How To Perform An Airbnb Market Analysis

Research – Airbnb Market Analysis

Understanding your market is the first step to professional vacation rental management. It is important to become a destination expert, analyze your competitors, and educate yourself on the unique regulations of your market. The more you understand your market the better positioned you will be to compete and the higher the chances of your success.

Market Research Tools

Airdna is a great tool we recommend to analyze your competitors and formulate a better understanding of the revenue potential of your market. The software offers a free and paid version. The free version will allow you to do basic market research and is the best starting point for a beginner. If you’re really serious about a market and want a deeper look into the analytics you can purchase a subscription for your town. Most towns cost between $10.00 – $50.00 per month. Read our Airdna review here.

Among the most useful and actionable tools that we make use of with Airdna is the Rentalizer tool aka the Airbnb Financial Calculator. This tool allows us to narrow down on a specific address and get a 12 month forecast. See below for an example that narrows into a specific Venice, California studio.

Hosting Groups

Joining short term rental Facebook groups are another great – and free – way to learn more about a specific market. Some of the groups have thousands of people who have real world experience running and managing vacation rentals.

Lifty Life in fact operates a number of local hosting Facebook groups.

• Join the BC Short Term Rental Hosts Facebook Group
• Join the Alberta Short Term Rental Hosts Facebook Group
• Join Central Okanagan Airbnb Host Community

Destination

Analyzing your market requires you to understand seasonality. When is it peak season? When is the low season? Whistler for example has peaks during both the Winter and Summer seasons, although Winter remains stronger. In order to maximize my ADR during these dates I keep prices high and allow the occupancy of the town to increase. As these peak dates approach supply in the town drops and demand increases. As such I can maximize my ADR by being patient. The off-season in Whistler happens to be Fall and Spring. During these periods my strategy is to keep my prices very competitive. In order to be among the first to book these dates and ensure I keep a strong occupancy rate.

You will also want to be aware of all major holidays and events. Heightened demand during these key dates allows you to increase your rates. In addition to major holidays such as New Years and Christmas it is extremely important to be aware of local events. Utilize the city website to get a sense of major events or simply google events in your town. Events to look out for are conferences, major sports events, long weekends, concerts, cultural events, etc. Major events in Whistler for example include Cranxwork, The World Ski and Snowboard Festival, Tough Mudder, Wanderlust, The Ironman Triathlon, and the Whistler Beer Festival, to name a few. I keep careful track of the dates of these events to ensure I maximize my nightly rates.

Beyond understanding important dates it is extremely beneficial to be knowledgeable of the best places to grab coffee, dinner, sight-see, park, etc. Guests frequently request local suggestions for things to do or places to eat in your city. If you ever get a request for a recommendation that you aren’t really sure about don’t hesitate to check out reviews online. Guests will really appreciate that extra effort. The difference between a great host and a mediocre one is how much value they provide their guest. Local knowledge is both free and one of the most important services you can provide your guests. I make sure to list all my favourite places such as Mount Currie Coffee which happens to be directly across from the unit on a guide that I make available to guests.

Competitors

In conducting an Airbnb market analysis you should find a few similar properties to benchmark against. There is no point in comparing yourself to a 4 bedroom home with top shelf finishings if your property is a 1 bedroom apartment furnished by Ikea. Make sure to compare yourself to your closet competition.

Look for competitors:

• In the same neighbourhood or closeby

• Properties with the same configuration (same number of bedrooms, beds and bathrooms)

• Properties with comparable finishings and amenities

The questions you should be asking are:

• How many direct competitors are there? What marketplaces are they listing on?

• How are they pricing themselves and how much of the calendar is still open?

• How many reviews do they have? What is their overall rating?

• How do their amenities and furnishing compare to my own? Are they providing unique amenities such as an espresso machine or use of their bikes?

After comparing yourself to the market you should reconsider your strategy. Is your pricing too high compared to the market? Do competitors have a lot more reviews than you? If so perhaps you need to follow up with your guests and request they review you with a 5 star. Should you consider what unique amenities will help make your property standout. There is a lot of insight that can be learned when comparing yourself to others however it is a mistake to simply copy your competition. Always be looking for ways to improve on what others are doing and optimize your listings to be the best in the market.

Airbnb Guests

Consider the types of guests that visit your destination. You can use Airdna to use a sense of where guests are coming from and some demographic details on them.

• Do guests of this market have the income to support your business?
• Is there enough guest demand in your market to keep occupancy high enough?
• Is their an identifiable target market that you can market your listing towards?

If you need help to identify your target market, utilize our Airbnb Target Market complete guide to help you through the process.

Regulation

Regulations are one of the most overlooked aspects of a short term rental. Always consult with your municipality and ensure that your property is properly zoned for tourist accommodation services. Whistler for example has very complex zoning regulations that restrict self-managed vacation rentals. If you launch a STR and find out a few months later that it is illegal, your business will suffer significant losses.

Regulation is further placed on short term rentals by stratas or HOA’s. Most apartment buildings are cracking down on short term rentals and the fines can often be extremely expensive. We do not suggest defying the bylaws passed by your strata or HOA. Illegal rentals increase the risk to you and often make for a very bad experience for guests. Guests being told “don’t talk to neighbours” or “don’t say your staying at an Airbnb” instantly have a bad impression of your unit before they even step in the door.

Finally consider the implications of running a rental on your taxes. Consult a tax professional on how this will impact you.

With all this research under your belt you’re ready to start dominating your market and providing superior guest service!

Airbnb Market Analysis Summary

• Utilize tools such as Airdna to analyze your market
• Join and interact in community Facebook groups
• Analyze the seasonality of your market (High season/ Low season)
• Look up important local events so that you can price appropriately
• Learn about the best restaurants, bars, and amenities in your town
• Analyze the customer base of the market use our Airbnb Target Market guide to help your through the process
• Analyze your competitors on Airbnb
  • Benchmark yourself to similar priced and sized listings
  • View their calendar to understand booking trends
  • Compare their reviews to your own
• Look up government regulations on Airbnb in your market