Do you ever wish you had a business background to help you with your Airbnb decisions? Would having a proven system for success help you feel more confident as an investor?
If this sounds familiar don't miss Episode 32 of the Host Coach Airbnb Podcast where we guide you through the 4 Ps of marketing, and how they specifically apply to Airbnbs, so you can make educated decisions and fast-track the success of your investment property.
Read on to learn the “MBA way” to make decisions and maximize the potential of your Airbnb investment!
Topics discussed in this episode:
- What your “product” is as an Airbnb host
- How nightly pricing impacts your listing rank, bookings, and bank account
- How to use key parts of your Airbnb listing to promote your space to its fullest potential
- The importance of choosing and mastering the right OTA for your short-term rental
Host Coach Airbnb Podcast Episode 32 Show Notes:
having both a master's degree and a bachelor's degree in business and having built several successful companies, one concept has stuck with me and served me the best over the years that is an understanding of the framework of the four P's of marketing. So I wanted to share that knowledge with you. Buckle up, this is going to be a more business-focused episode.
The Four P's of Marketing for Airbnb Hosts
First we need a brief history lesson. Professor and author Edmund J. McCarthy created the four P's while teaching at the college of commerce of the university of Notre Dame. His ideas were revolutionary and are still highly valuable today, serving as a cornerstone for analyzing and optimizing marketing strategies. So basically the four P's are a marketing mix. That's Product, Price, Place, and Promotion used when marketing a product. And today we're going to apply them to an Airbnb investment property to help you create the right business mindset to succeed as an investor.
The First P of Airbnb Investing
The first P is product. As you're working on your product, it's really important to consider your potential customers and their unique needs. And there are a few questions to consider when working on product. The first one is what is your product? In our scenario, it's a getaway experience.
What does your product do? Well, as an Airbnb, we provide short term accommodations, recommendations, and amenities to guests in a specific area. Does the product meet an unfilled need or provide a novel experience? This is where you look to make sure your market isn't saturated with other short term rentals, and pick Airbnb amenities that give your guests unique experiences. Things like my favorite basket chair, fire pits, kids, teepees, maybe even a zip line.
Who is your product's target audience? Knowing if your guests are couples, families, business travelers, hikers - any of these things can help you tailor your description and the design of your Airbnb with those types of guests in mind to really attract them and make them realize that your property is perfect for them. And maybe having enough of those amenities to attract all of those groups of guests.
How is your product different from what others offer? This question really helps us frame the idea that we don't want a cookie cutter property as an investment. Don't just buy an Airbnb, invest in an area you love with nearby attractions and amenities that will set you apart from your competition! We preach this day in and day out.
The Second P of Airbnb Marketing
Our second P is price. Price is obviously the cost of the product - the cost of the stay. And when marketing a product is important to pick a price that is simultaneously accessible to the target market AND meets your business revenue goals (covering the mortgage at a minimum.)
Different pricing can have a significant impact on the overall success of your Airbnb. For example, if you price your nights too high for your target audience, then very few people will book your property. Similarly, If you price your nights too low, your calendar will be full, but you didn't maximize your earnings potential for that property to identify a successful price. Whomp, whomp, whomp!
We want to thoroughly understand the target audience and their willingness to pay for your product on any given day. A question you might ask yourself when considering price is: "what's the price range of your competitors?" And this really comes into play when you're evaluating a market, right? Before you buy find out what are the nightly rates that similar properties in that area are getting?And is that going to meet your business goals? Is it going to cover and exceed your mortgage payment?
Danielle just said, "is it going to meet your return on investment goals?" We can use Air DNA to get a lot of data about average daily rates to determine if that market is going to support the investment. AirDNA's data for average daily rates I find to be very accurate.
The next question is: "what's the price range for your target audience?" This is where dynamic pricing is going to come into play. Dynamic pricing is going to help us adjust for seasonality, days of the week, special events that you might not even be aware of.
High Airbnb Occupancy is Driven by Dynamic Pricing
In addition, we're always striving for 90 percent or better occupancy. And the only way to do this is to closely monitor our near term occupancy - meaning bookings over the next 15 days. Next Tuesday night's not going to have the same audience or demand due to its proximity to today. This is where we bring out additional discounting. In addition to what your third party dynamic pricing tool is doing, this is where we want to monitor near term vacancy and occupancy. And we have to put those nights on sale. It's like having the sale rack at the store when it's the end of season. You have four pairs of shoes left and we must to put them on sale to move them. Start by discounting nights by 5% to 10%. We're looking to find a buyer for that night. Your property and your distribution partner, your OTA (for us that's Airbnb) - nobody's making money if that night goes unbooked. So, we need to find a price to find a buyer for every single night. Keeping track of your vacancies in the near-term and manually going in and discounting those nights until we find a buyer is the way we adjust price.
The Third P of Airbnb Marketing
The third P is promotion. The entire goal of promotion is to communicate to consumers - our potential guests, that they need this product and that it is priced appropriately. Promotion in this case boils down to your copywriting. It's everything you write in your listing and every word you use to communicate its value to your guests.
This is why it's so important to take your time and write amazing titles that promote your property and its amenities. For example, one of our places is called Modern Mountaintop Retreat with Hot tub and Fireplace. This title conveys exactly what our Airbnb is: it's a cabin, but it's modern. It's on top of a mountain and it has a hot tub and fireplace. I can see it in my head without even seeing a picture - sure, I want to stay there.
Your listing description also paints the picture of the experience your Airbnb provides. You're selling the dream to potential guests. They're not booking a place, they're booking an experience and the dream of what it's going to be like to stay in your property. This is why the descriptions you write under your listing photos are so important. Each description is another way to promote and convince your guests that your Airbnb is the perfect place for them to book a stay.
What do I mean by this? Instead of writing: Kitchen under the kitchen photo, which we see a lot, consider something along the lines of: Enjoy cooking meals with family and friends in our well stocked kitchen. Or instead of: Hot tub, describe that experience... Get away from it all. Unwind in the hot tub surrounded by nature and enjoy stargazing in luxury. I want to do that. I think anyone that reads that wants to do that!
Promotion also encompasses guest messaging. So once you have an interested potential guest, it's essential to convert them into a booked guest. Quick responses are key to showcasing that you are a host that cares about your guests and you're not going to leave them hanging if there's an issue during their stay. Seriously, if a guest asks a question and has to wait 48 hours for an answer from you, they're not going to feel confident in your commitment to hosting them, and they're most likely going to book somewhere else.
The good news is this isn't all on your shoulders. You don't have to be checking your phone 24/seven. Hospitable is a software that automates Airbnb host messages and helps you deliver them automagically within seconds.
Thoughtful messages are also part of the promotion. A guest inquiry immediately receives a message saying we would love to host them with a few answers to frequently asked questions and a call to action saying that our nights are booking quickly.
When a guest books, they should receive a confirmation that includes area attractions, restaurant recommendations, and anything else you can include to help them plan their ultimate stay in your Airbnb and the surrounding area. We call this our concierge message. We also send a message 24 hours after guests check in to make sure they're happy and ask if there's anything we can do to make their stay more enjoyable.
If you have a great place and excellent pricing, but don't deliver on promotion, you're not going to get the maximum revenue out of your Airbnb investment. So put in the effort on your listing, copywriting, and messages. I promise that you will reap endless benefits!
The Fourth P of Airbnb Marketing
The fourth P is place. Place is really distribution. Where are people going to find your product? The consideration of where the product should be available to the consumer, the guest.
You've got a lot of options here. There's multiple OTAs, online travel agents, Airbnb, VRBO, Booking.com, or even your own direct website. I mentioned shoes before as an example. Let's say you have a unique, fancy, high end shoe that you've designed. You're probably not going to get them carried in Neiman Marcus, Walgreens and sell them out of the back of your car. You need to make a decision about where your target consumers are shopping and you need to pick a channel partner that's going to fully support you. Is Neiman Marcus really going to send out ad flyers and give you prominent placement if they also know that that same pair of shoes can get picked up by the consumer at Walgreens? They're not.
So sure, you can list on Airbnb, VRBO, Booking. com, and also have a direct booking website, but you should really pick one and master it, partner with it, make the most out of it, right? And which is the best platform to choose? In our case, we favor Airbnb. Airbnb currently has 45 million active users in the United States and VRBO has about half of that. But, you don't have to choose Airbnb, choose a single partner and partner with that partner. Really learn to maximize your exposure on that partnership. Culin always preaches pick a platform, make it your sole platform.
So there you have it. You now know the four P's of marketing and how they specifically apply to your Airbnb as a business. You didn't even have to take a college class for this info! You also learn the tools you can use to determine if your Airbnb investment is worthwhile, as well as ones that will help you with pricing and promotion so you can confidently make decisions to maximize your Airbnb's cashflow.
If you want to learn the best ways to create financial freedom through short term real investing, sign up for a free 30 minute Airbnb coaching call to explore your needs and how we can help you succeed as an Airbnb investor. Our joy is in your success!