How to Start an Airbnb Business: The Full Guide

Does starting an Airbnb business look like a tempting idea?

If you have properties that you don’t currently use or plan to invest your funds into this type of asset, getting started with vacation rentals might turn out to be the best next move for you.

In the next sections, we offer an in-depth guide on how to start an Airbnb business and turn it from a small business idea to a fruitful venture that you can fully rely on financially. 

Is Airbnb Profitable?

Since its launch in 2007, Airbnb has gained tremendous popularity as a platform that connects hosts to travellers interested in booking temporary stays. Airbnb hosts can use the platform to create a listing for an entire house, a property with shared rooms, apartments, private rooms, and more. 

Today, there are more than 5 million Airbnb hosts around the world, offering more than 7.7 million active listings for rent on the platform. 

In 2023, there were a total of 223,000 active Airbnb listings in the UK. Although the significant startup costs (after all, running Airbnb rental properties requires purchasing property in the first place), this is a popular site for a number of reasons.

Airbnb rental businesses can enjoy certain tax reliefs, the costs are lower when compared to running a hotel, and most importantly – it’s a profitable venture. On average, monthly revenue for hosts in the UK is around £2,414.

Although there are promising money-making opportunities in the realm of vacation rentals, the market is also extremely competitive. To stand out from the crowd, you’ll need a bullet-proof strategy.

How to Begin with Airbnb

Here’s everything you need to know about getting started with Airbnb.

Research and Planning

Before you make any steps to launching your Airbnb business, it’s key to research and prepare a business plan. 

If you’ll be purchasing new property, make sure to identify the best locations for your Airbnb property. Ideally, strive for areas with a high return on investment that are likely to be attractive for short-term stays year-round. In most cases, these are central urban locations or areas close to airports and other transportation centres. 

Consider the property prices to ensure that your investment will pay off in a reasonable time. If you’ll require financing, ensure you’ve researched all of the available options and have set your eyes on the most viable ones. 

Although starting an Airbnb business may seem a bit different from launching a traditional company, the core principles of planning and management apply. To create a realistic road for growth, it’s highly recommended to have a business plan.

Some of the must-have components of an Airbnb business plan include:

• A short description of your Airbnb business concept;
• A summary of your objectives;
• Ownership information;
• Location and type of property you will offer; 
• Unique selling propositions;
• Competitive analysis;
• Marketing strategy;
• Pricing strategy;
• Expenses, including furniture, inspections, property taxes, Airbnb host fees, and others; 
• Financial management. 

Your business plan can be as short or long as you wish. However, best practices suggest that being more detailed will help you create a clear picture of where you want to take your business and how you can get there.

Identify your target market

Next, determine who your ideal visitors are and detail your target audience. You can do this by analysing the type of customers other rentals in your area are attracting. Identify guest segments based on factors like demographics, interest, and travel behaviours.

Think about all that your Airbnb property has to offer and how it can benefit specific customer groups. Is your area popular for tourists or business travellers? Do visitors usually travel solo or as families? Are there any local attractions that you can rely on for tourism in your location?

By answering these questions and others like them, you can make informed decisions and communicate more effectively with your potential customers.

Analyse local short-term rental regulations

Studies suggest that short-term rentals can be much more profitable than long-term rentals, with the difference in profitability being around 30%. 

Although this may be pointing you in the direction of short-term rentals, keep in mind that there are different rental regulations for these two types of business models. For example, in London, you must receive planning permission if you want to short-let your property for more than 90 nights per year. 

These laws will vary based on your location. Make sure that you’ve gathered as much information as possible before starting your Airbnb business to avoid unexpected situations and in some cases – legal disputes.  

Research the competition

Most importantly, throughout your research and planning phase, analyse your competition.

Assess what the typical Airbnb host in your area is doing to attract customers and land positive reviews on the platform.

Some of the core characteristics to observe include:

• Most popular property types;
• Airbnb listing descriptions; 
• Pricing;
• Customer reviews;
• Availability;
• Amenities and additional services;
• House rules. 

Seek inspiration from some of the most successful competitors but also keep an eye out for gaps. This approach can help you create a stand-apart Airbnb business strategy, putting you in a competitive advantage over others. 

Setting Up Your Property

Next, you’re ready to move on to the most exciting part of your journey – setting up your property.

Choose the right property

If you don’t already own a property you’re planning to rent out, you’ll need to invest in a new asset. In some cases, you may be able to rent out rented property, although in most parts of the UK there are laws prohibiting this practice.

When starting an Airbnb business, it’s crucial to select the right property type to invest in.

As a host, you can rent out a range of different properties, including:

• A single room;
• An entire home;
• Shared spaces;
• A 1-bedroom, 2-bedroom, 3-bedroom, or larger apartment;
• Private rooms; 
• Hotel rooms, and more. 

Each one of these options comes with unique features, advantages, and disadvantages. Rental prices will also vary dramatically based on the type of property you own. To make the best choice, make sure you’ve worked out the maths, understanding the returns and specifics of each option. 

Renovate and furnish your space

Before listing your rental property on Airbnb, you’ll also need to think about getting the space ready for welcoming guests.

No matter whether you’re offering a single room, a private wing, or an entire property, it’s important to prepare the property to ensure that it provides maximum comfort to your future customers.

Depending on the condition of the apartment or house, you may need to invest in:

• Repainting;
• Flooring;
• Structural improvements;
• Lighting;
• Beds and mattresses;
• Sofas and seating;
• Dining table and chairs;
• Storage solutions;
• Kitchen essentials;
• Bathroom must-haves, etc. 

In addition, adding decor pieces around the space can help add an extra layer of uniqueness and authenticity to your property, making it more attractive.

Install essential amenities

Most hosts acknowledge the fact that as an Airbnb business, they are reliant on customer reviews for attracting guests. Considering this, it’s fundamental that you truly offer a remarkable experience that customers can’t help but rate highly. 

To achieve this, make sure that you have all of the popular and much preferred amenities installed in your property.

These include things like comfortable bedding, climate control, clean towels and linens. Don’t forget about the essential appliances, like refrigerators, stoves, ovens, microwaves, coffee makers, and toasters. Installing a dishwasher is also a great idea if you’re looking to pamper your guests and make them want to come back again.

In addition, show that you pay attention to detail by providing all of the bathroom essentials, such as shampoo, conditioner, hand soap, toilet paper, hair dryer, and others. 

Make sure that your property has an outstanding Wi-Fi connection, a smart TV and enough charging stations. 

Legal and Financial Preparation

Another crucial component of starting an Airbnb business is to understand local laws and any additional regulations you’ll need to abide by. 

For instance, in some areas, hosts may be required to live on the property during a guest’s stay. In other regions, renting out vacation homes or apartments means getting a permit. Not to mention that there’s sales tax to prepare for and potential tax deductions based on the type of business you operate. 

Here’s how to get started with this part of the equation. 

Register your business

First and foremost, you’ll need to set up a business legal entity to be able to legally receive money from renting out short-term rentals.

The most appropriate type of business for this type of venture is a Limited Liability Company (LLC). 

This will enable you to keep your personal and business accounts separate and at the same time be in full control of any decisions you make. The best part is that in an LLC, liability is limited. In case of a lawsuit, you won’t need to expose your personal assets to risks. 

As an LLC owner and an Airbnb host, you may be able to save money from taxes. Make sure that you’ve researched all of the implications of establishing an LLC Airbnb business. 

Secure necessary permits

Earlier, we mentioned that starting an Airbnb business often means obtaining certain permits. For example, you’ll need to purchase a general business licence and register to collect taxes. 

But apart from that, there are also various essential permits that are usually specific to the area in which your property is situated. For example, if you’re planning to renovate or improve the property, you may require a planning permit.

In addition, keep in mind that you must have adequate insurance policies that can protect both you and your customers. As a business, you’ll also need to pay income tax and register for and charge VAT (only in the case that your earnings are above a certain threshold).

Set up business bank accounts

Next, you’ll need to create a business bank account in order to be able to receive direct deposits from Airbnb. You’ll only be able to do this once you’ve registered your business with the HMRC.

You can also consider hiring an experienced accountant who can take care of the finances of your legal entity on your behalf so you can focus on other business priorities.

Think payment methods and accounting

If you’re renting out your vacation property on Airbnb, getting paid is very easy.

The platform charges customers before their arrival and transfers money to the host based on the preferred method. 

You’ll need to set up your payout method (you can do this via the Payments & Payouts section in your Airbnb account). The available methods include bank transfers, direct deposit, Payoneer debit cards, PayPal and Western Union. Note that these methods can vary based on the country you operate in. 

As an Airbnb host, you can accept Visa, Mastercard, Discover, debit cards, Apple Pay, Google Pay, PayPal, and more. 

Listing Your Property

Once your property is all set up and you’ve completed all legal and financial preparations, it’s time to list your property on Airbnb and make your rental space visible to the world.

Create an appealing Airbnb listing

Creating a property listing doesn’t have to be difficult.

Take a look at similar listings for other properties in your area that match what you have to offer (size, amenities, extras). Use your findings as inspiration to craft compelling Airbnb listings. 

Make sure that your listing offers information on the following:

• Property type;
• How many guests you can comfortably host;
• Location;
• Amenities;
• Spaces that can be used by guests;
• Property description and titles;
• Photos. 

Although it’s free to create an Airbnb listing, you’ll need to pay a service fee once a reservation is confirmed. This fee is usually 3% of your booking subtotal and is collected by Airbnb in return for running the platform, offering 24/7 customer support, and more. 

Take high-quality photos

To make your listing stand out, it’s highly recommended to invest in a professional photoshoot of your property.

However, if you don’t have the budget for this, here are a few useful tips to create stunning photos of your vacation rental:

• Use the power of natural light to present your property in the best possible way.
• Make sure the property is prepared for the photoshoot (keep it tidy, cosy, and welcoming).
• Offer images from different angles. 
• Use the grid setting if you’re shooting with a smartphone to achieve a balanced composition.

It’s also useful to offer images of your property surroundings, like streets, nearby attractions, and other eye-grabbing locations.

Write a compelling property description

The best way to make your Airbnb listings attractive is via a detailed and grabbing description. 

Add a comprehensive property description by starting with a brief overview of what you have to offer. Make sure you provide dry facts but also intriguing and descriptive components related to the actual guest experience. 

When it comes to listing titles, make sure they also offer enough information to attract attention and filter out potential customers. Make use of unique selling points like ocean views, free parking, and BBQ areas in your titles. 

Pricing and Booking Management

When creating your listing, you’ll also need to list your price and acknowledge the available options you have for booking management.

Set competitive pricing

The good news about renting out with Airbnb is that the platform enables you to see the average high price, the average nights booked on a monthly basis, and how much hosts in your area are earning on average.

This information is vital as it can help you set an adequate price per night, positioning you competitively on the market.

However, keep in mind that you’ll need to subtract mortgage payments, Airbnb fees, fees for cleaning services, and others. 

After working out the calculations, if you feel that a single property won’t help you reach the financial targets you’ve set for your business, think about how many vacation rentals you’ll need to reach your desired income. 

Manage booking calendar effectively

For new hosts, booking management is probably not among the first priorities you’ll consider. However, as you start to land more bookings, you’ll probably find it difficult to keep track of your calendar without the help of digital tools. 

Explore the available options to manage your bookings and synchronise efforts with other individuals you might be working with, like cleaning services, property managers, and others.

Implement a dynamic pricing strategy

If you analyse your competitors, chances are that you’ll notice that other hosts frequently make use of dynamic pricing. 

This approach to pricing means that your daily rates increase during peak travel seasons or holidays and drop during low travel months. 

This can help you maintain your competitive edge throughout the whole year.

Marketing and Promotion

But how can you attract guests to your vacation rental?

In a nutshell – via social media, guest reviews, and local advertising.

Use social media platforms

One of the easiest ways to connect to potential guests is by spreading the word about your property on social media channels like Instagram, Facebook, TikTok, and others.

Create interesting and useful content related to the area where your property is based, the amenities you offer, unique specifics about your vacation rental, and more.

Where possible, partner with influencers who can also promote your vacation rental.

Encourage guest reviews

The Airbnb platform uses an algorithm that displays top-rated listings higher up in search results. Naturally, acquiring more positive reviews will help you climb up the ladder and gain more visibility.

You can encourage guests to leave reviews via personal messages, emails, and other channels. Make sure that you don’t pressure them into leaving specific feedback but instead, focus on collecting genuine reviews. 

Operations and Guest Experience

To make the hosting journey seamless for you and the guest experience outstanding for guests, you’ll also need to think about operations. 

Automate check-in and check-out

With Airbnb vacation rentals, automated check-ins and check-outs can be game changers. Enabling the guest to check in and leave the property as they please without having to communicate with the host offers an extra level of convenience. 

This means that you won’t have to change your personal schedule to personally greet visitors and at the same time – the guests can enjoy their privacy and freedom. 

Consider installing a key lockbox, a keypad, or a smart lock on the outside of your unit. 

Maintain high cleanliness standards

When browsing for attractive Airbnb listings, customers actively search for options where the cleanliness is outstanding. This is one of the most popularly discussed aspects of any property when it comes to reviews.

Make sure that you have an impeccable cleaning service that you can rely on. 

Provide excellent customer service

Finally, make sure that you can provide 24/7 customer service to your guests.

Airbnb as a platform delivers this but it’s crucial that your visitors can be in contact with you or a member of your team at all times. 

Conclusion

No matter whether you plan to start an Airbnb business as a full time job or a side hustle, your journey can be both exciting and profitable. 

We hope that this guide on how to start an Airbnb business will help you lay out the foundations, make the first steps, and gradually transform your small business into a financially rewarding venture. 

Frequently Asked Questions

What are the legal considerations of starting an Airbnb business?

Some of the legal considerations of starting an Airbnb business include being aware of local zoning laws, short-term rental regulations, and tax obligations. This includes obtaining any necessary business licence pieces or permits, adhering to safety and health standards, and understanding your responsibilities regarding income and occupancy taxes.

How can I choose the best price for my Airbnb rental?

Pricing should be based on factors such as location, property size, amenities, and seasonal demand. Research competitor pricing in your area, and consider using Airbnb’s smart pricing tool to adjust rates dynamically based on demand and other factors.

What are some of the most important amenities to include in my Airbnb?

By researching your competition, you can identify the most important amenities for properties in your area. Some of the essentials include comfortable bedding, a fully equipped kitchen, reliable Wi-Fi, air conditioning/heating, toiletries, and clean towels and linens. Additional touches like a coffee maker, high-quality furniture, and local guidebooks can enhance the guest experience.