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Is there a better way to run an Airbnb service?

15 April 2019 Sasha Karen

Short-term letting services like Airbnb are well established now, but one property investor and niche real estate entrepreneur has found another way to target it and ramp up its earning potential.

Evan Thornley, investor and executive chair of LongView Real Estate, said that a typical assumption may be that a small apartment in the CBD can find success on Airbnb rather than a traditional rental, but this may not always be the case.

He said that comparable property on Airbnb and traditional rentals are finding comparable returns, due to in part an oversupply of small apartments in the CBD listed on Airbnb.
 
Specifically, Mr Thornley’s tip focuses on targeting family and group travellers rather than focusing on the CBD location.

He said that there are not many services available to a large group of travellers, which may include multiple families travelling together, groups of people looking to find accommodation to attend a wedding, or on-site workers who need accommodation for less than a year.
 
“There are a lot more family and group travellers who want to stay in an Airbnb than there is suitable Airbnbs in Australia,” Mr Thornley said.
 
“Therefore, when demand is greater than supply, the price is driven up.”
 
To stress his point, Mr Thornley used the example of a block of small art deco apartments in St Kilda, rather than in the Melbourne CBD.
 
“The apartments were, at the time, in traditional rent, so we decided to move them over to Airbnb,” he said.
 
“Within a year, I was getting more than 40 per cent more cash in the bank each year than I was getting through traditional rent and that’s a lot!”

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Mr Thornley added that houses could provide a larger return than apartments.
 
“The amount of money you can get per bedroom in a four-bedroom house in St Kilda on Airbnb is about twice as much per bedroom for a two-bedroom apartment,” he said.
 
“Therefore, investors have the opportunity to make about four times as much money in the house even though it’s only got twice as many bedrooms.”

Is there a better way to run an Airbnb service?
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