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6 Pros and Cons of an Airbnb Business

It’s no secret that owning and operating an Airbnb business has become increasingly more popular in the past few years. Airbnb currently has about Airbnb has 12.7 million listings available. Owning a business like Airbnb is enticing to many because Airbnb operates under a peer-to-peer business model, meaning that there isn’t a third-party stakeholder orchestrating the interaction between buyers and sellers. Peer-to-peer models, in general, have gained traction in the business world in recent years— think Uber, Lyft, and eBay, for example.

To learn more about how this model of business works, check out this article on “What is the Peer-To-Peer Business Model and Does it Work?” But just like any business, owning and operating a peer-to-peer model business like Airbnb comes with its own set of pros and cons. Read on to learn more about the three pros and three cons of an Airbnb business. 

Pros of Running an Airbnb Business

Income

One of the most attractive aspects of owning and operating an Airbnb business is the ability to directly impact how much income the business generates. As an Airbnb owner, you have the autonomy to decide how much you want to charge and how often you want to rent out your space. Depending on the size, quality, decor, and location of the rental, an Airbnb owner has the potential to generate a healthy, consistent flow of income from their Airbnb rental.

Additionally, Airbnb allows owners to get paid whenever and wherever they want. Although there are circumstances in which an owner needs to be physically present at their Airbnb property, the majority of the income Airbnb business owners generate is coming in passively. Once an Airbnb is posted online, owners have the luxury of approving and checking in their tenants remotely. With the exception of special circumstances, Airbnb business owners are able to own and operate their business from virtually anywhere

Tenants

Another attractive feature of operating an Airbnb business is that owners are able to carefully screen all of their tenants prior to approval. Depending on the qualifications and expectations that have been listed for a specific Airbnb, the owner in charge has full control over either approving or denying a tenant. And unlike a more traditional model of renting, Airbnb business owners do not have to put all of their confidence into one, long-term tenant.

Instead, Airbnb owners receive income from a variety of tenants, meaning that each individual tenant is only paying a small percentage of the owner’s overall income. In the event that someone cancels at the last minute, for example, an Airbnb owner is financially less sensitive to such unpredictability when compared to a traditional landlord.

Property Upkeep

Another unique benefit of operating an Airbnb business is that it requires business owners to consistently maintain the overall quality of their property. With traditional renting, property upkeep could be challenging. This is especially true in instances where landlords have long-term tenants. 

Since Airbnb owners don’t typically host long-term tenants, they generally have greater access to their property and are even held up to the expectation that they must upkeep the quality of their property. If a property is not cleaned and maintained over time, the property will lose the interest of prospective tenants. So, Airbnb owners not only have greater access to upkeep their property but they are also incentivized to do so because it will draw in more tenants over time.

Cons of Running an Airbnb

Property Damage

One con of owning and operating an Airbnb business is that business owners must deal with property damage on their own. Although Airbnb offers property owners approximately one million dollars of aid in the event that there is property damage, that money isn’t guaranteed to cover all that was lost, stolen, or damaged. Items such as cash, art, and jewelry are just a few of these items that aren’t protected by the insurance that Airbnb provides. 

Reviews

While positive reviews can do wonders in facilitating the success of an Airbnb business, negative reviews have the power to completely shut down an Airbnb business if handled poorly. Given that the review section is one of the most frequently visited places by prospective tenants, reviews must be taken very seriously by Airbnb owners.

If there are a lot of customer complaints coming in regarding a particular Airbnb property, the owner has no choice but to respond to and mitigate all of those complaints. If they fail to do so, their entire Airbnb business is put at risk.

Lack of Predictability

Another potential con that may be faced by an Airbnb owner is a lack of predictability. The success of an Airbnb business is entirely dependent on whether or not there are tenants renting out properties on a consistent basis.

If, for example, your Airbnb does not garner any interest for a sustained period of time, you will naturally experience a financial low and potentially even endure the financial burden of covering your expenses independently for the time being. Airbnb owners must be prepared at all times for the unpredictable nature of owning and operating an Airbnb business.

Conclusion

For anyone interested in owning and operating an Airbnb business, it is important to consider all of the pros and cons that come along with doing so before making any big decisions. Given that Airbnb operates under a peer-to-peer business model, Airbnb owners are granted a lot of flexibility and freedom. However, the peer-to-peer business model isn’t for everyone and there are a variety of cons, such as a lack of predictability, that can make owning an Airbnb business difficult.

As an aspiring business owner, one of the best things that you can do is learn about all of the options out there and make a well-informed decision accordingly. If you are interested in learning more, check out this article on the different types of business models there are, including the peer-to-peer model.

 

Melissa Leyba on Linkedin
Melissa Leyba
Melissa Leyba is an educator and freelance content writer based in Los Angeles, California. She has a passion for learning and sharing her knowledge on a variety of topics, including business, education, and international relations. In her free time, she enjoys making music and traveling.

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Melissa Leyba is an educator and freelance content writer based in Los Angeles, California. She has a passion for learning and sharing her knowledge on a variety of topics, including business, education, and international relations. In her free time, she enjoys making music and traveling.

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