guests at the center of its strategy. Guests began complaining about poor quality customer service for reasons such as:
– Cancellations: Airbnb guests’ bookings being cancelled by hosts at the last minute with no compensation or alternative accommodation provided.
– Lack of response: Airbnb hosts not responding to messages from guests for assistance or questions about their booking.
– Unclear processes: Airbnb not providing clear processes and tools for customers to use when their accommodation is unsatisfactory or they need help with their booking.
– Misleading advertising: Airbnb hosts posting inaccurate details about their accommodation to increase bookings and revenue.
3. Slow growth in profit. Due to the competitive landscape against other vacation rentals i.e. hotels & VRBO’s, Airbnb hosts are forced to reduce their fees to remain competitive, resulting in a negative impact on their revenue and scalability.
Managing Airbnb properties can be a lot of work especially as you grow your listings. For most entrepreneurs, the key to overcoming your internal weaknesses and achieving success is finding ways to be more efficient.
Businesses of all sorts consistently seek ways to innovate and grow their revenue just like everyone else. Thus, a great opportunity would be for Airbnb to try to maximize revenue from its guests throughout their travel experience, rather than just at the accommodation stage.
For example, developing an all-in-one platform in which it includes offering services such as:
- Flight booking
- Restaurant reservations, spas, etc onto the core Airbnb platform. This can increase profits, expand it’s user base, and separate the brand name from competitors who are solely focused on lodging alone.
Airbnb user will be able to now book an entire vacation on the Airbnb platform alone. Guests will experience a seamless, contactless digital transaction ensuring health conditions are met during the pandemic period.As a result, they are likely to become repeat customers or tell their friends about you.
While Airbnb is the most famous brand in the service industry, there are numerous competitors. These are its biggest two:
- Airbnb’s biggest threat is the hotel industry. Hotels are in a unique position to fight back against Airbnb. They have been around much longer and understand the travel industry better.
Moreover, hotels also have far greater resources than Airbnb, making it possible for them to be aggressive in their attempts to counter the short-term rentals site. In fact, in response to Airbnb’s growth, Hilton Worldwide Holdings (HLT) launched a new hotel brand called Tru by Hilton that targets travelers who want a budget-friendly option without sacrificing quality service like what they would get at a traditional Hilton hotel.
- Another huge challenge for Airbnb is VRBOs. VRBO is a platform that allows homeowners to list their home or spare room for rent on a long-term basis.
VRBO was the first platform that allowed homeowners to do this, and it has been operating since 1995. Because VRBO was one of the first in the space, it has a first mover advantage over Airbnb and that is there are more properties on VRBO than on Airbnb. In addition, VRBO stands out from Airbnb in several ways:
– It’s more focused on family travel and longer-term stays (30 days or more).
– VRBO’s partnership with Expedia and Hotels.com is set to increase exposure for their vacation rentals in 2022.
– VRBO supports direct communication between hosts and guests before booking on the site.
Despite Airbnb’s existing threats, the most important factor of running a successful Airbnb business is having a place renters will want to stay at. With that said property management firms can have the best marketing and advertising efforts in the world, but if their space isn’t up to par, repeat bookings will be uncommon.
3 TIPS TO MAXIMIZE YOUR AIRBNB BUSINESS
The strengths highlighted in the SWOT analysis indicate growth potential for all Airbnb businesses. However, the SWOT also indicates that these hosts and property management firms address potential threats and opportunities related to its external factors. The following should be what a property management firm’s top three organizational priorities for their Airbnb properties:
Setting up and improving customer service. Airbnb currently uses Twilio to integrate marketing communications (IMC) that address the increase of customer engagement by effectively communicating its messages through multiple channels. However, while having bots behind the screen is great for simple queries, hosts should still ensure that there is a person to contact for more complex issues. According to fonolo “ 75% of consumers will still choose to interact with a real person even as the technology for automated solutions improves”. This strategy can help property managers establish a reliable brand image for their short-term rentals.
Developing an effective management structure for efficient operations. Although the flat management structure is efficient for quickly expanding the business, it may constrain the implementation of global strategies or expansion of properties for hosts . Therefore, property management companies should develop a more structured Airbnb management approach with clear roles and responsibilities in order to effectively manage its international operations.
Focusing on seamless transactions to mitigate potential risks. Since the sharing economy has various regulatory issues, Airbnb must focus on risk management to mitigate potential risks associated with lawsuits and other legal problems related to hospitality regulation, discrimination, product liabilities entailed by home-sharing activities, etc.
With an all-in-one service platform it takes care of all the necessities for Airbnb guests by handling their meals, their transportation, their activities, etc. Moreover, focusing on cashless, minimal interaction helps to ensure that the guests and renters have minimal chances for exposure to covid.
The fact that Airbnb is essentially just renting out your own space, with little additional costs and investments, has made it one of the hottest business niches of this decade. But with its popularity came a growing demand for an efficient business model. One that can handle the increasing influx of clients and bookings that the old model could not.
It’s no longer enough for property managers to just list your properties on the Airbnb platform and wait for the bookings to come pouring in. You have to make sure that you provide an experience worth coming back to, and that you’re available 24/7 to help them with their needs.
And that means setting up your own:
Hiring a virtual assistant for your property management firm can ensure that your Airbnb properties are well taken care of in the standards you aim for. They help you grow your business and improve your services to better fit your tech savvy guests of today. Moreover, you won’t have to ever worry if you’re falling behind the virtual trend.
WHY YOU NEED A VA TO ACHIEVE YOUR PM GOALS
From ensuring that your Airbnb business is running smoothly to satisfying your customers and taking care of your employees, there are many things that must be managed and maintained on a daily basis as a property manager.
Outsourcing is the practice of hiring another company or person to perform services for you. It is typically done to save costs and time, but it can also help boost employee morale, open up new opportunities, and allow more flexibility.
With that said, managing an Airbnb often requires basic administrative tasks, but it’s difficult to find workers who can reliably perform these tasks at an affordable rate. Property managers should not have to waste their hours trying to get a cleaning crew to fulfill its obligations or dealing with unruly Airbnb guests at two in the morning. By getting a virtual assistant, they would take care of all the messy bits so you won’t have to.
Virtual assistants cost as little as one-third the cost of hiring a full-time employee locally (sometimes as low as $4-$6 per hour), and are highly capable of doing the simple tasks required to help you run a credible Airbnb business. They are the easiest and most cost-saving way for property management companies to make sure their Airbnb properties are booked at all times, allowing property managers to better focus on improving the overall business.
Hiring a virtual assistant can help you meet the three pointers highlighted above, here’s how:
- Managing customer engagements.
If you have multiple properties listed on Airbnb, chances are you already receive hundreds of messages weekly concerning various inquiries. And while you might be able to handle this at first with Airbnbs Twilio app, it can soon become overwhelming once your listings start getting more visibility and require more than the basic information. The best way to handle this is by hiring a virtual assistant who can take care of all your correspondence with guests, partners, landlords while you are away.
It’s about your staff being trained to make the best use of their time on the front desk (virtually speaking), and to build brand loyalty by creating an exceptional guest experience.
- Streamlining processes.
A virtual assistant can help you to smooth out the processes involved in running an Airbnb business. They can streamline your guest communication process, automate your follow-up emails and scheduling of bookings, and keep track of all the guests who have stayed at your properties.
In addition, a virtual assistant is an excellent resource during the off season. With an extra hand around, you can streamline the process of getting your properties ready for visitors. They help arrange for your listings to be maintained, keep track of bookings, and manage any other administrative tasks so you don’t have to worry about it yourself.
It is imperative that the cautious tech travelers of today feel a contactless and seamless transaction with you. These days, having a strong online presence determines your future capabilities.
- Delegating tasks for a more clear process
It’s hard to manage multiple Airbnb properties by yourself, especially when there are so many tasks that go into managing an Airbnb property. One of the best things about hiring a virtual assistant in your property management firm is the fact that you can delegate certain tasks to them in order to streamline the operation. This way, you don’t have to spend hours each day trying to manage everything yourself.
For example, you can have your virtual assistant handle communication with Airbnb guests, from responding to inquiries and emails from potential guests all the way through to follow-up emails after their stay has ended. This way, nothing slips through the cracks and all communications are handled in a timely manner. You won’t have to worry about losing track of things or making mistakes in your communications with guests.
Property managers are able to better use their available resources because virtual assistants allow them to focus on scaling their Airbnb business rather than spending time on administrative work.
Additionally, hiring a virtual assistant can be of beneficial value to your company’s revenue growth. While Airbnb’s are forced to reduce the prices of their rental listings due to increase in competition, hiring a virtual assistant to manage your day to day activities reduces your overall cost by at least 40%.
Saving and cutting on costs allows you to be able to aggressively compete with big names because now you are able to afford the reduced rental price.
If you want to grow your Airbnb business, you’ll need to be intentional about how you scale. Outsourcing is a great way to focus on the parts of your business that matter most, and prioritize your core opportunities.
OUTSOURCING TO PROTECT THE FUTURE OF YOUR BUSINESS
The truth is, it’s not that simple to hire a VA from somewhere in the world and expect them to perform well straight away. You need to be able to spend money for training, employee benefits, as well as overheads. It can be an expensive ordeal for you and your company to go through especially if its just for one or two VAs. Not to mention, if this is your first time hiring a VA you would need to ensure you know what your doing or else this could be detrimental to your time management efforts and professional reputation.
For property management businesses seeking to outsource their business processes, choosing a credible firm can prevent the common mistakes that plague most companies that choose to do it alone. Here are two important advantages of why you should partner with a BPO instead of going solo:
- Outsourcing firms take care of all the hard work so you won’t have to. They go through a rigorous screening process to ensure they hire only the best virtual employees for you.
- BPO’s also train their VA’s to make sure they are up-to-date with the latest technologies and trends so they can stay competitive.
- Another advantage of working with an outsourcing firm is that you don’t have to worry about managing your workers or dealing with issues like payroll, benefits, taxes, etc. because all of this is handled by the BPO firm themselves.
- Moreover, good BPOs document your workflow and curate effective systems and processes for your organization to implement. This ensures your in-house team and VAs are performing at a high level at all times.
Introducing Rocket Station, a leading business process outsourcing company that helps real estate and property management businesses increase efficiency, cut costs and save time. An all-in-one platform that makes it easy for you to affordably hire virtual experts who have proven track records in growing real estate and property management businesses.
All you just need to concern yourself with is how things progress and whether or not you are happy with their services before deciding whether or not to continue working together in future.
As Airbnb hosts are calling more on property management companies to help manage and run their short-term rentals, it is important they reduce their costs but increase efficiency to beat out competitors in the industry.
We live in a digital age and the property management industry is no exception.