Airbnb Sub-Economies Help Users Avoid 'Host Fatigue' and Boost Profits

NEW YORK (MainStreet) — Ted Liu, a 39-year-old real estate broker, began listing his Santa Monica, Calif. townhouse for short-term lease through a "piggyback" start-up company, which uses the Airbnb platform to provide pricing and hospitality services to hosts.

”My wife and I recently moved out of four-bedroom place and thought, 'Why don't we consider renting out our place so we can make a little bit of extra money to help with the mortgage?'" Lui said, who started using San Francisco-based Pillow Homes to manage his Airbnb account.

Online management property sites, such as Pillow Homes, Proprly and Guesty, to name a few, are sprouting up in major U.S. cities where the Airbnb is popular to arrange bookings and other services like leaving chocolates on guest pillows.

Liu contacted Pillow Homes, which is available in the San Francisco-Oakland and Los Angeles area, to manage both the price listings for his Santa Monica home and guest communication.

His home is listed at $250 a night -- an attractive price for regular bookings -- but he doesn't want to be burdened by the day-to-day logistics.  

"The strategy is to get people into our place, and once we have a track record then we can start raising the rates closer to market," said Lui who hopes to achieve "superhost" status, the Airbnb benchmark for an extraordinary host, before the end of the year. Pillow Homes, a sub-logistics company of the sharing economy, has facilitated that process. 

Sean Conway, the 30-year-old founder and CEO of Pillow Homes, bootstrapped the online property management start-up with his business partner Justin Miller in 2013. The San Francisco-based service has since raised $2.6 million with plans to expand to other major U.S. cities like Miami and Austin later this year.

”Our value is we can become the power sellers of Airbnb by maximizing people's income by a 24/7 booking team for multiple platforms to increase the price fielding," said Conway, who comparing the growing economic environment of Airbnb to eBay.

eBay Likeness

Similar to eBay, Pillow Homes users set a ceiling and a floor price for their property to maximize revenue. Users pay Pillow a 15% booking fee to handle pricing, guest queries and logistical questions, such as key exchanges. Charges for house cleaning are handled separately.

The key to eBay's success has long been attributed to eBay "super sellers" who use the platform for marketing and a digital retail space, networked economy experts say.

"We think the same is going to happen to this market," Conway said about the multi-billion dollar industry in U.S. short-term rentals.

Randy Engler, 43, who started his young professional career at eBay, noticed the similarities between the popular e-commerce site and the Airbnb platform. Observing conditions for an Airbnb eco-system, he founded Proprly, an on-the ground property management system in New York City that provides essential hospitality services.

”I’ve seen see so many successful companies come out of existing platforms like eBay, such as PayPal, and I thought the same thing would apply for Airbnb," the Proprly CEO said.

Proprly customers fork out around $130 and $140, a line item in Airbnb, to pay for services like house cleaning and key deliveries to guests. The start-up is available in most areas around New York City, in places in the city where Airbnb is popular, and the site plans to extend its hospitality services to San Francisco and Paris later this year.

Monetizing Airbnb Accounts

A 44-year old attorney named "Robert," who insisted on anonymity to avoid legal consequences with his landlord, leases his one-bedroom East Village apartment when he's away on business with Proprly's support services.

”When I'm gone for a week or two, it could be two different parties staying the in the place and Proprly will clean it up and get it ready for the next person," Robert says. "A normal cleaning person, you can't schedule with a 24-hour notice.”

The East Village attorney who pays $2,600 for his apartment in a walk-up building has leased his place over 20 times in the last year, using the online management property service each time to manage hosting fatigue.

”It helps cover the rent," he says, who added he would have tired of leasing his apartment if he didn't have a reliable service for cleaning and providing key exchanges.

The attorney estimates that leasing his place at $195 a night had made him $10,000 in the last year. He added that services like Proprly have cut down his interactions with guests from four hours to one a week. "They make it possible unless you want to do it as a second job," he said.

Managing Host Fatigue

Airbnb coined the term "host fatigue," referring to hosts that feel overwhelmed by the amount of worked needed to rent a place full-time.

The average vacation rental owner in the U.S. spends 8.4 hours per week on marketing managing their properties and charges around $217 per night, according to a HomeAway vacation rental report.

Many of the online property management start-ups that have sprung up under the sharing economy, are creating niche services to accommodate Airbnb's pitfalls.

Amiad Soto, 27, and his twin brother Kobe, founded Tel-Aviv-based Guesty (formerly SuperHost) in 2013 for providing better customer service support for Airbnb hosts.

”When we traveled and put our place in Airbnb, it wasn't a smooth experience, Amiad Soto said. "And we decided they're should be a service that does this for you." He said he wanted a service that could handle guest communication while away on travel.

Guesty, similar to Airbnb, received seed funding from Mountain View, Calif.-based Y Combinator for setting up its international software based property management firm.

”Airbnb is focused on legalizing its platform while we're focused on helping their customers," Soto said on the popular platform's shortcomings in meeting customer needs.

Guesty charges hosts a 3% fee for booking reservations and tacks on other costs for coordinating house cleaning and key drop-offs. The service handles third-party vendors and is not confined to one specific location, operating all major cities in the U.S. as well as globally.

Guesty is an option for short-term rentals hosts living in second or third-tier cities like Boston, Denver and Washington, D.C. since other management sites are still only operating in major U.S. cities like New York and San Francisco.

Adam Falla, 35, a self-proprietor who moved to Austin, Texas last year; stumbled across the Guesty site for renting his one-bedroom apartment in Washington, D.C.

The self-proprietor who rents his place to pay down the mortgage says he used Airbnb before he switched to using the Israeli-based software based reservation and property management site.

”The amount of time that I spend in a week has probably gone down from five hours to one hour and has saved me 80% of the time, " said Falla who rents his apartment in the Logan Circle neighborhood. "Obviously, it’s reduced the kind of time of management needed to manage the [Airbnb] profile effectively.”

—Written by Farran Powell for MainStreet

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