The pandemic has upended our perception of remote work. More professionals than ever before are spending time working from home and even working while traveling. This creates a unique opportunity for entrepreneurs looking to start an Airbnb.
Before you jump into starting your own vacation rental business, you’ll need a business plan. This article will cover the steps to create your Airbnb business plan, along with some tips to run it successfully.
How to write an Airbnb business plan
Starting an Airbnb business plan might seem daunting, but keeping it light is the trick. You don’t need a plan that is hundreds of pages long. Instead, start with a one-page plan that you can update as your short-term rental property business grows.
Noting key factors surrounding your business like the market, financials, and more will help you in the planning process—and keeping things brief and viable will help you better manage your new Airbnb business.
Here is what to include when writing your Airbnb business plan.
1. Why are you starting your Airbnb business?
What motivates you to start a vacation rental? Are you passionate about travel and cultivating a rich and inviting experience for others? Do you just have a nice spare room you’re looking to rent out? Looking to take your first step into full-fledged property management?
Whatever the reason, make note of why this business matters to you and wrap in your value proposition (how you promise to deliver value to others out of this business). What is it about the property or surrounding area that sets you apart?
The entrepreneur inside of you might see this new shift to work-from-home as an opportunity to create an enticing oasis for professionals. Maybe there are several large events or seasonal sports in your area and you see this as an opportunity to provide a rental space for visitors. Or perhaps you find yourself wanting to travel for extended periods of time and would like to recoup some of your expenses by renting out your house.
You don’t need all the details right away, but you should have an idea of your value. It will point you in the right direction with actual research. Remember, passion will help fuel your Airbnb— strategic planning will ensure progress and growth.
2. Research the market
The research phase should not be skipped. You need to know what the competition looks like and how you can position your rental within the current real estate market. While there are plenty of ways to take this on, we recommend you focus on the following:
When planning your home rental business, consider your location and the demographics in the area.
- What type of people does the area attract?
- How will that influence the type of Airbnb experience you create?
- Does the nature surrounding your location draw in adventure-seekers and families looking for a remote getaway?
- Are the bustling streets by your rental space calling the names of young travelers looking to explore the big city?
Understanding what you and your location can offer is the first step in identifying who will want to stay at your Airbnb. Or in other words, who your ideal customer will be.
With research in hand, it’s time to get to know your target customers and understand what attracts them. The type of people in the market will determine what amenities you should provide such as free parking, Wifi, air conditioning and heating, a washer and dryer, etc. Remember, you need to consider people living in the area along with those that are traveling to your market.
Accessibility and amenities
Beyond the basics, it’s important to think of the accessibility of your location and what you can do to optimize it– are there ramp options as well as staircases? Can you install grab-bars in restrooms, avoid cluttering spaces for better wheelchair accessibility, etc.?
With the increase in people working remotely, you should also consider how work-friendly your Airbnb stay is. Is there a laptop-friendly station, a strong Wifi connection, good lighting for video calls, etc.? For travelers with kids, are there coloring books, games, and other fun activities or items to keep them entertained?
Thinking about the different kinds of people staying in your area and what accommodations they might like to see will really help your Airbnb business stand out from the others in your area.
When researching the market, you need to explore your competitors. This can be other Airbnb listings, hotels, motels, month-to-month leases, etc. What do these competitors offer that your stay might not, and what can you offer travelers that the other locations might not be able to?
When considering competitors, you should broadly identify the number of customers in the market at large. From there, refine that into the segment of customers you are choosing to focus on (and who you believe you could reasonably book). You will need to also consider the amount of available time in the year you would like your rental space to be available. In many ways, that will ultimately dictate how many customers you can realistically service.
Still unsure how to best accommodate your guests? Consider having a family member or friend stay in your Airbnb for a night or two and give their honest review. They may provide a fresh perspective and give you some pointers on how to elevate your Airbnb business from a good stay to a great experience!
3. Promotional strategies
A big part of finding success with your Airbnb is how well you advertise it.
When promoting your Airbnb business, you should outline your sales channels and marketing activities that will attract customers to book with you. Consider how you will position the property—what are the benefits, little perks, and specialties of your stay that you’ll showcase? Highlight what is worth visiting in your area, and really illustrate the unique kind of stay that your customers will have.
You can also consider partnering with local businesses to elevate your customers’ experience. Think about incorporating towels and blankets from a local boutique, a few fresh fruits from the farmer’s market, or discounts from a local restaurant or museum.
Remember to think like a guest—keep things simple, intuitive, and friendly. Utilize features like automated booking or reminder apps, timed locks with personalized codes, and more to help make the experience easy, comfortable, and memorable.
4. Financials and pricing
When setting up your Airbnb, you should expect some upfront costs to get your stay ready for guests. To start, you will need to consider a fresh coat of paint, furniture, lighting, internet, air conditioning, appliances, decor, etc.
From there, consider what ongoing expenses will look like. How much do you expect to spend on cleaning, maintenance, Wifi, towels, and other amenities? Bucket these items in categories to keep track of.
You should also review what your revenue streams will be. Consider the difference in revenue from short-term vs long-term rentals. Will you charge more for special occasions or attractions, or will you create promotional bundles surrounding certain events?
With these things in mind, you have the start of your sales, expense, and cash flow forecasts. These provide an idea of how you’ll need to price things in order to be profitable and tell you whether or not your business is viable.
5. Looking ahead
It’s important to set milestones for the next year of your business. These can be related to revenue, total bookings, additions to your home, easing your stay with automation, or anything else that makes your Airbnb business successful.
You should also outline who will be involved (or who you may want to partner with in the future). If it’s just you, add yourself and call it a day. Milestones are important because they tell you if you are on track to build a successful business. If you are not reaching your milestones, then it is time to revisit them and potentially revise them.
Tips to run a successful Airbnb business
Writing your business plan is only the first step in setting up your vacation rental. There are many other important aspects to the business process that will help you grow and succeed. Below are a few tips to help raise awareness, simplify processes, and better your vacation rental business.
Host on multiple services
With the increased popularity of Airbnb, prices and demand have also been largely on the rise. This can cause customers to look across different booking platforms to find their desired rental space. That’s why hosting your stay on multiple services will allow your rental space to reach a broader range of potential customers.
Sites like Vrbo, Booking.com, The Plum Guide, Agoda Homes, Homestay, and Sonder are just a few examples of Airbnb alternatives. Hosting on multiple services ensures that you are not solely attaching your business to a single platform. This provides you with multiple options, when a platform increases its fees, makes poor updates, or even goes under–potentially sinking your business in the process.
Automate scheduling and security
There are several factors to keeping an Airbnb business running that can now be scheduled through apps and other technology. Things like responding to messages from guests, adjusting pricing and calendar booking, writing guest reviews, scheduling cleanings, and other daily tasks can be automated as an Airbnb host.
You may also consider utilizing technology like smart locks which allow your guests to check in and out of their Airbnb on their own. This contact-free check-in allows for guests to enter their space with ease upon arrival, and gives you the extra freedom of not having to track them down to hand over a key.
You will want to include this investment in your startup costs and forecasts. This will help you determine how much to invest in, weigh what scheduling and security tools are important, and tie other investments in your business to specific milestones or revenue totals.
Encourage feedback and reviews
It’s important to be present with your guests (even just virtually) and remind them that you are there if they need anything while also respecting their privacy throughout the duration of their stay. Don’t be afraid to ask for feedback and honest reviews from your guests during and after their stay.
This can be as simple as sending a quick questionnaire virtually or leaving a little notepad and pen in the Airbnb rental for them to handwrite themselves. Receiving honest feedback and reviews will help you learn as you go and ultimately create the best possible Airbnb experience for your guests.
Lastly, it’s important to always respond to your guests’ questions in a timely manner. In order to keep your guests comfortable and satisfied, you should stay on top of your messaging with them.
Set notifications on your phone or device and always be ready to answer questions or potential problems your guests may run into. The quicker you can respond to your guests, the more satisfied they will be with the experience that you offer.
Download your free Airbnb business plan template
If you’re ready to start your own Airbnb business, you can download our free Airbnb business plan template from our library of over 500 sample business plans. Get started today, and see first-hand why businesses that plan grow 30% faster than those that don’t.