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Guide: How to Start an Airbnb Business in 2024
Ready to join the thriving world of short-term rentals? In 2022, Airbnb’s global booking value worldwide was 63 billion U.S. dollars, by far the highest it's ever been thus far.² Our guide on starting your Airbnb empire will help you get your slice of that revenue.
Plus, discover how Wise Business can become your go-to platform for hassle-free payments. Let's dive in!
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12 steps for starting an Airbnb business
Getting set to run a successful Airbnb can seem daunting, but breaking the process down into manageable steps can make it easier. Let's take a thorough look at the essential steps to launch your Airbnb venture:
Find out if you need permission
Before you build an Airbnb business, research your local and regional regulations.³ Some cities require hosts to register and obtain permits or licenses, while others limit the number of days you can rent your property. Here are some key aspects to consider when checking for permission:
Is short-term renting allowed? Investigate whether your local government permits short-term rentals or if there are any limits on the number of days you can rent your property each year.
Does your property have any restrictions? If you rent your home, check with your landlord or property owner for their permission to sublease. Homeowners should review their homeowner's association (HOA) rules and any applicable bylaws or covenants.
What licenses or permits do you need? Some cities require short-term rental hosts to obtain a business license, permit, or registration number. Ensure you acquire any necessary paperwork to operate within the law.
Do you have to pay accommodations or transient occupancy taxes? Some local governments levy taxes on short-term rentals. Familiarize yourself with the lodging tax rate in your area and incorporate that into your listing price. Be aware that in some jurisdictions, Airbnb collects taxes on hosts' behalf and remits them to the local tax authority.
Create an Airbnb business plan
A comprehensive business plan serves as a roadmap for your venture, helping you set goals and outlining the strategies you'll use to achieve them. Consider putting these on your checklist when crafting your Airbnb business plan:
Define your target market: Figure out the specific traveler types you want to cater to, such as tourists, business travelers, or long-term tenants. This will help you tailor your property offerings and marketing efforts more effectively.
Select property types: Based on your target market and available resources, choose the type of property you'll offer. You might want to offer an apartment, house, or unique stays like tiny homes or treehouses. Look at the neighborhood's appeal, local amenities, and points of interest when selecting your property.
Competitive analysis: Research nearby hotel rates, other Airbnb listings, and overall market positioning. Understand the competition in your niche to better gauge your property's value and identify opportunities to set your place apart.
Develop marketing strategies: Marketing is what you’ll need to attract guests and make sure your Airbnb property stands out. Invest in professional photography, optimize your listing description and headline, and consider listing enhancements such as Airbnb Plus or Airbnb Luxe.
Form a legal business entity
Establishing a legal business entity for your Airbnb startup will help you protect your personal assets and give your business a professional edge. You’ve got a couple of options available, with the most common being limited liability companies (LLCs) and corporations. Talking to a legal pro can help you figure out the best fit.
An LLC provides the flexibility of a partnership and the perks of a corporation. Its main benefit is that It keeps your personal assets safe from any issues tied to your Airbnb business. And with pass-through taxation, you get to save a little on taxes.
A corporation is a more formal legal structure that separates your personal and business assets. Incorporating your Airbnb business provides limited liability protection and may offer certain tax advantages. Just remember, though – forming and maintaining one can be a bit trickier, and setting one up might cost you more than other business structures.
Open a business bank account
Having a dedicated bank account for all your business transactions is like the golden rule of keeping your personal and business finances from getting all tangled up. When it comes to picking the right bank for your Airbnb business, consider what matters most to you – low fees, easy online access, or maybe seamless international transactions. With Wise Business, you can avoid currency conversion headaches and manage multiple currencies in one place.
Choosing a bank account that caters to the needs of your Airbnb business will make financial management a breeze. It streamlines your bookkeeping and tax preparation, so you can focus more on being a great host.
Acquire business insurance
Insurance is a key component of any business, and becoming a host on Airbnb is no exception. It helps protect you, your property, and your guests from potential issues or the unexpected. Two main types of insurance you’ll want to have include:
General Liability Insurance: This type of insurance coverage protects you against claims that might pop up from accidents, injuries, or property damage that could happen at your rental. It's a must-have for most businesses and will give you peace of mind knowing you're covered in case of any guest-related incidents.
Property Insurance: Your property is the biggest investment in your Airbnb rental business, so you’ll want to keep it safe from damage, theft, or natural disasters. Property insurance covers the property itself and everything inside, like furniture, appliances, and stuff provided for guest use.
Review Airbnb’s AirCover: While you’ll want to have your own insurance, Airbnb also offers something called AirCover for Hosts. AirCover is Airbnb's suite of protections and support for hosts for peace of mind and a stress-free hosting experience. It provides $1 million in liability coverage and up to $1 million for property damage protection. On top of that, you'll also have income loss protection (for things like utility outages) and deep cleaning coverage (for those unexpected messes).⁴
Consider earnings and costs
While starting an Airbnb business is exciting, it also needs to make financial sense. So, you’ll want to get a clear picture of your potential earnings and costs.
Think about your Airbnb income. How much can you charge per night? What's the average occupancy rate for your area? Are there any seasonal fluctuations to factor in? And just like with any business, you'll have expenses to consider. These might include mortgage or rent payments, property maintenance, cleaning services, utility bills, and even tax obligations.
How much are Airbnb taxes?
Taxes can vary depending on location, and you'll want to make sure you're playing by the rules.⁵
Sales Tax: Some areas charge a sales tax (or accommodation tax) on short-term rentals. Depending on your location, Airbnb might collect this tax on your behalf, so double-check their lodging tax help page.
Income Tax: As an Airbnb host, you're going to be earning a solid income, but you’ll have to report your Airbnb income on your tax return and watch out for required estimated tax payments throughout the year. A good tip is to set aside a percentage of your earnings to make tax time less stressful.
Tax Deductions: Here's the good news – hosting an Airbnb also means you could score some tax deductions. Expenses tied to your rental, like maintenance, supplies, or advertising, can be deducted as business expenses, which helps lower your taxable income. Just make sure you keep detailed records of all your expenses and consult a tax professional.
How much does Airbnb take?
As a host, you'll typically pay a 3% service fee on each booking. But that number can vary depending on your location and the cancellation policy and fee structure you choose.⁶
Find and prepare your Airbnb space
Once you’ve followed your plan and have everything in order, it’s time to find and prepare the perfect space to wow your future guests. Here’s how to get your abode Airbnb-ready.
Pick the right location: Location is a priority when it comes to attracting guests. Think about what your target guests want – is it quick access to tourist attractions, a quiet neighborhood, or maybe a hip and trendy area? Focus on locations that'll make your guests want to book.
Stand out with unique features: What makes your space unforgettable? Maybe it's the rooftop garden, a vintage vinyl collection, or a fancy espresso machine. Stand out from the crowd with some worthy features that'll make your guests enthusiastic in their reviews.
Style and comfort: Create a welcoming and comforting atmosphere with a well-thought-out design. Invest in good quality mattresses, provide plush towels, and ensure the space is clean. When you have happy guests, you’ll get more bookings.
Safety and necessities: Don't skimp on safety – double-check that you have functioning smoke and carbon monoxide detectors and a fire extinguisher. Make sure you have all the essentials like fast wifi and easy-to-understand check-in instructions for your guests.
Figure out Airbnb permits and licenses
Permits and licenses aren’t the most exciting aspect of starting an Airbnb business, but they’re crucial for operating legally and responsibly.
You’ll want to start by digging into your local laws. Every place has its own regulations, so you'll want to figure out what applies in your area. Take a peek at Airbnb's Responsible Hosting page for a basic overview, and double-check with your local government or housing authority to get more information.
Depending on where your rental is, you might need a special permit, license, or registration number to run your Airbnb. Keep an eye out for any fees, application processes, or inspections that might be part of the ride. Rules and regulations can change in the blink of an eye, so stay on top of the latest updates and make sure you're always in line with new laws or requirements.
Set your price
Setting the right price as an Airbnb host can be a bit of a balancing act – you want to make a profit without putting off potential guests. To find that perfect number, consider factors like location, property size, amenities, and local competition. You can even check out similar listings in your area on Airbnb to get an idea of what others are charging.⁷
Don't forget to factor in seasonal fluctuations, as demand may change throughout the year. And to make things easier, Airbnb has a super useful pricing feature called Smart Pricing. With Smart Pricing, Airbnb will suggest an optimal price for your listing based on your property details, booking trends, and more.⁷
List your Airbnb
Now that your space is prepped and permits are sorted, it’s time to make an Airbnb host account and create your listing. Listing your Airbnb is your chance to make a fantastic first impression and entice potential guests to book your space.
To create an appealing listing, invest in high-quality, professional photographs that showcase your property's unique features and charm. Write a detailed, engaging description that highlights your space's amenities and the benefits of your location - and, of course, use a professional yet warm and friendly tone when you’re doing so. Regularly reviewing and updating your listing to cater to current trends and guest feedback can help it stay attractive and effective.
Hire or enlist some help
As your business gains traction, your Airbnb rental business can feel like a juggling act. That's when hiring (or enlisting) some help can make hosting a whole lot smoother. For example, a sparkling clean space can make or break your guest's experience. While you might start off DIY-ing the cleaning, hiring a reliable cleaning crew can be a good idea if you’re managing multiple turnovers or other commitments. In the same vein, you might want to have a go-to handyman for unexpected repairs that can fix those issues and keep your property in tip-top shape.
Host an Airbnb experience
After some experience, you can take things up a notch with Airbnb Experiences. These are all about sharing your passion, skills, or local knowledge with guests who crave authentic, personalized adventures.
Ask yourself what unique experiences you can offer. Are you an incredible chef who can teach guests how to make the local cuisine? Maybe you're a history buff who knows the most fascinating hidden spots in your city. Or perhaps you're a yoga guru who can guide a beachfront class during sunset.
Creating your Experience listing is a lot like your property listing – top-notch photos, a catchy title, and engaging descriptions are key. Sell what you do, and make sure to highlight the exclusive, local aspect that guests can't find anywhere else.
Wise Business: How to save when taking payment across currencies
If you're an Airbnb host receiving payments in different currencies, saving on conversion fees can make a huge difference. One smart way to save is by using Wise Business. Wise offers the mid-market rate, which is the fairest exchange rate you can get. Unlike traditional banks that often add hidden charges and offer poor exchange rates, Wise is transparent about their fees and ensures you save money on your international transactions.
Looking to save when sending and receiving overseas payments?
Receive money
with Wise Business >>
300k businesses use Wise every quarter
Trustpilot Score: 4.4 /5 - Excellent ¹
Use Wise account details on Airbnb and Booking.com
FAQ for starting an Airbnb Business
Is Airbnb profitable for hosts?
Doing Airbnb as a business can definitely be a profitable venture. But, like any business, it depends on factors like your location, property type, occupancy rate, and guest experience. Put effort into a fantastic listing, offer superb hospitality, and be sure to do plenty of planning and research to increase your chances.
How to start an Airbnb business as a property owner
To kick off your Airbnb side hustle, you can follow these easy steps: 1) Research local laws and obtain any required permits or licenses for short-term rentals. 2) Polish up your space, making it comfy, stylish, and guest-ready. 3) Take some photos and create an irresistible listing on Airbnb. 4) Set competitive pricing and update your calendar.
How much does it cost to start an Airbnb Business?
It depends on your location, type of property, and initial setup expenses. You might need to consider costs for purchasing, renting, or renovating the property, furnishing, obtaining permits, insurance, and professional services (like photography, cleaning, and maintenance).
What percentage does Airbnb take?
Hosts typically pay a 3% service fee on each book, but the percentage can increase depending on your location, cancellation policy, and fee structure you choose.
How do I make money with Airbnb?
To make money with Airbnb, you can host travelers in your spare room or separate property. But you can also provide unique experiences like food tours, art workshops, or outdoor adventures. With Airbnb Experiences, you don't have to be a host to earn extra cash.
How do I start an Airbnb business with no money?
Starting an Airbnb business without money is certainly more difficult than having money to purchase a property, but it's possible. One approach is to start small by renting out a spare room in your own home to generate some income. Another option is to reach out to friends or family who have a spare room or property they're willing to rent out and offer to manage it for them on Airbnb. Alternatively, you could host an Airbnb Experience.
How to start an Airbnb Business without owning property
One way to start an Airbnb business without owning property is to become a co-host. This means partnering with someone who already owns a property and offering your management and hosting services for a share of the profits. Another option is to lease a property and sublet it on Airbnb, but be sure to check local laws and regulations before doing so. And as mentioned, you can also offer unique experiences or tours on Airbnb.
Airbnb renting rules, guest rules, and possible risks
Airbnb has its own set of renting rules and guest rules that hosts and guests need to follow. The rules cover things like guest behavior, noise levels, and smoking restrictions. As a host, you can also set your own house rules that guests need to follow while staying at your place.
Some of the possible risks of renting out your space on Airbnb include damage to your property, problems with guests, and legal issues. But luckily, Airbnb offers insurance and protection against some of these risks. Always be sure to thoroughly vet guests before accepting a booking.
Maintenance fees and average maintenance costs on Airbnb
Maintenance fees on Airbnb are all the expenses needed to keep your property in good condition and ensure a comfortable stay for guests. These can include cleaning, repairs, utilities, and routine maintenance tasks.⁸
Average maintenance costs for Airbnb hosts can differ depending on the property size, location, and guest turnover. For cleaning, hosts charge a separate cleaning fee per booking to cover the costs of professional cleaning services, laundry, and supplies. It’s one of the several fees applied to reservations.⁸
For utilities like electricity, water, and internet, plan for an additional amount per month, depending on your rates and guest usage.
What is the average Airbnb income?
In general, hosts can earn anywhere from a few hundred to a few thousand dollars per month. For example, a downtown condo would likely make more than a suburban or rural property due to higher demand and proximity to popular attractions. According to Earnest, the average Airbnb entrepreneur in the US earns around $924 per month.⁹
Looking to save when sending and receiving overseas payments?
Receive money
with Wise Business >>
300k businesses use Wise every quarter
Trustpilot Score: 4.4 /5 - Excellent ¹
Use Wise account details on Airbnb and Booking.com
Learn More:
How to become an Airbnb Host
How does Airbnb work with PayPal?
How do Airbnb payments work?
Booking.com vs. Airbnb: Which is better for you?
Airbnb & Payoneer: How to Integrate Them
Online Business Ideas for 2024
Please see Terms of Use for your region or visit Wise Fees & Pricing for the most up to date pricing and fee information.
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Sources:
- https://www.trustpilot.com/review/wise.com
- https://www.statista.com/statistics/1193536/airbnb-gross-booking-value-worldwide/
- https://www.airbnb.com/help/article/1376/responsible-hosting
- https://www.airbnb.com/aircover-for-hosts
- https://www.airbnb.com/help/article/2509
- https://www.airbnb.com/help/article/1857
- https://www.airbnb.com/help/article/1168
- https://www.airbnb.com/help/article/58
- https://www.earnest.com/blog/sharing-economy-income-data/
*Please see terms of use and product availability for your region or visit Wise fees and pricing for the most up to date pricing and fee information.
This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its subsidiaries and its affiliates, and it is not intended as a substitute for obtaining advice from a financial advisor or any other professional.
We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.
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