Uncovering the Secrets to Higher Airbnb Revenues
Using Data Analytics And Machine Learning to Reveal the Secrets Behind Successful Airbnb Listings in Boston & Seattle
Introduction
Airbnb is one of the most popular online listing service for short-term leases around the world. While it is relatively easy to set up an Airbnb business, succeeding in this line of business can be difficult. If you are thinking about entering the Airbnb business in Boston and Seattle, this post is made for you.
We will explore if Airbnb is indeed a viable business in these cities, and apply data analytics and machine learning to identify strategies to help you gain an edge over your competitors.
The following questions will be investigated:
- How much revenue do Airbnb hosts make?
- What are the best types of property to rent?
- When is the best time to rent?
- Which are the best areas to rent?
- What should you write in a listing name to attract more attention?
We will also share additional tips to help you succeed as an Airbnb host, so stay tune.
Data
In order to answer these questions, we will be working with Airbnb datasets for Boston and Seattle provided by Kaggle. These datasets provide information such as property listing details, customer reviews and availability schedules in both cities.
Assumptions
Although both datasets do not provide booking details, we can estimate the number of bookings for each property based on the number of reviews they received during the time period. We can then extrapolate each property’s revenue with this formula:
Number of Reviews x Price of Listing x Minimum Length of Stay
This will serve as a conservative estimate of the revenue, since it is likely that properties will have more bookings than reviews. In addition, guests are also likely to stay longer than the minimum number of nights required.
Without further ado, let’s begin!
$7,200 is the average host revenue in Boston in 2015, while in Seattle, it is $4,700
In 2015, the average estimated revenue for a Boston Airbnb host was $7,200. Among active hosts who listed their properties for more than 90 days in a year, the average annual revenue grew to about $9,000.
While the average revenue of an Airbnb host was relatively high in Boston in 2015, revenue disparity was prevalent. 50% of active hosts saw less than $3,900 in revenues, while the top quarter of active hosts received over $9,800 in revenues on average.
The top Airbnb host in Boston received over $371,000 in revenue in 2015! In fact, 4 of the highest grossing hosts received at least $100,000 in revenue during that year.
In Seattle , the estimated average revenue in 2015 for an Airbnb host was $4,700, while an active host received over $4,900.
As is the case with Boston, revenue disparity exists in Seattle. 50% of active hosts made less than $2,400 in revenues, while the top 25% of active hosts made over $5,800 on average. Meanwhile, the top host in Seattle collected over $270,000 in revenue.
In Boston, you should rent out an entire apartment or house, while in Seattle, apartments that accommodate 4 guests do best
Renting out an entire apartment or house in Boston is likely to result in good revenues. Expect to receive annual revenues of $6,100 for an entire apartment and $6,700 for an entire house.
Not only is this well above the average revenue ($4,600) of an Airbnb listing in Boston, apartments and houses constitute the lion’s share of listings in Boston. Hence, the demand for this type of properties is relatively healthy.
While there might be other property types (Bed & Breakfast, loft, etc.) that generated higher revenues, they comprised a smaller proportion of Boston’s listings and are thus more likely to serve a smaller niche market.
In addition, properties that accommodate more guests are also more likely to generate higher revenues in Boston. In fact, the average revenue for properties accommodating 4 guests was almost twice the revenue for properties accommodating 3 guests. Listings that accommodate 6 guests received the best revenues in 2015. However, these listings are relatively scarce, so the market for this segment may not be huge.
Revenues of listings can vary a lot, just like the revenues of hosts. 50% of the listings in Boston received under $2,300 in revenue in 2015, while the top 25% of the listings received over $5,520.
If you are looking for the perfect Airbnb listing in Seattle, look no further than apartments accommodating 4 guests. There were 336 properties of this category listed in 2015, and they generated an average annual revenue of $4,500.
For comparison purposes, Airbnb listings in Seattle fetched an average revenue of $3,400 in 2015.
Renting out an entire boat garnered an estimated annual revenue of $9,000, far trumping any other properties. However, this figure should be treated with care since only 2 such properties were listed in 2015.
If you are renting out an entire house or apartment, by far the most common listings found in Seattle, you can reasonably expect to receive $4,500 and $4,000 respectively.
In Seattle, properties that accommodate more guests also generated higher revenues in 2015. Once again, the ideal number of guests appears to be 4 as these properties generated relatively high revenues while still serving a sizeable market.
Listings with 2 bedrooms also fetched relatively high revenues while still catering to a large market. The impact of having more than 2 bedrooms is often negligible. This is especially true when we consider the smaller market size for listings with more than 4 bedrooms.
Revenue disparity does exists in Seattle as well. 50% of properties generated less than $1,800 in revenues in 2015, while the top 25% of properties fetched over $4,500.
August and September are the best time to rent in Boston. While August is the best month in Seattle
August and September are the best months for Airbnb properties in Boston. It is no surprise that these months generated the highest revenues, considering that the weather is often pleasant during this period of time and visitors can enjoy Boston’s amazing fall colors.
In Seattle, August is the best month to put a property out for rent, while July and September are lucrative alternatives as well.
In both cities, total revenues have risen significantly throughout the years, suggesting that the demand for Airbnb properties will likely grow for the foreseeable future.
Beacon Hill and Back Bay are the best performing neighborhoods in Boston, while First Hill is the best in Seattle
In Boston, Beacon Hill generated the highest revenue among all neighborhoods in 2015, averaging an estimated $7,400 per listing. Back Bay was the next best neighborhood, grossing over $6,900 in revenues.
Both neighborhoods also ranked among the top 5 neighborhoods with regards to the total number of listings available. This is out of 25 neighborhoods in Boston recognized by Airbnb.
Note: Each neighborhood is represented by a circle in the map and the color of the circle reflects the average revenue of a listing in the neighborhood. The size of each circle corresponds to the number of listings in the neighborhood, and the bigger the circle, the more listings there are.
Among all neighborhoods in Seattle, First Hill generated the highest revenue, averaging over $5,900 in revenues per listing during 2015. However, it is worthy to note that the area has a significantly lower number of listings as compared to neighborhoods such as Belltown and Broadway.
Central Business District and Stevens are the next highest grossing neighborhoods in 2015. An Airbnb listing in either neighborhoods fetched around $4,500 in revenue in 2015.
Mention popular locations in your listing name
The listing name together with the listing picture are often the first thing a potential customer will see when searching for apartments. Hence, it is crucial that your listing name catches the reader’s attention.
Shown above is a word cloud of the most popular words used in the names of Boston listings ranked in the top 10% of revenues generated. Contrast this to the word cloud below depicting the most common words from listings ranked in the bottom 30% of revenues generated.
Note: The size of a word in the cloud corresponds to the frequency of its appearance in the listings, with words that are used more frequently appearing larger.
By comparing them, we immediately notice that neighborhoods such as South End, Back Bay and Beacon Hill were frequently mentioned in higher-revenue listings. On the other hand, these neighborhoods were infrequently mentioned in lower-revenue listings. Hence, if your property is located near the aforementioned neighborhoods, be sure to state them prominently in your listing’s names.
The word studio was also over-represented in top performing listings, while the word room was over-represented in weaker performing listings. Renting out studio units appears to be far more lucrative than renting out rooms in Boston, although one has to bear in mind that renting out rooms are likely to incur lower operating costs than studio units.
Interestingly, while words like beautiful, spacious are commonly used in both types of listings, top listings are more likely to use the word modern to describe their properties, and listings with lower revenue are more inclined to use the word cozy. This could be a sign that Boston travelers prefer modern décor.
Shown below are the most popular words used in the names of Seattle listings with revenues ranked in the top 10%.
Contrast this with the most frequent words used in listings ranked in the bottom 30% with regards to the amount of revenue made.
The most contrasting difference between the two is that top listings often had the word Seattle in their names, while lower revenue listings rarely mentioned it. On the other hand, lower-revenue listings were far more likely to use the words room, cozy, modern as compared to top listings.
Private, downtown, Ballard and Capitol Hill were also more frequently mentioned in top listings, suggesting that these attributes are well sought after. Ballard and Capitol Hill refer to neighborhoods in Seattle and it is likely both places are extremely popular with visitors.
It is also interesting to know that view was well-represented in either type of listings. Most travelers likely visited Seattle for its spectacular views.
Contrary to Boston, the appeal of studio units is lower, suggesting that there are no advantages to owning a studio unit in Seattle.
A key takeaway from this is that location names matter a lot in listing names. The location of properties is likely one of the most important considerations of Airbnb customers. If your property is located near any popular locations, ensure that these locations’ names are highlighted in your listing names.
Another key takeaway is the word room in a listing name is almost always associated with lower revenues in both cities.
If you are enjoying this article so far, here are some additional insights to help you in your Airbnb journey.
Airbnb Superhosts earn more both in Boston and Seattle. In both cities, being recognized as an Airbnb Superhost is likely to result in higher revenues. The requirements of being a Superhost are as follows: achieve a 4.8+ overall rating, respond to at least 90% of booking requests within 24 hours, host at least 10 stays a year and honor every reservations.
Moderate or Strict cancellation policies are preferred in Boston. Properties with either moderate or strict cancellation policy tend to fetch higher revenues in Boston. In 2015, the median revenue for properties with moderate or strict cancellation policies was $2,600. In contrast, the median revenue for properties with either flexible or super strict 30 cancellation policies was $1,300.
In Boston, customers prefer properties that provide good value for the price. Airbnb customers in Boston are primarily concerned with getting their money’s worth. Hence, properties with higher review scores for value tend to perform better in Boston.
In Seattle, customers prefer cleaner properties. Properties with higher review scores for cleanliness tend to receive slightly higher revenues in Seattle. Airbnb customers in Seattle definitely have a strong preference for cleanliness, so pay attention to that.
Higher cleaning fees don’t affect revenues in Boston. In fact, listings with higher cleaning fees tend to outperform other listings in Boston. Hence, do not be afraid of requesting higher cleaning fees if you need to, especially if your place comes with a lot of extra perks for the guests that need cleaning.
Throughout this article, we have seen numerous tips and strategies that will help you set up the perfect Airbnb listing. We will now end this article with a recap of the key findings.
Recap of key insights for Boston Airbnb hosts
- Boston Airbnb hosts received an average revenue of $7,200 in 2015
- Renting an entire apartment is likely to bring in a good and stable revenue
- Properties accommodating 4 guests seems to be the optimal choice
- August and September are the best time to rent out a property
- Beacon Hill and Back Bay are generally the best neighborhoods to establish an Airbnb
- Mentioning popular locations such as South End, Back Bay and Beacon Hill in your listing name is likely to attract the viewer’s attention
- Studio units are preferred in Boston.
- You will earn more as an Airbnb Superhost
- Properties with moderate or strict cancellation policy generally do better
- Customers prefer properties that provide good value for the price
- Higher cleaning fees don’t affect revenues
Recap of key insights for Seattle AIrbnb hosts
- Seattle Airbnb hosts received an average revenue of $4,700 in 2015
- Renting an entire apartment catering to 4 guests is likely to bring in a good and stable revenue
- Properties with 2 bedrooms are the best choice
- August is the best month to rent out a property. July and September are good alternatives as well
- First Hill is the best neighborhood to rent out a property, followed by Central Business District and Stevens
- Mentioning private, downtown, Ballard and Capitol Hill in your listing name is likely to attract more interest
- You will earn more as an Airbnb Superhost
- Customers prefer cleaner properties
Thank you for reading this article! I hope you enjoy it!
The code for this analysis can be found here.
