Australian Insights
The Big Gap Between Airbnb High and Low Income Earners
An enormous gap exists between high and low earners in the same neighborhood on Airbnb.
Many owners clearly put a lot of work into presenting their properties but end up as 'middle earners,' despite having a large number of reviews with high ratings.
The difference in earnings is the result of listing optimisation and price strategy.
At Airbooster we assess how your annual revenue ranks compared to your competitors, then we will work from there to improve your position.
One of the biggest myths among Airbnb hosts is that they have to accept a ‘market rate’ for their property; hosts assume that similar nearby places all earn around the same revenue (give or take some interior design or building age differences).
But what most don’t realise is that successful hosts earn twice or even three-times more than others for similar listings.
Airbooster has looked at the annual revenue of Airbnb hosts in Sydney and found an enormous gap between high and low earners.
Below is an example of apartments in the inner suburbs of Sydney covering Surry Hills, Newtown, Chippendale, Redfern, Waterloo, Erskineville.
One Bedroom Apartments
There were 87 one bedroom apartments on Airbnb in this Sydney inner city area; earning annual revenue from $30,800 to $95,200 where:
- Over half (45 properties) earned less than $60,000 in annual income.
- The top three hosts earned more than $90,000 - none were Superhosts and one person managed two out of these three top properties.
- The bottom four hosts earned less than $40,000 - and three out of these four were Superhosts (!)
Some Superhosts earned less than half than other (non Superhost) managers for similar properties in the same neighbourhood.
Two Bedroom Apartments
There were 43 two bedroom apartments on Airbnb in this area, earning annual revenue from $44,500 to $123,000 where:
- Almost one-third (13 properties) earned less than $70,000
- The top three hosts had annual income of over $100,000
- The bottom six earners earned less than $50,000 each
As in the case of one bedroom apartments, some hosts were earning less than half of other managers who had similar sized properties nearby.
Conclusions
This case study reveals significant differences in annual income among hosts of similar Airbnb properties. The study specifically examined one and two-bedroom apartments located less than 5km apart in inner Sydney, but similar patterns were observed across other Australian cities.
When evaluating individual listings based on their photos, descriptions, and reviews/ratings, determining whether properties are high or low earners becomes challenging. "Low-earner" properties do not always appear "cheap," and "high-earner" properties do not necessarily have the most luxurious appearance or the highest ratings. Many owners put considerable effort into presenting their properties but end up as "middle earners."
The discrepancy in earnings is a result of effective listing optimisation and pricing strategies. Successful hosts do not rely on a "market rate." Further analysis revealed that the main distinction between high and low earners was their use of pricing techniques, resulting in tens of thousands of dollars of difference in earnings for owners each year.
It comes as no surprise that two out of the top three listings in the one-bedroom group were managed by the same host. Each of his apartments earned over $90,000 in 12 months. His pricing strategy delivered triple the earnings of the lowest-earning host and double the earnings of many other nearby hosts.
At Airbooster, we assess competitors in your local area and provide you with a realistic earnings range to expect. We do not rely on "averages" or "median" price estimates, as they are nearly useless when aiming for optimal pricing. Unlike some property managers, we do not provide a simplistic "guesstimate" of how much more you can earn compared to long-term rentals, as it lacks relevance.
Instead, we examine the range of earnings for properties similar to yours and then focus on improving your position within that group through our price and listing strategies. We begin by evaluating how your annual revenue ranks compared to your competitors and then work on enhancing your position from there.
Many hosts work out their rates by looking at the prices of nearby listings. But is this approach effective in maximising your annual revenue?
Estimating your potential Airbnb revenue may appear to be a guessing game - but Airbooster will provide you with a realistic appraisal of your potential earnings based on nearby Airbnb properties that directly compete with your property.
One of the biggest myths among Airbnb hosts is they accept a ‘market rate’ for their property. What most don’t realise is that some hosts earn two or even three times more than other similar listings nearby.
If a guest gives you less than five stars for a stay, can this affect your annual revenue?
Airbooster tested whether the number of reviews or the rating score of a listing could affect annual earnings.
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