Local hosts underpricing themselves

As I said, I wasn’t going to message them. But it sure was tempting for a minute!

@LizinMN -
It’s illegal in the United States to get together with your competitors and set prices. It’s called “price fixing” or “collusion”. I don’t know that the law would find out about it, but I strongly recommend you just let it go.

@Eberhard_Blocher - I suspect Germany has anti-collusion and anti-price-fixing laws, too. You can get together with your competitors, but you are not supposed to talk about prices - or at least agree to anything about how to price.

I made this point a while back, but I was smacked down by other posters.

@EllenN - I don’t see your post in this thread (it’s either deleted or in another post). But I agree! I’ve marketed products for a large corporation before, and received a lot of legal training on what you can and can’t do. You can’t agree on setting prices or splitting territories or segmenting customers.

Let me correct my words. You are not allowed to do those things, or you are in violation of the law. Will some owners violate the law? Of course, if they think they can make some money or avoid getting caught. I won’t encourage that - my anonymity is not ironclad. Besides, it’s the right thing to do to follow the law.

1 Like

Here’s a link to the thread. I am well aware that competitors meeting to agree on pricing is price fixing and is illegal. Other posters disagreed with me.

@EllenN - I see why I hadn’t read that thread - it’s over a year old and I was not on the forum then. The response from “alba” was incorrect (as was noted later) about price fixing being legal in the U.K. The marketing group I managed had a branch in the U.K., and the U.K. laws are even more strict than the U.S. laws. And cabinhost’s response that AirBnB owners getting together to set pricing is nothing like big corporations fixing prices is only accurate in the scale of the issue. It probably won’t get caught simply because not all the owners will be involved or no one is paying attention (and there is always the alternative of a hotel). That does not make it legal.

You do not have to set prices.
But you can educate them on how to properly do business, and make a profit.
Teach them what depreciation is, and how they should consider it into their pricing.

At $20 a night, they will run into problems at a certain point, when they have to start replacing things.

Here in Austria there are huge STR clubs, with over 5000 members, they spend a lot of time educating and advising people on financial items like taxes, pricing, getting a subsidy etc etc.

I expressed my frustration, and I’ve gotten a lot of good responses. I’m thankful for those. As for “price fixing,” that was never my aim. People love to take others’ ideas and stretch them to the max in order to make something sensational out of something pretty ordinary. Have a great day, everyone! :slight_smile:

2 Likes

@LizinMN - I was not trying to make anything sensational out of it. I was sharing information that I thought was important in case you were not aware of it.

Fellow Minnesota host here as well. If your area isn’t too saturated, I’d simply say just ignore the underpriced hosts. In essence, it’s like they don’t exist. I have one host in my neighborhood who’s severely underpriced to the point that she’s constantly booked out months in advance. It might make her feel good, but it’s actually a mistake to get so far booked out. It basically means you’re leaving money on the table In my mind, it’s like she doesn’t even exist since she’s booked so far ahead.

1 Like

Hi Everyone
I’m in Queensland Australia and over the past year the suburb I have my 2 apartments in (Palm Cove), has been swamped with new Airbnb listings.
Most coming on board with ridiculously cheap rates.
Also, with Airbnb now allowing ‘boutique hotels’ with less than 25 rooms to list on their site, this is adding further competition.
Hotel operators with more than 25 rooms are also listing, and I’m certainly feeling the effects of that.
Cheers
Pip

The under utters usually fizzle out after a while.
The problem however is that since there are new entrants every day, they’re always new green/naive under cutters to replace those that fizzle out, so for us hosts waiting it out, the wait becomes increasingly long, and sustainability becomes an issue!

1 Like

@kevinjha makes a point about listings that I’d forgotten. I’ve seen a number of listings where the price is low but not available. Whether it’s booked up or the dates are blocked, we don’t know. Others have minimums of two weeks or 30 days and so are not really my competition at all since I want bookings of less than a week. I really like my 1 nighters. So @LizinMN if you click on every underpriced listing and read their descriptions, looked at their calendar and so on, you may find there is less competition than you thought. But the best policy is the be a great host and price fairly. If you build it they will come. :wink:

2 Likes

Airnb just sent me an email telling me my prices are between 18-85$ too high because people booked “similar” places nearby after looking at mine. Problem is they are comparing apples to oranges. If I cut my prices by $85, it will be lower than last year and way lower than a one bedroom hotels with no waterfront and my place has 3 bedrooms, total 1200 sq ft, vs 600.

Those suggestions are just plain laughable! I have gotten those messages regularly, citing months where I have 100% occupancy. They simply make no sense and should be considered to be fodder for laughing!

1 Like

Pay no attention - I get that all the time. I know the value of our listing and an automated Airbnb email does not.

Value is the point, not the price.

3 Likes

I’d leave it alone. Every host has the right to price their listing any way they want. As others have said, focus on making yours stand out.

If I took Airbnb’s suggestions seriously, I’d be paying guests to stay! They quoted a place which was charging so little and compared it with mine. Ignore them, I do!

2 Likes

Talk to your competitors to fix the price? If companies do that it is illegal. Depending on the country you are in it is called price fixing, collusion or cartel like behavior. It is probably also illegal for AirBnB hosts to do it though I doubt anyone would be prosecuted. The market is allowed to operate based on supply and demand and be fair to both sellers and buyers. If you don’t feel that your effort in AirBnB is being suitably rewarded then try another line of business. I agree it can be frustrating to see new entrants undercut prices but that is the advice they are given to get bookings when they don’t have reviews. In my experience guests who choose on price are also the ones who are more likely to give you a 4 (or even a 3!) because they don’t value the extra effort you have gone to.

From the web: “When competitors agree to restrict competition, the result is often higher prices. Accordingly, price fixing is a major concern of government antitrust enforcement. A plain agreement among competitors to fix prices is almost always illegal, whether prices are fixed at a minimum, maximum, or within some range.”

1 Like

If you read the whole thread, you’d know I wasn’t thinking of engaging in price fixing. Let’s not exaggerate, as much fun as you might think it would be to do so. Have a great day.

1 Like