Sometimes Google Translate is great. I mean, sometimes a word or a phrase is a little off, but generally it’s quite understandable. But sometimes you get this:
Det här låter skum! Vi kan inte gå in på Airbnb! Har du erfarenhet när det gäller återbetalningar? Det står att vi skulle ha pengar inom 5-7 dagar nu är dag 12 och vi har ingen åning hur detta fungerar?
This sounds foam! We can’t go into Airbnb! Do you have experience regarding repayments? It says that we would have money within 5-7 days now is day 12 and we have no crap how this works?
I never cease to be amazed how impossibly difficult various “experts” make it seem to get started on Airbnb. I just happened across one on the internet who said, “Amenities need to be meticulously clean, of quality, be relevant and coordinated tastefully.” I think she was selling interior decoration services.
People rent out tents in their back yard and get five stars. Look at this listing for a sailboat. 123 reviews, five star-average, Superhost, as of this writing.
No frills accommodations. Great for nature lovers/outdoor enthusiasts/adventure travelers! Budget “boatcamping’ w/NO AC JUST FANS. The 22-foot sailboat is simple, cute & all yours. It’s moored in a peaceful shallow channel, 4-5 miles (driving) from Old Town/Duval St. THE BOAT IS NOT IN A MARINA. Access to shore/Boat is a 5 minute kayak paddle with FREE Unlimited use! Designed for 2 people, it’s possible to fit 3. Camping means Solar shower, porto potty. No NIGHT check in;Arrive by sunset!The space
This is primitive CAMPING on a small, 22-foot boat & is NOT in a marina, but a shallow channel that you NEED to KAYAK to.For this reason you should have experience on kayaks and be able to propel yourself through the water without assistance – it can be windy. You should be a capable swimmer in case of emergency. The boat is not attached to land.
The point is: you can get started very easily. You don’t have to make big, up-front investments. Start with what you have, see if you like it, see if it works for you, and then begin to upgrade.
The trick is to be very upfront in the description. You need to set expectations in the first sentence. It could be, “Old, unrenovated apartment sparsely equipped with well-worn, second-hand furniture.” Set your price accordingly, and guests will be happy.
Hello, my name is Mya, and I have a quick question. My flight is scheduled to arrive at 11:10 pm on the 8th can I still check in if anyone doesn’t book for the 8th it will still technically be the 9th once I arrive to your home after midnight?
There are dozens of web-based services for managing Airbnb, HomeAway/VRBO, Booking.com, and all of the other short-term rental sites. (Actually most of them just manage Airbnb plus maybe one of the other major platforms.)
They all claim to be a “channel manager”. This term is hopelessly, meaninglessly vague. And yet the marketing materials all just say, “It’s a Channel Manager! Pay upfront for a year!”
I did a web-based demo last night and I asked directly, “I don’t know what a Channel Manager is. What is it, exactly?” And I got this completely meaningless, completely unhelpful response:
Well, the Channel Manager handles all of the connections to the booking platforms.
I wanted to scream. What exactly flows across this connection? Because it really matters. Here’s an inside guide:
Rudimentary Channel Managers
The basic capability is calendar synchronization. Yep, that’s it. And that’s all that some products do in this category. When one platform gets a booking, they see it (hopefully quickly) and they block out those nights on all of the other platforms (also hopefully quickly). This prevents double-booking.
Another fairly basic capability is consolidating messages. This is also called “unified inbox”. When guests on any platform send you a message, the channel manager grabs the message and imports it. This allows you to read and respond to all of the messages in one place.
Of course, you can read and respond to all of your message right from your email box, and that’s just one place. Typically a “unified inbox” will also display the booking details and will display the messages in a nicely formatted manner.
More Advanced Channel Manager Features
Here are capabilities that most “Channel Managers” don’t implement, but some do:
Pushing prices to each platform
Pushing minimum and maximum stays to each platform
Pushing listing descriptions to each platform
Pushing photos to each platform
What is a PMS?
Well, as the salesguy helpfully explained:
It’s the meat and potatoes of the system. It’s where you manage everything about your property.
I haven’t figured this one out yet. I’ll keep you posted.
This the second part in my review of dynamic pricing software for Airbnb. I’m looking in detail at BeyondPricing, Wheelhouse, and PriceLabs. See the first installment here:
The Quick Summary
The starting point for using each of these packages is to set your “base price”. This is a nightly rate that is supposed to be the average of your nightly rates across an entire year. If you charge $150/night six months of the year and $50/night the other six, then your base rate is $100/night.
Wheelhouse will actually calculate and recommend a base rate for you. The initial calculation is based on location, the characteristics of the property (how many people it sleeps, etc), and past booking history (if any). As time goes by, it watches how the listing performs, and it will refine the base rate up or down.
I use Wheelhouse and for the last four months have periodically recorded all of the recommended base prices in a spreadsheet. For my five listings that have more than two years of history, the recommendations fluctuated just 1-2% from Oct 15 to Dec 11.
But for my new listings, where there was no history, Wheelhouse started high and then gradually lowered prices, some more than others. Again, Oct 15 to Dec 11:
Dixie #2: $81 🠆 $77
Dixie #5: $73 🠆 $57
Poolhouse #1: $149 🠆 $126
Poolhouse #3: $101 🠆 $99
And then at the end of December I got an email from Wheelhouse saying that they had rejiggered their algorithm.
We’ve been listening to your feedback and working on — among many things — some exciting updates to the foundation of Wheelhouse Pricing: the base price model.
All of my prices dropped. The listings with 2+ years of history all dropped 2-3%, but the new listings dropped drastically:
Dixie #2: $77 🠆 $58
Dixie #5: $57 🠆 $47
Poolhouse #1: $126 🠆 $87
Poolhouse #3: $99 🠆 $73
How Wheelhouse Sets the Base Price
In addition to offering a specific recommendation for the base price, Wheelhouse makes an effort to explain where it comes from. Big thumbs up to Wheelhouse on both points. And yet, I find their explanation very frustrating.
A minor frustration is the chat button that covers the most important number. By repeatedly resizing the window I was able to figure out that it is $137. But that’s minor.
The real frustration is that there are three variables that I can immediately and easily tweak to change the apparent value of my listing: “sleeps”, photos and fees. And yet, of photos and fees, I don’t know which one to attack. And what’s this about “etc”?
I typically have 20-25 photos on my listings. I had real elsewhere that having lots of photos was important, but seeing it here spurred me into action. I called my photographer and told him to give me a lot more photos.
Then I thought to ask Wheelhouse support how many photos were needed. “About 10” was the answer. Hmmmm…. How about some help on “fees”? For very little effort Wheelhouse could break these apartment and offer another very valuable piece of information to owners.
How much will I get if I replace the sofa with a sofa sleeper (ie, couch that turn opens up into a queen-size bed) and increase “sleeps” from three to four? It’d be nice to know, and I’m sure Wheelhouse has the data. Maybe the topic of a blog post?
Sometimes I have no idea what potential guests are trying to say, but I still know that it is a very bad idea …
Good morning. I’d like to book your place feb11-12. It’ll be our last night together we fly out of FLL on Tuesday at 7am so it’s perfect. My question are the wall thin? No loud music that the issue its just because I’ve heard I can put on a show in the bedroom. He’d asked me to ask the host so we’re/he’s won’t be embarrassed and are asked to be quiet . Other than that I’m ready to book. I look forward for your response. Thanks
How should I set my prices? Are they too low? Too high? What should my cleaning fee be? How much higher should I set weekends? What should I do in the low season? How much can I charge on holiday weekends? Can I raise the price when there are special events?
These are incredibly difficult topics even if you just have one property on Airbnb. It just gets harder as you add more: you still don’t know the answers, and the work just multiplies.
Fortunately there are tools that can help you with pricing, both by recommending what prices to set and in automatically pushing those prices to Airbnb. And Airbnb offers SmartPricing. In fact, Airbnb pushes SmartPricing pretty hard. Why not just use it?
The smartest PhD data scientists, and lots of them
Lots of computing power
In other words: boat-loads of money and the “cool factor” required to attract the very best. It goes without saying that Airbnb wins on every point.
And yet, many people, including myself, have tried Airbnb’s SmartPricing and have found the prices to be way off.
The Alternatives to Airbnb’s SmartPricing
The independent tools are Wheelhouse, PriceLabs, and BeyondPricing. All three work about the same way:
You set a “base price”, which is the average of the daily prices that you want to set across the whole year.
They predict how demand will fluctuate day-by-day over the next year.
They use the demand prediction combined with secret magical algorithms to determine the delta, plus or minus, to apply to your base price for each day.
They automatically update Airbnb with your prices.
Let’s take a specific example. Here’s one of my nicest 1BR/1BA apartments in Fort Lauderdale:
Let’s say I set a base price of $100/night. Why $100? Each of the services helps you with that, and we’ll get to that in detail later.
BeyondPricing for a $100 Base Price
So based on the $100 base price, here’s what BeyondPricing recommends. As you can see, it’s wildly different than a flat $100/night. The peaks are weekends, holidays, and events in the Fort Lauderdale area. The valleys are the mid-week days. Fort Lauderdale is definitely a weekend market.
We also have a strong high/low season differentiation. Everyone wants to come to Florida in the winter when it is cold up north. Not so much in the summer when it’s 95 degrees (35 C) and humid.
Of the three services, BeyondPricing is the most extreme. It sets the highest weekend prices and the lowest mid-week prices. Holiday and special event periods are similarly aggressively priced. In the low season prices are rock-bottom.
In the graph above, starting from the base price of $100, the highest peak is $209/night, and the lowest valley is just $55. There is a logic to this, and I will discuss it in more detail in a separate blog post (coming soon!).
Wheelhouse for a $100 Base Price
Wheelhouse is substantially less aggressive. The highest recommended price is $184, and the lowest is $84.
Note: the dotted line represents bookings that are already made and the price they were made at. I just put this apartment on the market a month ago, and I purposefully underpriced it to quickly build up reviews. Read about my pricing strategy for new units on Airbnb.
PriceLabs for a $100 Base Price
PriceLabs is a little more agressive than Wheelhouse, but not by much. The peak recommended price is $219, and the bottom is $83.
(At this point, another clear differentiator becomes apparent: Wheelhouse and BeyondPricing are substantially prettier. More on that later.)
Looking More Closely
So now that we’ve seen the macro picture, how the prices take into account seasonality and vary across the year, let’s look at what happens at the day-to-day level. Weekdays vs weekends is a big question.
If you are in an urban market with a lot of guests who come for short extended weekend vacations, then you probably find that your weekends fill up quickly with two- and three-night stays. But Sunday night to Thursday night often remains unbooked, or you have to discount heavily to get them booked. If this is happening, it’s an indication that your ratio of weekend to weekday pricing is not right.
All three services provide calendar views that let you see day-by-day pricing along with some explanation of the pricing.
BeyondPricing High Season Pricing
I’ve kept the base price fixed at $100/night. My apartment is in Fort Lauderdale, Florida. It’s a warm-weather winter destination for people who want to escape the cold weather in the northern US and Canada. The high season is approximately December 20th to April 10th.
Here are BeyondPricing’s price recommendations for next January:
Monday, Tuesday, and Wednesday nights are cheapest. Thursday and Sunday nights are about equal, and Friday and Saturday nights are the most expensive.
And yet there are oddities. Why is Sunday, Jan 12th so expensive? It is $165, when the previous and following Sundays are $133 and $136. Hover the mouse over the 12th, and we see there is a $30 increase for a local event. What event? That’s a mystery.
But if we look at Monday, the influence of the event has disappeared.
Wheelhouse High Season Pricing
So now let’s look at Wheelhouse for the same period. Unfortunately I couldn’t get more than three weeks on the screen at the same time, so we can’t see all of January. But the main themes come through:
Much less agressive weekend vs weekday pricing
A general increase of about 20% over the base price for all of January.
Wheelhouse is unaware of this event on Jan 12th, but it thinks Jan 7th will be high demand.
Let’s explore what Wheelhouse has for Jan 7th.
PriceLabs High Season Pricing
The PriceLabs calendar is initially harder to interpret, but ultimately much more powerful. More on this later. For now, the sixes in the upper left corner are the minimum stay. For far-future stays I have a minimum of six nights. The upper left corner is the date, and of course the large number is the price.
While it lacks the wide range of weekend vs weekday prices of BeyondPricing, PriceLabs is across-the-board more aggressive. Prices are just higher. Let’s see what explanation PriceLabs gives us:
BeyondPricing in the Low Season
The low season is hard. I have a mortgage to pay, and in the low season I just hope to break even. A pricing mistake can be fatal because you can’t fill the calendar at the last minute by dropping the price a bit. To get the low season months filled, you need to be getting bookings steadily for months in advance.
Let’s see what recommendations each of the tools makes for September, which is traditionally the slowest month in Florida.
Tuesdays are priced at $55 compared to Saturdays, which are 63% higher at $80/81. Overall, prices are substantially lower than the base price of $100/night.
Wheelhouse is just flat across the board, with every night at $86.
PriceLabs has slight weekday/weekend differentiation, but not extreme. Other than October 6th, at $141, the differences seem to be in the 12-15% range.
Note, however, that September on average, is priced slightly above the base price of $100/night. This is strange given that September is traditionally the slowest month in Florida. Why is this?
I created the above screenshots at the end of January, approximately eight months before September. Anurag Verma of PriceLabs wrote to me to say,
Our algorithms apply something we call a “far out premium” to gradually raise the prices for far out dates (we’ve found this to be helpful in most urban locations).
As a result, the prices for summer/fall might be looking a little aggressive now, but will come down as the dates get closer. Same thing with Jan 2020 – the prices will come down as the month comes within the 2-4 month window (though seasonality will still keep them much above the base price).
This illustrates another key point about all of these products: how they work, and why they recommend certain prices, is pretty much a mystery. None of them publish long, detailed, insightful, analytic discussions of their algorithms. In fact, none of the publish much explanation at all.
I get this question a lot. There are two good responses:
Short response — I’m sorry, it is not.
The snarky response — actually the cleaning fee pays for the apartment to be cleaned before you arrive. So I guess in theory you could take the apartment uncleaned, but I try to provide a uniformly high level of service, so that’s not something I’m willing to do.