How To Start An Airbnb Business (Expenses & Revenue in 2023)

How To Start An Airbnb Business (Expenses & Revenue in 2023)

Brian Chesky and Joe Gebbia had quite the idea back in 2007.

With hotels all full up, they decided to rent out air mattresses from their apartment to provide people with a place to stay.

Little did the two know that this simple solution for a common problem would develop into the massive business that Airbnb is today.

But let’s speak about you.

Can you still ride the Airbnb wave?

How much will it cost in terms of expenses and revenue to start your own business?

And how can you make sure your venture is profitable?

In this article, I’ll provide all the information needed to answer these questions so that you can decide whether investing in an Airbnb business makes sense.

What Is Airbnb And How Does It Work?

Airbnb is a website and mobile app that offers a peer-to-peer platform for people to find and rent vacation homes, apartments, rooms, or other accommodations.

Airbnb allows users to list their rental property on the website or app – from shared spaces to entire houses – and guests can make bookings online.

As a service, this platform charges hosts a 3% service fee per booking, and guests pay around 14% of the total booking fee when they make a reservation.

Airbnb also allows rental arbitrage, when people buy or rent properties strictly to list on Airbnb – thus, making a profit with each booking.

With the ability to do rental arbitrage, you don’t need to own a rental property to start an Airbnb business.

You can purchase (or even rent) a property and list it on the platform for others to stay in, thus making a profit with each booking.

How To Start An Airbnb Business

Knowing how to start an Airbnb business is the key to achieving success.

From understanding how cash flow works to researching competitors, here are the steps to take when starting your own Airbnb business.

Assess Your Market

If owning property in your area is too expensive, consider the rental space in your city.

As a startup business (which is how you should be looking at an Airbnb venture), it pays to research the average nightly rates for properties.

For example, if you’re a vacation rental owner, look at other properties with similar amenities and features and find out what they charge per night.

Also, consider the zoning rules in your area – some regions might not legally allow short-term rentals or require special licensing or permits.

Find Out If You Need Permission

The Airbnb market doesn’t have to be limited to those who own their property.

As business owners, you can approach those who already lease or rent properties and get their permission to list them on the platform.

Having your own Airbnb business means thinking like a business owner and understanding what makes tenants choose one place to stay over another.

If you’re subletting a place for Airbnb purposes, always ensure the agreement between you and the tenant benefits both parties is essential.

Research Competitors

Understanding the competitive landscape can help you set rates for your Airbnb business.

With many online bookings, it pays to look at how other owners list their properties, the details they mention in their listings, and what they charge per night.

Looking at nearby properties’ nightly rates can indicate the price range customers are willing to pay.

Another factor you can learn from your competitors is understanding which features make a property attractive to guests.

As property management, this will be key in setting up successful rentals.

A successful Airbnb business can attract guests with both affordability and uniqueness – researching your competitors will help you do this.

Choose A Business Model

The correct legal entity is essential when setting up an Airbnb business.

Said differently, choosing the proper business structure is critical for long-term success.

Following your area’s local laws and regulations, you can set up a Limited Liability Company (LLC), Sole Proprietorship, or any other business model that makes sense.

An Airbnb rental business can be listed as a sole proprietor if the owner runs it alone or as an LLC if there are multiple owners.

Long term, having a successful Airbnb hosting means taking into account both short-term and long-term aspects when proposing rates and managing property.

Register Your Business

Whether you set up an LLC or a sole proprietorship, it is essential to register your Airbnb business with the local authorities.

Knowing the implications of registering a business in your area is essential for tax and legal purposes.

For example, one needs a registered agent if forming an LLC to serve as the legal representative in case of legal action.

Get The Right Insurance

The Airbnb industry has plenty of horror stories, ranging from property damage to malicious guests.

While the platform provides insurance for hosts, it’s essential to understand what type of coverage you may need for your business.

As the rental market goes, people that stay in your accommodation might not always be aware of (or care about) their responsibilities towards your property.

Especially with a short-term rental, this carefree factor would not work in your favor, meaning that adequate insurance is necessary.

As a business owner, research and compare different business insurance policies available and settle on one that best suits your needs and budget.

Create Your Airbnb Listing

Being an Airbnb host means having your listing on the platform be seen by potential guests.

An Airbnb rental needs high-quality photos representing the property and a personalized touch with a unique description to stand out from the competition.

Whether you list a short-term rental or long-term stay, make sure it meets the expectations of potential guests.

Market And Advertise Your Listings

When it comes to Airbnb hosts advertising their properties, it’s essential to understand your target market and what type of message resonates with them.

Your prior market research will help you in this regard.

You can attract potential guests in multiple ways, ranging from social media marketing, SEO, and advertising on other property search platforms.

Get started with Airbnb.

Price Value Equation

When setting prices for your short-term rental business, it’s essential to consider the demand in your area and the quality of your listing relative to what else is available on the market.

Attract potential renters and generate reasonable profits by using an attractive pricing structure.

Finding this balance can take trial and error but should eventually lead to higher revenues for your Airbnb property.

Airbnb Business Expenses

The expenses of starting an Airbnb business can add up quickly if not properly managed.

Planning and ensuring you understand the costs associated with running a successful business is crucial.

Here are the most common expenses of starting an Airbnb business:

  • Property costs: These costs include mortgage, taxes, insurance, etc.
  • Legal and Professional Fees: Getting a business license, setting up an LLC, or hiring a lawyer may all be necessary to stay compliant with local laws and regulations. Account for these elements in the business plan before launching the business.
  • Supplies & furniture: You will need to invest in furniture and other supplies that make guests feel at home.
  • Advertising & Marketing: If you’re going down the paid route, different advertising mediums may be necessary to generate leads and bring more customers to your business.
  • Cleaning Services: Depending on the type of property you manage, professional cleaning services could be a great way to keep your guests happy and coming back for more.
  • Airbnb taxes: With occupancy tax collection and remittance being the responsibility of the rental property owner, it’s essential to stay ahead of any applicable taxes associated with your rentals. Knowing the regulations that apply to your business, from your local occupancy tax to any sales tax you have to pay, is essential for running a successful Airbnb enterprise.

Airbnb Business Revenue

Knowing how you will price your services is vital in generating revenue from your Airbnb rentals.

It’s important to remember that what makes sense from a financial standpoint is not always the right strategy for long-term success.

Finding the balance between pricing and attractiveness to potential customers is critical.

Here are a few aspects to consider.


An Airbnb property in an in-demand neighborhood or city will undoubtedly draw more attention than one in an obscure location.

As homeowners or people listing properties on Airbnb, it’s essential to consider the local market and the demand for rental properties when setting up shop.

If local attractions are near your property, this could increase its appeal even further.


One’s Airbnb income can also depend on seasonality – as summer or winter holidays bring more demand to some areas than others.

Having your property in a place with high year-round demand could prove beneficial if you want to grow your rental business.

A future property owner planning on running a small business through Airbnb should consider the people visiting a specific location when making such a decision.

Type Of Property

One way to make extra income from Airbnb is to rent a property appealing to specific groups of people.

For example, renting out luxury properties or villas can bring more money than plain apartments or traditional family homes.

A house that’s furnished and equipped with a vintage or mid-century flare will also attract more attention, as people usually prefer something that looks unique and out of the ordinary.

With the same concept as the real estate market, it’s essential to understand the target market and know what type of property design, style, and amenities will attract more potential customers.

In the vacation rental industry, having a property that appeals to an affluent clientele means higher prices and more profits for the host.

Quality Of Service

While you don’t have to hustle all day long to make a living from Airbnb, providing top-notch service to guests is crucial.

Getting people to have a great experience and returning to your property for another visit is one of the best ways to ensure repeat customers.

How To Make Your Airbnb Business Successful

Now that I’ve looked at some factors involved in setting up an Airbnb business let’s review ways to ensure its success.

Listen To Your Customers

The best way to create a successful short-term rental business is by listening closely to what guests say about their experience.

With something to learn from positive reviews and constructive criticism, paying attention to feedback can help you improve upon existing flaws or capitalize on areas where you excel.

You can generally implement any feedback received on both long-term rental and short-term rentals, ensuring that you maintain a high level of customer service.

Also, if a problem arises before or during a guest’s stay, inform them about the issue and the steps you’re taking to resolve it.

Know Your Competition

One of the best ways to get more money in your business bank account as an Airbnb host is by staying ahead of the competition in the local market.

The rental industry relies on direct bookings from repeat customers or new visitors looking for attractive rates.

Knowing what successful businesses do in their marketing campaigns can give you an edge over others in the area.

If other businesses offer something unique, it’s always wise to consider replicating their approach and making your offer even better.

Make Sure The House Is Clean And In Good Condition

Whether you get business travelers that come to your or people looking for vacation rentals that want to enjoy their stay, a clean house is a must.

As you can, cleaning can become a full-time job.

If you want to avoid doing it yourself, consider hiring someone to help with the cleaning or investing in professional services that will save you time and effort.

Keep Your Price Competitive

When setting up an Airbnb business, pricing is one of the most important things to remember.

Make sure you offer competitive prices compared to other businesses in your area.

Carefully researching what others are charging for similar properties gives you valuable insight into how much you should charge for yours.

Make The Check-In Process Smooth

Part of your Airbnb property management process should focus on ensuring guests have the best experience possible.

Start by using a template that explains the check-in and out procedures, as well as any other information they need to know.

Then, consider how visitors will get their keys, who they can contact if they have any issues and what amenities are available upon arrival.

A net positive cash flow in an Airbnb business starts with a smooth check-in process.

Have A Well-Defined Cancellation Policy

You must outline your cancellation policy clearly and prominently on your website.

This way, guests know the terms before booking and can make an informed decision about staying at your property.

You should also specify any refund policies for cancellations or late arrivals.

Providing this information upfront can ensure clarity later on.

Maintain A Quality Control System

After the recent pandemic, many people still want to ensure they take all necessary precautions when staying in an Airbnb.

Letting people know what measures you’re taking to create a safe and hygienic environment can give them the peace of mind they need to book with you.

These measures could include deep cleaning between guests, providing disinfectant wipes, or having a contactless check-in process.

Offer An Airbnb Experience

An Airbnb experience is something extra that sets your rental apart from others in the area.

Whether you co-host this experience with somebody else or offer it yourself, it’s sure to be popular with visitors looking for something unique on their trip.

As long as you know the startup costs involved in such experiences, you can increase the value of your rental by offering a one-of-a-kind experience.

You could offer a virtual cooking class, guided tours of local attractions, or live music events.

These experiences can add value to your property and make it stand out among the competition.

Airbnb Support

Airbnb provides multiple ways to support hosts and ensure a successful rental experience.

Here are some of the features available.

AirCover for Hosts

Using guest identity verification and reservation screening technology, Airbnb can help you avoid the exorbitant costs associated with damages caused by disruptive parties.

In addition, the platform offers up to $1 million in host liability insurance.

Together with $3 million in host damage protection, these insurances cover assets such as cars, boats, art, and other valuables.

It would help if you still got insurance to protect yourself from potential losses, but this can help when you’re just starting.

Ground Rules

To ensure your guests understand what behaviors you expect from them, set your ground rules on the platform.

These rules can range from the usual no-smoking policies to more specific directions like limiting the number of people allowed in a rental at one time.

Having straightforward guidelines ensures everyone involved has an enjoyable experience.

Host Cancellations

As a host, you can decide to cancel any renters who don’t follow your ground rules or otherwise misbehave.

You can tailor your cancellation policy to fit what works best for you, from strict to more flexible options.

This feature is also useful when unforeseen circumstances make it impossible for you to continue hosting them.

Calendar And Booking Settings

From getting a down payment as security to setting maximum nights for bookings, Airbnb offers several features for managing the dates and times available for your rentals.

You can also set up automated messages for confirming bookings and informing potential guests about availability.

Response tools

Airbnb provides response tools such as auto-responses and templates that make it easier to respond quickly and professionally when a guest inquires about your rental.

Live chat

For more complex inquiries or disputes, Airbnb offers live support with their team of experts.

This live chat makes it easier to resolve any issues that may arise quickly and efficiently.

Dedicated Superhost Support

Superhosts have access to unique tools like the HostCenter, which gives them exclusive resources for managing their rental experience on the platform.

A Local Emergency Line

Airbnb provides a direct line to local law enforcement from its app.

This line helps travelers who need to get in touch with local authorities.

An Urgent Support Line

The customer service team is available 24/7 should you need urgent assistance while hosting or renting your property.

Wrap Up.

Starting an Airbnb business is a great way to make some extra money.

Focusing on providing excellent customer service and learning from each hosting experience can help you have a successful rental experience.

Whether you rent a single room or an entire property, Airbnb has the resources and tools to help you make money.

Get started with Airbnb.

Further reading on Do you have an opinion on a topic and want to monetize this?

Making money by blogging is one of the best money-making strategies in the digital world.

Over time, this can become one of the best passive income streams you can leverage.

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