AirBNB vs Conventional Rental
In terms of business setup, AirBNB is a hybrid between active hotel management and passive rentals.
AirBNB rentals make sense in certain locations where tourists or traveling businessmen are looking for short-term accommodation.
- AirBNB need on-site management and housekeeping, management benefits from scaling up to many rentals
- There is a risk of regulation by the cities authorities
The AirDNA platform scraps AirBNB data and gives income and occupancy estimates for any city in the world. If one buys flats in a touristic area, one can check the data and decide whether to rent as AirBNB or conventional rental.
Mashvisor allows comparing AirBNB and long-term rentals in the US. There is no automated long-term rental available for general locations outside of the US.
The two drivers of AirBNB returns are (1) average daily rate (ADR) and (2) occupancy. - Successful AirBNB delivers good value (low daily rate) and have very high occupancy. - Less desirable areas still have a minimum ADR under which the landlord will switch to long-term rentals, and low occupancy is indicative that the rental mode chosen is less profitable.
AirBNB is about management, but also about attractiveness and correct fit of the location.
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