As the cost of living rises due to inflation, it can become more expensive for hosts to manage cash flow and generate good income on Airbnb and VRBO. This is because inflation can result in higher expenses such as utilities, property taxes, credit cards, and maintenance
To stay profitable, hosts may be forced to increase their rates. However, this can be a challenge, since higher prices may decrease the demand for short-term rentals. It’s kind of like a game of “Price Increase Chicken” – no one wants to be the first to blink and lower their prices.
The Effect of Impact on Short Term Rental Demand:
Inflation can also impact the demand for short-term rentals. If the general cost of living is increasing, people may have less disposable income to spend on non-essential items like vacation rentals.
As a result, demand for short-term rentals may decline, which could lead to lower prices for hosts. It’s kind of like when you’re trying to decide whether to splurge on that fancy Airbnb or just stay at a cheap, dingy motel.
What Can Airbnb Hosts Do to Fight Inflation?
Here are a few strategies that hosts can consider in order to mitigate the impact of inflation on their short-term rentals:
- Negotiate lower rates on expenses such as utilities, credit card, insurance and maintenance. All it takes is patience, humility and time to make phone calls to each company.
- Remove unnecessary monthly services that guest or you may not be using.
- Consolidate high rate credit cards debt into a single debt with a lower interest rate through a small business loan.
- Pay off high interest debt first. Find your smallest amount and highest rate debt and make the largest payment that you can comfortably make against it.
- Improve your credit score. A score of 700 or above will help you lower your credit card interest rate.
Did you know that Credit score is typically the biggest factor in determining interest rates? RentReporters helps you increase your credit score by reporting on-time rental payment history to the credit bureaus.
Getting a secure credit card through Fintech companies like Chime and Ally can also help raise your credit score by 30 points.
More: Increase your credit score up to 40 points in 11 days - Offer special promotions or discounts to attract guests to your listing. Try running more Airbnb promotions or offering a low cost perks such as a complimentary bottle of wine or a box of doughnuts.
- Look for low cost ways to make your property more appealing or unique to differentiate it from the competition. Consider add lower cost amenity such as a inflatable hot tub, larger screen tv, or sound bar.
- Watch market trends and adjust your prices accordingly. Tools such as AirDNA and Pricelabs help you monitor competition and occupancy rates.
Conclusion
The impact of inflation on short-term rentals like Airbnb and VRBO depend on various factors such as interest rates, and unemployment. While rising prices due to inflation can make it more expensive for hosts to list their properties, it can also affect the demand for short-term rentals.
Next Read How much money can you earn with AirBnb?
