25 Mar Coronavirus and Airbnb – a mismatch in heaven
I’m going to offer my thoughts on how to increase your Airbnb revenue in the event of a pandemic like COVID-19.
Short answer: sorry, there’s nothing you can do other than ride it out. And I hope you’ve saved up a few months’ worths of burn rate… But hold on a second, there’s more to it than that.
My students and readers reached out on several occasions through email and private slack messages to try and get my input on the current situation.
I’ve been bombarded by at least a few dozen emails in the last 20 days since this crazy thing started.
The thing is, I have nothing to say. I’ve never been through a pandemic. I have no insights to offer, but what I can offer is a few reflections.
We’re all hurting.
Airbnb is hurting (racked up hundreds of millions in losses according to WSJ), Lyric (a major player that raised hundreds of millions from Airbnb is cutting down their supply by 30%), our international host communities (Italy, Spain, France, and Germany), and our US hosts at large.
We cannot be profit-driven in times of crisis like this. We need to work together and get through this. This is my core belief.
I give you two choices: health crisis or economic crisis? Which would you pick?
Either people die or commerce grinds to a halt. Money or people? You can pick your poison.
It was estimated about 30% of small businesses in China were closed during the quarantine. Japan sent millions home without work. And thousands of flights, cruises, conferences, and events got canceled.
If you choose to value health, you introduce a major economic downturn (like what’s happening to us in the Airbnb community and just about every other industry). On the flip side, if you choose profit, then you accelerate the speed of the spread. Which will kill more elders (this virus seems to target older people).
I pick human lives over profit. And that’s where I stand. Sorry, I can’t offer you any advice on how to increase your bookings.
And please stop asking me…
What to do after this pandemic is over?
This is the section that I can offer my insight. Here are a couple of tips.
We do not want to flood the market with cheap supply once this pandemic is over! Here’s an example of what I mean. If you charge $100 on average per night in April, don’t try to offer it up at $80. This is stupid for two reasons.
One, travelers are willing to pay. If your historic data tells you that you could charge $100 per night in April, please oh please, charge $100 per night. You don’t want to cut your profit margins once the recovery starts (isn’t that stupid business practice?). You can see my post on Beyond Pricing (they’re a godsend) if you want to automate your pricing and make more money.
Two, travelers are going to do what they want to do. Think in abundance. Once all of the travel restrictions are over, just think of the poor folks who been trapped in their homes for weeks or months. I bet the first thing on their mind is “VACATION!!!”
We need to stand together and hold the market. Again, please re-read my first point. You don’t want to be that host that gives it up too cheaply then regret it for giving it up too cheaply.
My last insight is on how to better prepare for another pandemic. Sadly, we’re going to get hit with another one in the future. It’s not a question of if, but when.
Global warming is real. It accelerates the mutation of viruses. Another virus could hit us sooner than later.
3 tips to help you better prepare for another pandemic
You need to save up for 3~6 months of hardship. I have no idea how the market will respond after Coronavirus. It might take as long as 6 months for travelers to feel comfortable to travel again.
It could also take 3 weeks. My point is, I have no idea. And let’s wait and see how we deal with this pandemic first so that we can gather some facts.
My advice: save for at least 3 months’ worth of burn rate. It’ll help you sleep better at night as well. Ideally, 6 months if you can swing it.
My second tip is to provide deep cleaning. In times of crisis, train your maid on how to better provide “deep” cleaning. Then advertise it to your previous and current guests.
*You can read my blog post on email marketing here.*
My third tip is to offer a long-term stay discount. I know this tip has been done so many times before and it’s still effective.
You should aim to give your future guests a discount that they can’t refuse. For example, offer up nights at your cost per night. If you need $30 dollars a night to cover your rent, then give it up at $30 dollars per night. This way, at least you can recover some of your operational costs.
A few positive thoughts about Coronavirus
I sent out an email to update my community on what the impact of coronavirus has done to my business. And I ended the email with 3 positive outlooks on COVID-19.
So, I’m sharing this again.
- General flu kills more people (80,000 people per year). If you’ve ever survived the general flu, you’ll survive this.
- We don’t know what we don’t know. There could be a miraculous vaccine discovered next month.
- Only in the wake of a crisis, do we learn and grow. And I mean both in business and life.
IF you can, stay home for a couple of weeks. We can slow the growth of this thing. And we can beat this together!