7 Major Pros and Cons of Hosting on Airbnb

Airbnb is a rental service based on the ‘sharing economy’ model that offers excellent benefits to hosts and guests. The 5.6 million (and climbing) listings from across the globe show that Airbnb is a force to be reckoned with; however, Airbnb is not all cash and roses and it has certain downsides potential hosts should consider.

The pros of Airbnb hosting are increased income, flexibility, international exposure, and the protection offered by Airbnb. The cons of Airbnb include inconsistent income, potential damages, increased stress, and time demands. Airbnb tends to favor guests during resolutions despite being presented evidence.

If you are considering becoming an Airbnb host, it is tempting to be seduced by the lure of extra cash, but success takes hard work and may not be guaranteed.

So if you would like to know what advantages and disadvantages you may expect for being a host, read on.

The Pros of Airbnb Hosting

5.6 million global listings show that Airbnb is a lucrative and increasingly popular alternative to traditional long-term rentals.

The ‘sharing economy’ based rental service delivers financial benefits, enhances cultural cross-communication, and forges relationships between host and guests that may continue long after the guests have left the accommodation.

There are numerous benefits to being an Airbnb host, and they are not all strictly financial. There are social benefits as well, in terms of the human experience of forging relationships with a variety of guests from around the world.

First and foremost, the most obvious benefits to Airbnb hosting are financial.

Generate an Income

There is no doubt that renting your space or property based on a nightly rate is far more lucrative than traditional tenant rentals. Besides having control over who uses your space and when they use it, there are definite financial advantages for choosing the Airbnb rental route.

For example, if your area’s average monthly rentals are $2000 per month, you have a rental worth $24,000.

If you decide to turn your property into a short term rental on Airbnb, you may have an average of 75% occupancy (273 days). If your nightly rate is $150, you stand to make $40,950, which is a substantial profit.

This profit is not applicable in all Airbnb rentals, however, and potential Airbnb investors should take into consideration the following factors:

• Your location. You should factor in your rental location in relation to attractions such as beaches, theme parks, and where your rental is situated, such as remote or metro areas.
• The type of rental unit. If you are offering a room, your profit margins might not be as high as if you plan to rent an apartment or house.
• Your target demographic. If your property is more suited to backpackers and students or are of a more rustic bent, your nightly rental profits will not be as high compared to having a long term tenant.
• Comparative rentals in your area. An Airbnb Rent calculator can give you a better idea of your local rates and whether it would be worth your while using the Airbnb platform.

Greater Flexibility

Airbnb rentals have the advantage of greater flexibility and control of your rental property than the traditional single lessee route.

You have the power to adjust the availability of your rental to suit your changing requirements, unlike conventional rentals. For example, you are free to block off dates when your rental is not available, which can be super handy if, for example:

• If you have plans for vacations and will not have the time and opportunity to meet and greet and host your Airbnb guests, you can easily block off those dates for potential reservations.
• There is a special occasion, or you would like to share your rental with visiting friends or relatives, you have the flexibility to offer up your rental. This flexibility would be impossible with a single-tenant renting your property full time.
• If you need time for repairs or renovations, it would not be necessary to ask your tenant to vacate the rental, which could be problematic. You can merely block off the dates without inconveniencing any existing tenant.

You Get to Vet Your Guests

Everyone who has rented properties in the past will understand that sometimes people who look good on paper can turn out to be nightmare tenants.

The great thing about Airbnb is that guests are reviewed alongside their hosts, and you can get an idea of who you are allowing to use your rental. And if you get a bad guest, you only have to deal with them for a very short time.

Often prospective full-time tenants, especially ones with bad track records, can create fake references with friends or relatives to back up their story. You will be faced with how to remove badly behaved tenants from your property.

Once you are committed to a six-month or yearly rental scheme is often a battle to be rid of unruly or irresponsible tenants.

Short term Airbnb rentals allow hosts to identify ‘repeat offenders’ and tenets that often give negative Airbnb reviews. With shorter-term guests who create havoc, it is a short term problem that you can chalk up to experience.

Airbnb gives owners the right to establish their own rules of conduct as long as they are not illegal or in contravention of community standards. If your guests disobey, you are well within your rights to ask them to vacate your property.

Also, Airbnb’s Host Guarantee helps to protect Airbnb owners from guests who may damage their rental property.

Airbnb Protects Your Property

Airbnb is committed to providing safety and trust in the Airbnb community around the world.

Unlike many other hosting platforms, Airbnb has a protection program in place to protect hosts from personal liability and cover potential damage to Airbnb properties by guests. The two central policies offered by Airbnb are as follows:

Host Protection Insurance

Airbnb Host Insurance covers their Airbnb members from liabilities related to injuries to their guests or damage to guest property incurred while in the Airbnb rental.

There are exclusions to the benefit of Host protection Insurance, and these include:

• Host protection does not extend to those who offer Airbnb spaces through the Airbnb Travel or LLC
• Hosts in mainland China
• Hosts situated in Japan
• Airbnb members of the “Hosts of Experiences”

This primary liability cover may provide host protection for up to $1,000,000 in the case of injury or damages.

The Host Protection Insurance covers:

• Your legal liability for bodily injury to guests or others
• Legal liability for damage incurred to guest’s or other’s property
• Your Legal responsibility to damage to common spaces like lobbies or neighboring properties caused by guests or others.

What the Host Protection Insurance does not cover are:

• Intentional damage or injury that is not accidental
• Damage to your property or your belongings (see Airbnb’s Host Guarantee)

Airbnb’s Host Guarantee

Airbnb provides protection for Airbnb hosts for damage to their property and belongings for up to $1,000,000 in damages.

The same exclusions to the above Host Protection Insurance apply to this coverage, so prospective Airbnb hosts should ensure that they are covered.

The Guarantee gives Airbnb hosts peace of mind that their rental property and amenities are protected from potential harm. Airbnb’s Host Guarantee covers:

• Property damage that is caused by guests
• Damage to hosts belongings caused by guests
• Damage that may be caused by an assistance animal.

What Airbnb’s Host Guarantee does not cover are:

• Stolen cash or securities such as savings bonds or stock certificates
• General wear and tear damage
• Injuries to pets and livestock
• Injury to guests or others or property damage (see Host Protection Insurance)

Other Benefits of Airbnb Protection

Beyond the above protections, Airbnb offers hosts other protections that they would not receive in a traditional rental situation unless they took out (often costly ) personal insurance. Airbnb also provides the following protections as part of their commitment to host safety:

• Identity verification option. Hosts have the choice to have their potential guests provide personal documentation to Airbnb before booking confirmation.
• A secure messaging platform. Airbnb offers a secure way to allow hosts to communicate with their guests and resolve any potential issues.
• Global community support. Airbnb provides around the clock support from a worldwide community support team should anything occur to you, your guests, or your rental property.

The Benefits of Being Part of the Airbnb Platform

With active listings of more than 5.6 million and available in 100,000 cities in over 220 countries worldwide, many property owners have seen the Airbnb platform’s advantages.

Hosts get to choose their service fee structure that either splits Airbnb service fee between the host and guest (3%vs 14.2%) or a full host service fee (14-16%) on booking confirmation.

There are many benefits from joining Airbnb that deliver distinct advantages to those who wish to rent out their property. These benefits include:

• A wide variety of property types. Airbnb includes a wide variety of properties, from single rooms to houseboats and even genuine castles.
• Free property listing. Airbnb offers free property listings with photographs, descriptions, and even an optional user profile to introduce yourselves to your guests.
• Airbnb hosts determine their own rates. It is entirely up to each Airbnb host to decide their rentals’ value and charge accordingly from nightly, weekly, and monthly.
• Become part of the Airbnb database. Rentals listed on the Airbnb database benefit from customizable searches according to amenities, property type, and the host language. Specific rental locations may benefit from searches near famous sites such as “Near Yankee stadium.”
• Expanded services. Airbnb is continuously updating its guest enjoyment by adding attractions such as Airbnb experiences offered by their hosts, such as classes, restaurants, and sightseeing.
• Airbnb protection. Airbnb offers Host Guarantee and host protection insurance as well as community support and identity verification services.

Airbnb Social Advantages

The ‘sharing economy’ makes it possible for members of a vast social network to interact directly and share personal experiences.

Hosting people in an Airbnb setting gives both owners and guests an opportunity for cross-cultural communication, especially when guests are from another country.

Airbnb increases the chance to forge and maintain social connections from online to offline on a global scale. Airbnb has been increasingly delving more into the experience factor of Airbnb benefits rather than the commercial side of the venture.

Often, Airbnb owners are in the same property as their guests, which increases the possibility of forming relationships in the rental process.

Many Airbnb hosts report that they had good experiences with their hosts, and retired hosts found guest interactions enjoyable and enlivening. A survey even noted that Airbnb hosts who shared their homes increased their trust and confidence levels when dealing with new people in their everyday lives.

Easy for Beginners to Get Into the Market

Compared to traditional housing agencies, Airbnb is much easier to join, and the process is user-friendly.

Prospective Airbnb guests merely have to upload the relevant documents, photos, and descriptions and wait for Airbnb’s manual check. Local housing agencies can not provide the scope to reach the global guest market.

With mobile app-based technology, prospective Airbnb hosts can use the internet to cast their nets wide for interested parties on a simple, accessible, and international platform. The enhanced flexibility, ease, and mobility of the Airbnb platform provide the greatest reach for a relatively straightforward sign-up process.

The Cons of Airbnb Hosting

Although the advantages of Airbnb hosting are abundantly evident in its increasing popularity, there are a few downsides to this novel form of rentals. Not every Airbnb story is a successful one, and host experiences can differ dramatically depending on your area.

The most significant challenges to Airbnb hosts are primarily based on conflicts between business and everyday life, the burden of extra physical activity, and the financial stresses of deriving a consistent income from their Airbnb rental.

Before being seduced by the idea of financial gains and the plus side of guest interactions, you should consider some of the disadvantages of being an Airbnb host.

Running a Short Term Airbnb Rental Can Be Time-Consuming

For those who use Airbnb rental income to supplement their salaries, the increased organizational requirements for a successful Airbnb rental can be tiring and time-consuming.

Specifically, in the field of short term rentals, hosts need to clean, change beddings, and make the rental perfect between every guest departure and arrival. Sometimes in the same day with only a few hours in between check-out and check-in.

For those who use Airbnb as a business, cleaning services and rental property managers may take much of the physical and time constraints off the host themselves. The average person renting a room or property while maintaining a busty work schedule may be too much.

Airbnb penalizes hosts who are not online quickly for responses from Airbnb guests, and these guest inquiries may be quite a time-consuming affair such as:

• Potential guest inquiring about the rental
• The necessary information for the guests who will arrive shortly
• Issues and queries of guests currently staying in your Airbnb rental

Running an Airbnb rental can be more of a hands-on affair than hosts realize arrivals, departures, cleaning, responses to messages can impact your personal time.

Inconsistent Income

While it is evident that you will generally make more money out of short-term Airbnb rentals than the traditional long-term tenants, it does come at a cost. The advantage of long term rentals is that you will have a regular and consistent monthly income (barring some unexpected instances.)

The consistency of long term rentals is that you can budget each month with certainty in mind or a consistent sum. Airbnb can be seasonal and fluctuate according to several factors making your earnings more erratic and less dependable.

Rentals tend to follow seasonal trends, not to mention external factors such as COVID-19.

As an Airbnb host, it is usual to block out a day between guests’ arrival and departures to ready the new tenants’ space, which reduces your occupancy percentage. The increasing competition is a swelling Airbnb market; it is not always easy to stand out and get noticed.

And every day counts.

Expenses May Be Higher Than Traditional Rentals

In the fight for Superhost and Airbnb Plus certification, Airbnb owners may find it increasingly expensive to offer the kind of service, rental design, and amenities to ensure their continuing status.

A traditional long-term rental does not require upgrades and expenditures to provide your tenant comfort and luxury. Prospective Airbnb hosts should factor in costs such as:

• Providing high-quality furnishings, decor, and amenities that have become standard in Superhost rentals. The competition between Airbnb hosts has elevated the expected levels of comfort and quality that Airbnb guests have grown accustomed to, which often entails a substantial expense on upgrades in high-end units.
• Food. It has increasingly become the norm to provide guests with essential food items in the fridge and potentially costly items such as coffees and alcoholic beverages. With the stiff competition, these added extras will draw better ratings but may hurt your budget even more.
• Quality entertainment and wifi. While single long term tenants would generally need their own internet connection, Airbnb guests expect the facilities to be part of their package when they choose an Airbnb rental. Reliable wifi and entertainment access to streaming services such as Netflix, Hulu, or Amazon Prime are becoming standard in Airbnb rentals.

Problems With Jurisdictions

Depending on your Airbnb property’s location, you might find yourself facing restrictions on how you may operate your Airbnb rental according to the local laws. According to the city’s zoning and administrative codes, some cities will not allow hosts to offer short-term rentals.

In San Francisco, the laws restrict owners from renting out your property unless it makes up your primary residence (the domicile you occupy for 275 nights per year.) These laws further ensure that you may not provide more than 90 days a year of ‘unhosted rentals’ without your active presence.

Studies have shown that areas with high Airbnb rentals can drive up property prices and make it difficult for locals to find fair priced lodgings in their own city. These laws are set to become increasingly adopted as more surveys show the longer-term effects of Airbnb rentals on the property values and residents’ quality of life.

Maintaining Ratings Can Be Stressful

Maintaining Suprehost and Airbnb Plus status has become increasingly expensive and time-consuming. These certifications from Airbnb also definitely favor the wealthier Airbnb hosts who may attract guests with high-end amenities, flashy decor, and state of the art entertainment.

The average middle-class Airbnb hosts suffer because they cannot provide the expensive add ons to ensure 5-star reviews and increasingly struggle to attract guests whose raised expectations require high-end amenities.

Maintaining a Superhost or Plus certification may also cause stress, with hosts needing to deliver more and more services and luxuries to ensure they keep their 5-star ratings.

As other hosts raise the bar in their rental offerings, other hosts have to keep up, causing pressure both financially and psychologically.

Potential Damages

Although the Airbnb Host guarantee is comprehensive, it does have a host of exclusions that can leave you financially depleted lest you undertake your own personal insurance policy regarding items that may be irreplaceable due to rarity or antique status.

Sentimental objects such as photographs or personal documentation are also something prospective Airbnb hosts should protect themselves. Although destructive and negligent guests are not the norm in Airbnb rentals, owners should ensure that artifacts, items of sensitive nature, and sentimental value should be stored securely or removed from the rental premises.

Your pets or livestock are also not covered, which is a sobering thought about the nature of that particular exclusion.

Should a guest harm your pet through negligence or intent, veterinary bills are quite a cost to bear, so you should consider pet insurance or create divisions to keep your pet from rental spaces.

Success Might Be Gradual

Although the statistics of increased earnings and comparative profits between standard rentals and Airbnb rentals may seem enticing, Airbnb rentals are hardly ever a cash stream from the get-go.

It takes time to build up your reputation as a desirable rental commodity and require corresponding efforts and potential expenses.

For an Airbnb newbie, you are at the mercy of guest feedback that supports your descriptions and photographs on your listings. Airbnb guests are voraciously tech-savvy and rely on guest ratings to decide their rental choices.

Those starting in the Airbnb businesses may need to use attention garnering methods such as new host discounts and reduced initial rates to attract guests. Airbnb owners need to have a track record so that potential guests may feel assured that they won’t step into a nightmare.

As often as Airbnb owners have had horrible guest experiences, a corresponding amount of guests have experienced terrible hosts. For this reason, ratings are an invaluable tool to ensure that a potential rental is a safe option.

So the types of guests you’re able to get in the beginning, before you have any reviews or reputation, will be hit and miss.

Conclusion

There are plenty of benefits to hosting an Airbnb property if you have the time and the energy to make it work for you.

Not only do you get to make money from an unused room in your home or your rental, but you may work on your social skills and meet new and interesting people.

However, hosting an Airbnb is hardly as simple as it may seem, and you need to weigh up whether it is worth your time and peace of mind. Definitely check out our other articles to help you in your hosting venture and consider subscribing to our email list below!