Latest / Short Term Rental Problems and Solutions / The Airbnb Algorithm Is Judging You, Here's How
Transcript
- Jeremiah Noll: Did you think you could expect cleaners and guests to be reasonable? Good luck. I thought so too, but I was wrong. Now you've realized it's not all sunshine and five star reviews. That means you're in the right place. Ever look at your calendar and just see that next weekend is vacant and notice your new bookings have suddenly dropped off a cliff? Nobody is immune to Airbnb dropping your listing visibility for no apparent reason. Today we answer a question from Victor. Who wants to know why this is happening to him? That's because this is the community where we talk about the gross, the awkward, and the operational messes, as well as the real strategies that help you keep going instead of quitting. Because this industry is somewhere where you can win big, or you can ignore education you can quit. Welcome to Short-Term Rental Problems and Solutions. Let's get into today's question. Morning, Jeremiah. I bought this house six months ago because the previous owner had it booked solid at ten thousand dollars per month in revenue. Over the first four months of ownership, I was hosting his transferred bookings, and I really expected the house to be earning more by now. I priced the nightly rent to prioritize smaller groups with variable rent based on occupancy, and I increased my minimum nightly rate based on expected occupancy and a break even calculation. Now I'm looking at a practically empty calendar and have five stars in all categories and Airbnb says my listing is a guest favorite. I feel like the previous owner tricked me. How is it possible that I can be highly rated and priced at break even rates and still fail? More importantly, what tips have you got for me? Thank you, Victor. You are you're not alone. This happens to me. It happens to all of us. And by correcting this problem several times, I can provide you with some tips to help you follow for sure and get out of this rut. And that's essentially what it is. You know, we'll get into you know all the the the different dynamics of the algorithm. What I want to emphasize is this. Usually it is a mystery only because we don't understand the algorithm Airbnb utilizes to determine the amount of visibility your listing gets. Most people simplify it, but it's actually very complex. And we'll get into that in this episode. I'll explain from my perspective some of the factors that the algorithm considers when determining your visibility. First, I want to focus on your comparison that the previous owner was succeeding and that you're failing. Consider instead if I buy Babe Ruth's bat, am I going to hit a record number of home runs in my career because I have the same bat as the great Bambino? Consider this as an alternative. I buy the number 19 car driven by Chase Briscoe, who won the NASCAR Great American Getaway 400. Last year, that was the race at the Pocono Raceway. Can I jump into the driver's seat of his Toyota Camry, sponsored by Bass Pro Shops, and Beat Danny Hamlin and compete with 36 other cars and drivers to squeeze out the win? No. The first issue is I don't have the Joe Gibbs racing team fueling me and changing my tires quickly and reliably. Second, I'm not 30 anymore and I don't have 10 years of experience racing at that level. Short-term rentals are much more comparable to traditional businesses than long-term rentals or commercial real estate. You can underwrite an apartment complex of 800 units much more easily. It already has management and you have the option of keeping that team in place. With short-term rentals, you might get a new cleaner, you might get a new handyman, you might change up the pricing strategy, you might change up booking preferences too. The success and failure are based much more on how you operate your business. If you miss everything else from today, hear this. Rental history means nothing when you purchase a short Term rental. In fact, the investment has a better potential for return on investment if the rental history is bad. That's like me telling you that to buy the Eagles an NFL team just because they won the Super Bowl two years ago. But you can't keep the same head coach. Why do I say it's better for a return on investment to buy something with poorer rental history? Because the best investments are made with the ability to recognize the property was poorly managed, which reduces its perceived value. Therefore, you'll be able to get something that's already ⁓ ready to go and just employ some of these new techniques and strategies in order to get that fantastic return. But you'll still be able to acquire the property below market value. So, how does algorithm work? Well, I'll go in order from things that we know for a fact to things that are a little more speculative. You'll see ⁓ this algorithm is complicated as Facebook or TikTok, and there's a good reason for that. That reason ⁓ is that it platform effectiveness, and we all benefit from Airbnb's market share as they compete with resorts and hotels. The first thing that they say very openly is that your visibility is impacted by your conversion rate. when guests are shopping around, they might type in Lake Harmony ⁓ four people, and they're see a host of listings. What determines which listings they see? Well, Airbnb as an organization wants to give the highest probability that that guest is going to book. by putting properties that have the highest conversion rate right up in front, they're increasing their likelihood that they're going to get a reservation. So if the guest put in dates, then Airbnb is going to show that guest the properties that it thinks they're most likely to book. Now it's going to consider things like their history, what they've clicked on in the past, and how long they hover over your listing before they move on to another one. This is not just did they click on my listing and how long did it take for them to make a reservation? This includes them clicking on your listing and then if they send a message to the host, if they do an instant book, if instant book is even on, if they ask questions. Or if they just back out of that house. This means ⁓ that a ton of things ⁓ on listing that could be impacting that conversion rate, which we're going to get into shortly. But you can actually track your conversion rate on Airbnb. It's actually something that you can find and you can keep track of that. And ⁓ that is one of the number one factors that that perceived value. See again, Airbnb only wants to promote your listing because they believe they're going to get a commission if somebody books your listing. If they if they don't think that that's a very good listing, they're not going to be promoting it in front of people because those people are likely to look into your listing and then determine that they don't really want to book it. So the higher your conversion rate, the better. That is like the number one for sure. We know that this is one of the biggest factors impacting. Our reservations and our impacting our visibility. So before you can get booked, people have to find you. And in a marketplace like ours, when they type in Lake Harmony, they're going to find like over a thousand listings. So there's several pages of results. And if they're only searching based on, you know, four people, then they're gonna see even the big houses. If they're only searching for four people and a hot tub and a pet, then hopefully they still see yours. But they're gonna see only like even though they add in some filters, there's still gonna be hundreds of listings. The second thing to remember is even though they typed in Lake Harmony, doesn't mean they're only seeing listings in Lake Harmony. When I look in Lake Harmony, I find listings in Blakeslee and Albrightsville and Pocono Lake, anything surrounding Lake Harmony. And that also has to do with my search history on Airbnb. But it is not just you to a geographical region. When you do a search. So the algorithm has a lot of flexibility in what it can present. But it's presenting, it's putting the best fruit at the front of the cart because it wants people to stop, linger, negotiate a little bit, and make a purchase. And at the end of the day, Airbnb doesn't care if it's the higher priced properties or the lower priced properties. I think they just want another reservation. They just want a guest for the first time ever. To make a reservation on Airbnb. They just want that activity. They just want people to walk through the door. So they don't care if your pricing is high. They want it to be low because that improves conversion rate. So if your pricing is low, then people look at your property, the perceived value is high compared to the price. so if they pick your house out of a long list to book the house, then ⁓ that obviously is They want to put your listing up at the top. Now, a lot of people, their analysis of why their reservations fell off a cliff is this far. That's about as far as they go. It's just, okay, well, conversion rate. All right. How do I get my conversion rate better? And we'll get into that, but you've got to understand it's incredibly complex, some of the stuff that we're going to be talking about today. And some of this is just speculation. Because they're not gonna fully throw out there what their actual algorithm is. But some of this is for sure. Like the next item I've got here, which is value. So another one of those areas that we know for sure impacts your visibility is the perceived value. So if the guest perceives value for your property, or like if Airbnb looks at the cost per night divided by the number of beds, or you know, whatever, they're gonna throw you in a category, they're gonna look at the competitors around you, and they're gonna look at your perceived value. That's gonna impact your visibility as well. So It's also the ratings. So this is like a no-brainer. We all know if you have bad ratings, they're going to be placing you on page two, three, four towards the end. I saw a listing yesterday that had 4.16 stars. Now it is only a matter of days until that listing gets taken down. They only have four reviews. So for them to only have 4.16 stars is a red flag. It's no surprise that they were trying to push their listing on Facebook. ⁓ but nevertheless, I'm getting off topic. of those categories ratings is value and they value, which means all you revenue managers out there, if you're bleeding your guests dry and you're charging as much as you possibly can to get a reservation, you better back it up. And add in something to make the guests feel like they're getting better value for what they're paying. Because if you don't surprise them when they get to their property with something that's going to improve their opinion of the value of the property to the point where they feel like they got a good deal, then your rating on value may suffer. If your rating on value suffers, guess what? You are not. getting pushed in the visibility algorithm because they're they're looking at that value rating is they're looking at your guests and how your guests feel about the property as far as the value goes, that's more heavily weighted than the other ones, like safety, cleanliness, and location. Although I feel like those are important as well, it's not just the overall five star rating. If a guest leaves four stars for value, but five stars for everything else, it's going to impact your visibility. So it's not like the bar is so incredibly high that you can't make it. You know, this is just, these are all these different metrics that you compete with all the other rental properties around you. You know, and nobody needs to be perfect. Nobody is perfect. But the idea is you just want to know that the guest's expectations ⁓ have to be met or exceeded when they get to your property. And if you keep on raising your price to the point where they feel like they were ripped off for your property, then you're going to be dropping down in the visibility search. So the other ratings do impact your visibility on the platform. Things like the overall rating for the house, the safety, the cleanliness, the location. It wasn't that long ago I hosted Jenny Snow on this podcast and we were talking about some of the strategies that we employ with guests. And one of those strategies is to actually ask your guest how they felt when they walked up to the front door. Did they feel like the neighborhood was safe? Did they feel like the house was clean? Did they feel like it was a good location? And actually to answer those questions or you know get to the heart of the matter head on. I like that idea. I like that approach because it means that there's not going to be any surprises. Additionally, there's questions that Airbnb is asking. And it's best to ask your guest those questions first. So the next thing, and this is something that Airbnb repeats over and over again, is that your visibility is impacted by your cancellation policy. wants you to have this flexible cancellation policy. They ⁓ done their research ⁓ they've found that it's in their best interests for guests to be able to cancel and get a full refund. ⁓ I mean, truth be told, the guest is gonna call Airbnb, give them a lame excuse, and Airbnb is gonna issue the full refund anyway. Regardless of what your cancellation policy is. So if it impacts your visibility, you might as well go with the flexible cancellation policy Airbnb is going to let them cancel. ⁓ ⁓ ⁓ most of my properties I have a moderate, which means ⁓ the guest cancels less than five days before check-in, they only get a 50% refund. ⁓ this has happened a few times where I would credit the guest for a future stay ⁓ I would refund them 50%. ⁓ Or if I felt bad, you know, I might give them a bigger refund, but maybe not the entire thing. Nevertheless, I've got a lot of registration fees that get paid when the guest is registered. And that typically happens four days before check-in because of the cancellation policy. I don't want my property owners losing money just because a guest, you know, last minute they broke up with their boyfriend and now they don't want to stay. Well, I already paid $125 for your registration. Not only that, but because I can't accept another reservation because it would be a late registration, I'm just gonna be empty. There's there's no way to refill those dates, you know, if it's short notice. So ⁓ I do get like if you get a cancellation, Airbnb tries to get you rebooked. And that might work really well when you don't have to register all your guests. And that's probably something that I would do. ⁓ I feel like worth Moving to that flexible cancellation policy. even if it's just because it impacts your visibility, and you know, the guest is going to get a full refund anyway. If they're upset that they got a 50%, they're gonna contact Airbnb half the time they're gonna get a full refund. ⁓ they could do a chargeback on their credit card and then they get a full refund anyway. So I'm kind of ⁓ in the air. what the effectiveness of the moderate cancellation policy is, but it's worked out for me a few times. the next one that they've talked about, but only slightly, is completeness. This is the completeness of your listing. The context that I heard this from Airbnb in is that your host profile should be complete. So if it just has your name ⁓ your age, like what decade you were born in, it is certainly not complete. Go onto Airbnb, fill out a lot more information. It's not just the decade, it's also what you like to do as a hobby. If you have any pets, where you like to travel, things like that. They're gonna ask you these questions and prompt you for it. You're just gonna want to answer those questions, you know, truthfully, but without divulging too much info. If you're property manager, this is a really good spot to put down that you're in real estate or that you are a property manager. Reason for that is because if somebody sees your listing and they're looking for a property manager, this is a really good way for them to find you. ⁓ link over here to another episode that we had on how to find a a really good property manager. Anyhow, back to the completeness thing. So your listing should be complete, meaning you go through all of the amenities that Airbnb has and you check off the ones that you have. You can also you have to do the photo tour by room. So organize your photos into rooms and then in those rooms put down the beds, the bed sizes, make sure you've got a description under every single photograph. So you should have a caption, an Airbnb. This is free SEO, you know This is a free way for you to add in and make your listing more complete is to label your photos. Even if you just put backyard or hot tub or gas grill, like you're not necessarily even explaining something that somebody can't tell from just looking at your photos. But it's because it's more complete that this could impact your visibility, where the listings that are not complete just don't get the same visibility. Airbnb feels like if your listing is complete. That the guest is more likely to have a good experience because their expectations are set a little bit better. Another one, and this is something I'm pretty sure Airbnb has talked about in the past, is your response rate. So when a guest sends you a message and it's like, hey, you know, do you accept guests that are under 25? you take an hour, two hours, three hours to respond to that guest. Your response rate is really bad. ⁓ and that response rate is also making Airbnb not really trust you with guests. So it's gonna limit your visibility because of that. If your response rate is very fast, if you are getting back to that guest right away, those kinds of messages, that response rate is going to make a big difference. And they can and they do track how quickly you respond to guests and how responsive you are. I also feel like if they call you and you don't answer the phone. That might be something that they put on your profile. Not really sure about that. That's more of the speculative side of this episode, but it could have something to do with it. ⁓ the next one is your conversion rate. So when somebody does make an inquiry, your conversion rate is affected because now that inquiry is you either accepting the reservation or not accepting that reservation. I almost always hit pre-approve. Now, this is actually a good time for me to get into some of the filters. ⁓ limits. Now I'm currently now in Tobyhanna Township. Tobyhanna Township is in Tobyhanna ,Tobyhanna is not in Tobyhanna Township, though they are mutually exclusive. But they require we put on our that primary must be 25 years or older to book. Now, do they enforce this? They don't really know how old your guests are. But they have to have it on the listing. So in order to improve our conversion rate, every single time a guest asks me how old they have to be to rent this place, I tell them it says 25, but I can make exceptions. Are you guys responsible? I want to make the guests feel like I'm pulling them like a like a favor. And I want them to book, even if they're under 25. Now there are a couple of property owners I know are not okay with that practice, and I don't do that for them. I make sure to follow their rules because this is their property at the end of the day that I'm managing. if it was just about visibility, if it was just about conversion rate, that's the approach I'm taking. It's yes, it says 25. I can make some exceptions as long as you guys don't get me in trouble. There's like that and strategies that we employ, ⁓ and ⁓ mitigate in other ways. So ⁓ don't all worried. ⁓ we've got this stuff under control. But that's a question that comes up a lot is like they're not going to know what your age limit is until they click on your listing ⁓ and scroll through the description because that's really the only for it. You can't really put that ⁓ in a different category. People sort based on this. ⁓ So ⁓ people who are or who are 24, like they're looking for a place go, ⁓ but they're not going to be ⁓ for some of those places. And the listings where it's 25 or older to book, ⁓ their conversion rate is being affected. Your conversion rate is being affected. ⁓ ⁓ it or not, could make a huge difference, especially if your property, ⁓ if your if your property is built for like young people, if you've put a lot of like, I don't know, Pinterests ⁓ Instagrammable ⁓ in your property, ⁓ then you're gonna be attracting that younger crowd. If you've built your house to be a party house, you're gonna be attracting that crowd. And you have to be willing to accept that crowd Because those are the ones that are going to be asking you if they can stay there. if you keep telling them no, and people are making inquiries and then they're not making a reservation, that's actually really affecting your conversion rate. ⁓ it's affecting it in one of the biggest ways. It's weighted more heavily because they made an inquiry and because of how long it took you to respond. And because after you responded, the guest never made the reservation. ⁓ nobody's going to be perfect every time. You can't wrangle every single one of them in. And there are definitely guests that I say no to. Like if it's a $4,000 weekend and they're like, hey, could you do $1,000 for this? I'm going to say no. But keeping all this whole like conversion rate thing in in mind, I'm going to tell that guest, no, I can't. But I can offer you a discount and I'm going to send you a special offer with the best I can accept for that weekend. Now that might be like $3,400 or $3,600 or it might be $3,800. I'm still going to send a special offer because that's another thing that helps that guest say, okay, there's some value here. The guy did come down in price. Maybe we're negotiating a little bit back and forth. I want to have a conversation with that guest. I don't want to just shut them down. Okay. ⁓ would never say, well, $1,000 is far too, ⁓ don't know what's the word. A thousand dollars is far too insulting. Why would I even entertain a conversation with this guest? I'll tell you why. It's because you're on Airbnb and everything you do is being followed. so your practices are going to impact your success on this platform. ⁓ so if you ⁓ not allow pets, ⁓ is a big one. a lot of guests are gonna ask about pets. ⁓ And you do allow pets but you don't allow cats, ⁓ or do allow cats and you don't allow dogs, ⁓ or whatever. Like Anytime a guest clicks on your listing and then has to look through the information in order to weed themselves out, that's affecting your conversion rate. So sometimes guests will sort the properties that they're looking for based on which ones are pet friendly and which ones aren't. Sometimes they will sort based on the number of people in their group, sometimes they don't. So when somebody clicks on your listing because you've got a great hero image. They should see a description there that is accepting and welcoming of all peoples. Instead, if they see something on there that says, no cats allowed, no old people allowed, no young people allowed, no, no parties, no sound, no music, no no bathing suits, no whatever. I don't know why I said bathing suits. like you get it. The more issues you have in that description, ⁓ the more. problematic your conversion rate's going to be. So another thing, and this is a big topic last year or maybe it was two years ago in Arrowhead Lakes, because they instituted a new variable rate short-term rental registration fees. was $8.50 per person per day. ⁓ And ⁓ still it is, ⁓ but it variable. So it's based on the number of people who are coming. So I had a property and ⁓ you know I managed their So they are the boss, ⁓ right? So I had a property owner who required that I follow this strategy I knew was going to be a failing strategy. And ⁓ didn't my foot down at first. I just said, okay, we'll try it out. ⁓ And it horribly. ⁓ her listing ⁓ was like ⁓ very deep the search results. ⁓ You had zoom in ⁓ really close the map just for her to pop up. ⁓ So I took over that listing and tried turning it around. So I employed some pricing strategies and we did get three reservations. The problem is, as soon as those reservations found out that there were additional fees that they had to pay, they canceled. And that killed us. For like the next three weeks, we weren't getting any more reservations, no matter how low I put the price. So things like this seriously impact your visibility. And young property managers might not necessarily understand this, but it's why your Bookings, your new bookings have fallen off a cliff. It there's just so many reasons why this could happen. if you have in your description ⁓ after the guest books the house, you're going to send a Venmo request, ⁓ that you're going to send a payment request through the platform so that you're, you know, following the actual platform policies. If got that in your description and the guest looks at it and sees, ⁓ I was willing to pay $1,200 for this week. But I'm not willing to pay an extra eight dollars and fifty cents per person per day. We're staying for seven days. That's fifty-six dollars per person. There's ten of us. That's five hundred and fifty dollars extra. already spending fifteen hundred bucks for this place. gonna add on another thirty-three percent. Like this doesn't seem like a good deal anymore. They back right back out of your listing and they never sent you a question. They never did anything. They just looked at the description and decided. I'm not going to book this place. So you definitely want all of your fees built in. There shouldn't be anything that's charged to the guest afterwards, if you put it in the description, because now the description is causing your conversion rate to be bad. So age limits, pet limits, ⁓ also nights. So one of the things that affects how you show up in search is the minimum number of nights. So take for example a guest that says, well, I only want go up for Friday night. I've got to be back Saturday night. So ⁓ it's going to cost less if I stay for one night versus two. That guest does not realize that the vast majority of properties in the Poconos ⁓ are a two night So when they're searching through Airbnb and they put in Friday night checkout Saturday, they're not seeing any of the listings that are a two night minimum. Now it might be a two-might minimum for your property and for your community. would encourage you to have a couple of dates that are still ⁓ night minimums. The length of the reservation should be as flexible as possible. So you should allow long term stays, you should allow one night stays. I would encourage you to make that minimum as low as you can Because it affects your visibility. If somebody is searching with just a one night search, they're not going to see your property and the same thing is true for pets. The next thing I'm gonna touch on is So I'm sure you figured out by now that there's special promos. When your listing is brand new, your first three reservations get a 20% discount. because you're new, you also get a boost in visibility. So they're going to put you in front of more people so they can test out, you know, your conversion rate, ⁓ good your marketing is. And a lot of those things have to do with completeness and blah, blah, blah, blah. ⁓ your special promos are something you can do after you've got enough reviews ⁓ that. ⁓ You can do special promos. Now you would select up to 14 days on your calendar and you go in through the little gear icon. I'm sure you know how to do this, and you select a special promo. So there they'll actually send your property out in emails. They will put a little slash on the thumbnail when people see your property. They'll see that it was this price and now it's this price. And that gives people the impression of value because they know it was priced higher. ⁓ I mean, we all see what's actually going on here. Nobody pays ⁓ at Kohl's Kohl's is trying to tell me I saved $150. It's like, no, I didn't. I would not have bought these clothes if they were if they were an extra $150. ⁓ shop at Kohl's because you're 45% off like all the time. So no, I didn't save any money. I spent money. I'm sorry, I get off topic sometimes. ⁓ the special promos is exactly what that is. I upcharge. ⁓ On Airbnb, and then I add a special promo, and that brings the price back down for the guest to give the impression that the guest is getting a good deal when the price is reduced compared to what it would normally be priced at. Special promos definitely affect your visibility because things like that are also going to help your conversion rate. if you haven't done any special promos in a while, do some special promos. Do that instead of changing your base rate. The next one is fixed pricing and variable pricing. So we have to think about like your cleaning fee, your registration fee, those are fixed, right? there's something else like a linen fee or whatever that you've got in there, ⁓ you want to make sure that those numbers are low. ⁓ they reflect what the cost actually is? Yeah. Yeah. ⁓ they don't have to, right? ⁓ I messed around with one of my listings ⁓ I changed the cleaning fee from $250 down to $15. ⁓ I changed the registration from ⁓ $50 down to $5. Now my fixed cost was only $35. And I increased my nightly rate ⁓ a lot. So my fixed price was lower, but my variable price was higher, much, much higher. ⁓ So ended up getting about the same payouts, but I was only getting like two night reservations. And I think that's just because when people were searching for three nights, I was now high priced compared to my competition. So ⁓ You could go both directions with this. If your fixed price is too high, but your variable nightly rate is too low, what you're going to get is longer reservations. And that's not necessarily a bad thing, the guest is still looking at the total price. You know, they're they're not looking at how much is it for two nights versus three nights. ⁓ it's only this, it's only 60 bucks more for me to add on a third night. ⁓ not looking at it that way because they've already figured out what day they want to check in and what day they want to check out. ⁓ they're trying to keep that to a minimum because it affects their price. They're not necessarily doing the math. And as a former math teacher, I can tell you people hate doing math. Don't make them do math. but you can look at this ⁓ this curve and this graph, and you can say, where do I have the most success? And you can mess around with those figures as much as you want. ⁓ had ⁓ lowered the nightly rate and I had lowered the fixed price, and both of those things have an impact on reservations and on visibility and on occupancy. What I would caution you though is don't put your fixed price, like your cleaning fee and everything else, don't put that too high they don't want to see those things being too great, because that impacts the perceived value from Airbnb's algorithm. ⁓ one is that dynamic pricing. So you definitely should be using dynamic pricing. And going to get into pricing strategies and revenue management on another day. I actually invited Josh Messinger, who's one of my colleagues, to come onto the show so that we can talk about some of these pricing strategies that he's employing. The one thing that I want to ⁓ point out at this point is that in dynamic pricing, you've got your base rate. Your base rate determines how high or low your prices are going to be for the rest of the year. Now, other thing that determines that is the perceived demand and what other properties are priced at. So your base rate is like your throttle. It's the one control that you bring up or you bring it down order to control your occupancy. So the lower your pricing, the more bookings you're gonna get. Obviously, if you went down to $1, ⁓ gonna get booked up real fast. If you went up to, I don't know, $5,000, you're not gonna get any reservations. So somewhere in there is a sweet spot. ⁓ ⁓ will ⁓ the strategy of building momentum. The momentum makes a big difference. And this is one of those things that's a little bit speculative, but I think the Airbnb sees that you just got five reservations or four inquiries, and they're like, wow, this person must have done something to make their property more attractive. Their conversion rate was this, but it just boosted over the last three days. They've got this really good conversion rate because they just got all these reservations. Let me promote them and keep up this momentum before they raise their pricing. ⁓ that stuff happens. And so momentum impacts your visibility. But you have to start by lowering your price enough that you can build that momentum. So I look at it this way. I look at it like an airplane. Airplanes do not ⁓ ⁓ feet. Commercial airlines go all the way up to 33,000 feet or 30,000 feet. Do you know why? Because the air is thinner and they can burn less fuel and still go places. They can still go the same speed with less fuel if they're all the way up there in the I don't know, stratosphere or whatever that is. I didn't really pay enough attention when it came to cumulonimbus clouds and anyway. So math, not science. ⁓ nevertheless, ⁓ the airplanes they fly at that high altitude because they can burn less fuel at that level. So what they have to do is they burn so much fuel just on takeoff and on the climb. and then once you get up to cruising altitude. you can actually hear it in the cabin ⁓ where the engines go ⁓ like they start going ⁓ slower. And it's because already up at that They just want to maintain this this speed, this ⁓ altitude, ⁓ and it's gonna be a lot easier. From that point it's a lot quieter in the cabin. And ⁓ I look at the pricing strategies that same exact way. is I'm going to keep my base rate low. That means I've got my throttle at like full throttle. I've got my base rate low until my occupancy and my momentum picks up. I've got ⁓ and momentum, I'm going to be raising that base rate until both of those things start to slow down. And then I'm just trying to maintain that level of business. And that's when ⁓ when in revenue management you've got things dialed in. But Going back to the algorithm, ⁓ your calendar actually has an impact as well. And again, this is speculation. But if you are solely on Airbnb and you're not blocking the house for projects, you're not blocking it for personal use, the platform knows ⁓ ⁓ can promote your property and you're not just gonna block those dates. That that guest is gonna have the opportunity to book it because that. Is just not something that you keep doing. You don't keep blocking dates. Whereas if you are on multiple platforms and you get a reservation on VRBO, you've got to block those dates on Airbnb. Airbnb, I don't think, likes that. I think they like to have complete control and availability of your calendar, whether it's full or empty. when you block dates on the Airbnb calendar through software like Hostaway or Hospitable, what's Happening in Airbnb's mind is well, I've got competition. This is not a chance for me to ratchet up the visibility. This is somebody I might not want to promote because they've got these calendars getting blocked because they're on other platforms. So properties actually that I've seen be the most successful ⁓ ⁓ just on Airbnb ⁓ ⁓ just on VRBO. It's like They've built this successful strategy. They've built this successful rental for that platform. And the platform keeps promoting them. In which case, it's almost pointless to have software except that the fact that you get better reporting, you get better metrics, you get automated messages, which you can also set up in Airbnb, but whatever. I think that the algorithm ⁓ the properties that do not block their calendar. So that's blocking it for personal use. That's blocking it because of reservations from other sources. And that kind of goes hand in hand with like, you know, talking to guests. And then after they've booked, they cancel because you called them up once you got their phone number so they can book direct. kind of activity is going to get found, especially in the ⁓ age of AI. They're going to, they're going to find things like that. It's not just, it's not just the keyword search anymore for them to figure it out. And they're not limited to the processing capability of a bunch of humans. They've got AI who's scrubbing these messages threads like on a 24-7 basis. So calendar comes into software control as well. So we've already seen Airbnb impact hosts that are just on the Airbnb platform versus hosts that use an OTA. When you're using software like Hostaway or Hospitable or ⁓ I think that impacts your visibility as well. I'm not sure if it has a big difference or a little difference, but like I told you already, I think that the properties that are the most successful happen to be on one platform and they do that one platform really well. Now we all want to be diversified and there's value in that. I'm just saying, I think that blocking the calendar, I think that the software controlling your profile, ⁓ I think that does have something to do with it. thing to consider is that having that software impacts the completeness of your listing. one of the reasons for this is when you go from your winter pictures to your summer pictures, ⁓ like got to go back in, disconnect your software, update the photo tour, add in descriptions like you have to make it complete and then bring it back into your software. It's so annoying for us as managers to be going through this so frequently, but it is part of the job. And it does impact your visibility. We already talked about momentum, but this is where I had ⁓ momentum in my notes. Is that once you do build that momentum, ⁓ I feel like that momentum is what causes Airbnb to push you. It's the conversion rate has been built up for, you know, this whole period of time for all these different reasons. It's looking at the past, know, a couple of days and it's seeing that you're getting a lot of booking, so it goes up. ⁓ like ⁓ What have you done for me lately? Right. It's not just how much have you done for me? It's what have you done for me lately? ⁓ It's sweet but sour ⁓ when got a 30 night stay. It's great, this is wonderful. And you accept a guest and they're there for a little while and not as much work to do ⁓ because they've already figured out the house and there's not as many things on. It's not like you're introducing the property to another person every couple of days. A 30 night stay is a nice little relaxing relief. That's the sweet part. The sour side is for that 30 days, you're not getting any new reservations. So you kind of like fall off the visibility spectrum. It's like now you're blocked out for the next 30 days, even though it's because it's an Airbnb reservation, Because you haven't gotten any inquiries lately, because you haven't gotten any new reservations lately, it's actually affecting you in the visibility spectrum. So the momentum has a lot to do with that. And so that in itself is a reason to not take long reservations. But you know, you have to kind of balance these things because it is really nice to get a long reservation. Whereas, you know, you can build momentum back up. So, but though both of those things have to be thought up together. Like when you get the inquiry for somebody who wants to stay for 45 days, you've got to think about all right, well, what am I gonna do 30 days from now in order to get my my next open dates booked? And what am I gonna do, you know, 40 days from now in order to get those dates booked? Because the closer we get to the end of this reservation, I'm just gonna be out in the middle of nowhere with no future reservations. So you have to think through that. You know, when you take those longer reservations, and I still recommend taking them. It's just like, all right, well, we have to have a plan. You know, that way I don't end up with an empty calendar what happened to my momentum. It was killed because you didn't have any availability for days. And because you didn't have any availability for 45 days ⁓ and your booking window is typically days, like you got to think, what am I going to do on day 35 and day number 40 and day number 45? Because this guest is going to be checking out and I need to. Have the momentum coming out of this long stay. that's ⁓ kind of all I have to say about momentum, but it does definitely affect your visibility. another thing I think that they follow is your refunds to guests. So if guests are having a bad experience at your property, but you're sending them money, I think Airbnb is picking up on that. They're looking at the resolutions. ⁓ when send a guest money. ⁓ they do ask the question, is this because of a trip related issue, or is this because of an additional service, or is this because of something else? Are you changing the dates? All these different types of things. I think they're looking for clusters. looking at averages. They're looking at this is how much money we sent, this host, and this is how much money they send back. Now, It's kind of funny to think that Airbnb would care about this metric because it doesn't affect how much money Airbnb is getting. doesn't even get taxes taken off. It's ⁓ I think they pay attention to this because most hosts are not sending credits to guests who are having a good time. ⁓ think that the correlation between credits to guests ⁓ experiences that are not what they expected is pretty high. So ⁓ Typically when a guest is getting a refund, when they're getting a credit, it's because they experienced some sort of trip related issue. So if Airbnb wants to promote guests, know, coming to their platform, going to their properties, and then coming back someday in the future, then they're heavily invested in that guest actually having a good time. If paid off your guest in order to get a five star review, ⁓ then Airbnb is kind of questioning is this review actually legitimate? Or did they just pay this guest in order to get a good review? I don't know. This is again this is speculation. I just think that you should, you know, give your guest credits, but keep it under control somehow, or keep or maybe even do it off the platform. You know, that might be a bad idea for other reasons, but let's not get into that today. to visibility. ⁓ ⁓ you can ⁓ a successful strategy of upsells, that is adding services to the reservation to where the guest is willing to pay extra for it. ⁓ If you are able to get them to extend their stay as well, those are upsells that Airbnb does make more money from. might not be making extra money from, like, you know, a decor package or ⁓ know, concierge shopping, ⁓ Airbnb likes to see ⁓ that are adding value to their guests where the guest is willing to pay extra. So Those additional things that the guest is paying, it's because of additional services that are being added, or because of the dates being modified or the number of guests being modified, all of those things increase how much Airbnb is getting paid, but it also I think impacts your visibility Airbnb sees you as a good salesperson. If they're extending their stay, if they're adding on a couple extra dates, those are all things that are beneficial. And then the next thing is the cancellation rate. So the cancellation rate is like, you know, guests have already booked your property. often are they canceling the reservation? ⁓ that's another indication that the guest is not having a good experience. And if they do cancel, like that's a big deal. Now, if you cancel on the guest, I haven't even brought that up. You do that, that's you, you know, you can expect your listing to tank if that's the situation. ⁓ what we're mostly talking to Victor about today is actually. We don't know why we're tanking. And if he had canceled on a couple of guests, he would know. You know, he wouldn't be asking this question. He would know it's because he canceled on a couple of guests. But nevertheless, when a guest cancels, whether they give you a reason or they don't give you a reason, this happens. And that's why they have the flexible cancellation policy, is they give those guests that opportunity. I think that Airbnb is looking at your listing and comparing your cancellation rate to other cancellation rates. These are all very small numbers, they want to look for clusters. If there's like a bunch of guests that just canceled your property, like two cancellations within a week ⁓ two cancellations within a month, like that's a cluster. Like that's a problem. That's actually a big problem. Cause now the guest is getting all of their money back and Airbnb is getting nothing. And is doubly bad if the you don't even get rebooked. ⁓ So guest canceling is a big deal. And if too many guests are canceling, that's gonna affect your visibility because it tells Airbnb there's something wrong with this listing. have a ⁓ well performing property ⁓ I was hosting last year. And last year the homeowners blocked the calendar for ⁓ weeks ⁓ order to get their deck torn off and rebuilt. ⁓ did the deck need any work? No, it was just a little small. So them increasing the size was a long term win. Did they review this idea with me first? No, I would have been all for it, but we would have done a few things in order to make this happen a little bit more smoothly. They're boss, it's their property. If they want to block it out for two weeks so they can, you know, build up the deck, that's their choice. So what actually happened what I would have changed ⁓ is I would actually blocked those dates far earlier. That way it didn't seem like You know, it was kind of a last minute deal. the second thing is I would have made sure that it actually happened in that period of time. ⁓ ended up happening was the construction started, things went bad with the contractor. Construction never finished. Well, it didn't finish on time. So ⁓ found a new contractor to finish the job. It took another three weeks until that new contractor was able to show up, ⁓ then another week for them to finish the job. ⁓ in that period of time, We had three reservations. So we had to notify all three of those reservations the week before they showed up that there was work going on in this on this deck that they wouldn't have access through the sliding glass door to the deck. to all of them, we offered a small credit, something reasonable. I think it was like $450 ⁓ a credit for this inconvenience. The construction was not going on while they were there. There was no like dust for them to worry about. It wasn't dangerous. The doors were locked. It's just an inconvenience that they were not able to use the small deck that was there before. So what happened was this seriously affected our visibility. the guests that did stay with us, they got the credit. ⁓ And there was one guest that canceled, ⁓ and there was another weekend in that period where we got it booked, and then we would notified them that there was this ongoing work, ⁓ they canceled. Shortly after booking. So those four weeks killed our visibility. And this is a very high performing property. It normally does extremely well. But it was like all of a sudden, you know, the deck is all done. And we're like, where are the reservations? What's going on here? And it was that we lost all of our momentum by blocking it for two weeks. It's that we got a reservation and then we got a cancellation. It's that we had a guest cancel after we told them they wouldn't have access to that deck. And then it's also that we sent a couple of refunds. It's all of these things that are all like speculative, it's all in this closed little space of time. So over the course of that month, we did not get any new reservations, except for that one that I mentioned. ⁓ had to cut our prices in half. I lowered our base rate in order to increase the throttle. I to add in special promos. I had to build up momentum again. And that took me two months to get back to the kind of pricing that we were at before this whole fiasco happened. So the new deck project cost them like twenty thousand dollars. It cost their rental activity like forty thousand dollars. So the total cost for that deck upgrade was fifty grand. Now if they had been presented with this pricing and saw that it was fifty thousand dollars, they would not have done it. I can guarantee you ⁓ it's because it twenty thousand dollars and they saw an improvement coming, but homeowners don't always understand the algorithm. They don't always understand how their decisions are going to affect you, your business, or even their rental activity. ⁓ And that, guys, why we're going through this. That's why we're discussing these things. The last thing, and this is purely speculation. ⁓ but it would make sense. If I was Airbnb, this is what I would be doing. the tone of your conversation. So AI is easily able to look through the messages on your thread and identify ⁓ your guest is happy, whether your guest is upset, whether they are sad. Whether they are regretting their life decisions, whatever is happening, or if it's an emergency. And now that Airbnb is employing AI in their algorithm, you would expect that they're searching through and not just looking for keywords like what they were doing before. Now they're actually looking at the tone of the message. So they're looking for red flags, like is this guest being encouraged to cancel the reservation to rebook direct? Is this guest being told that they can. You know, break some community rules or break some host rules. Is this something that we need to care about? And Airbnb is looking through these things their AI in order to tell, is this guest having a good time? So I feel like they're actually searching through these messages and these message threads, and that that tone, the the happiness of the guest, the comparative ⁓ Upsetness of other guests or how harsh or how friendly the host is, I feel like these things are actually impacting your visibility. ⁓ ⁓ the guest is being completely unreasonable, it's still not good for your visibility to go dark ⁓ this guest I feel like just the tone of conversation is something needs to be ⁓ kind of carefully manicured. And you have to have this consistent tone with your guests ⁓ you are helpful, happy to help, responding back, responding back quickly. It's only a matter time until. ⁓ They are also measuring how quickly you respond to guests, not just inquiries, but also like every single message that the guest sends, how long until you send them a response. And this is really gonna suck for the people who are hosting on their own and they don't have VAs or AI or a co-host to respond back to the guest right away. Like that out of office message. Cause sometimes guests will send you a message at like four AM. And part of that's just because they're coming from like internationally, right? They might be in Madrid. Where 4 a.m. here is like a reasonable hour, you know, in Madrid. So like they might be looking at the message threads and saying, well, this this host didn't respond to this guest for four hours. Like that's a big red flag. I feel like that's coming. ⁓ don't know that it's actually impacting anything yet, but the tone of the conversation is definitely something that they can tell. It's definitely something that they can measure and see. Now, this might seem wild, but your visibility is being impacted by thousands of factors. And a whole bunch of those we haven't even discussed today. The way your rental is run is going to change the the volume that your property does. It's ⁓ it's a strategy for marketing. It's a lot of things all combined into one. There's a lot of factors that make a property manager good or a property manager bad. And there's a ton of factors that can make you as the host successful or unsuccessful. And Victor, think you're seeing, like through all these different parameters, how every decision that you make when it comes to price, every decision that you make when it comes to your listing, ⁓ decision that you make ⁓ your short-term rental business ⁓ going to impact your visibility. Your visibility impacts your reservations. It impacts how much you can charge per night. And it's not just about like using that throttle to get up to that cruising altitude. It's also about efficiency. Right. So if you've got an issue with your hot tub and you keep giving your guests credits for the hot tub, like the tone of the conversation is negative because now they're identifying issues. And this could impact your visibility. Like even though you're giving them a credit, now you're still less likely to get a five out of five for value. So you should just like my opinion, fix the problem before the guest arrives. Add value to the guest before anything gets done. Like I have mentioned before, I really like putting soda in the fridge. I think most Americans like drinking soda. so we put a couple Cokes, a couple Diet Cokes, a couple Sprites, and a couple bottles of water. Why do we do this? Because anybody, even little kids, can drink sodas. And everybody drinks water. Not everybody likes water. I get it. But that's why we do these things. It's because one of the first things your guests is going to do when they walk into your house is check the fridge. I don't know why, but the fridge better be clean. And if you have something in there, it's going to give them a first impression that's really going to make a difference. you kind of have ⁓ think that like these challenges we're running into, the challenges that Victor is running into, ⁓ these are the things that don't really talk about when they sell this dream of easy passive income. But they're exactly the problems that make or break your operation. If you've got a situation or a question, then please email me your question ⁓ and let me know if willing to call in. The email address is info@galvanized management.com. problem might be the next one that we break down, and chances are you'll help a lot of other hosts in the process too. If this episode helped you, then share it with another host who's in the trenches. Rate and subscribe too, so that we can organically reach more people. That's how we make the industry better. 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