Study shows AIR hosts in Sydney make 50% of their listing rate

Saw this today – this makes sense to me since I also pay around 35% in just income taxes. With the high cost of utilities year round in Chicago year plus the large payment that goes to the cleaner for every booking, my “annual” earnings from Air is probably half of my low nightly rate. But it’s 50% more than leaving it empty since we won’t rent it long-term.

Same here. In Arizona the governor struck a deal with Air for them to remit taxes (appx 15%) on our behalf. So after taxes, my cleaning fee… I’m looking at 70%. Then I give 15% to my co-host, so I’m at 55%. Then there are other expenses factored like utilities, federal taxes, and inventory. Drop it another what, 10-15%?

But hey, such is the cost of doing business. I don’t think hotels have a high net profit margin, either, and it’s probably even lower than what we get. The question for entire house hosts is whether it’s better to Air it or long term rent it. LTR has a much higher margin (no cleaning cost, manager, inventory, etc) but on a lower overall sum of money (monthly rent).

This is not surprising. It is sobering for a lot of hosts, though.

Uber is another enterprise that drivers have to examine closely. Initially it looks just wonderful that you’re pocketing all this extra cash. But over time if the cost of gas, maintenance and depreciation are calculated, the earnings don’t look so great.

I know that for us, it is less than 50%. But as @chicagohost says, leaving the property empty makes $Zero.

Edit: I think that if a lot of hosts took their time into account the percentage would be even lower.

It also depends on how you calculate your expenses. We had taxable income of 10% of our revenue last year. We have a full house rental. The 10% was after the mortgage interest expense, the depreciation on the house and on capital investments of furniture, and all the operating expenses (utilities, cleaning, staff, etc.). Cash flow was positive, by about 10% of the revenue, too.

I put together a business plan before we bought the place to be sure we would not be in the red. We’ve actually done better than my initial plan (:relaxed:).

So many people don’t know how to do that. They get into the business for a short time, then find out they aren’t really making money. In the meantime, they have depressed the rental rates for the rest of us. But that’s what AirBnB is counting on (Homeaway, too) - that there are enough naive (uneducated?) people out there to keep coming in as hosts and keep the prices low - and AirBnB’s pockets full.

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I can confirm (after spending time in the hotel industry with a global meeting planning company) that their profit margins are often much lower than 50%. MAYBE they could reach that IF they sold all rooms at listing price, but after they begin to cut rates for groups, offer online and last minute deals, and cut prices for industry professionals they really aren’t going to be making that high of a margin on the average night stay.

If you look into other industries, 50% margin is awesome! Makes sense now why property managers are looking to scale, given upside of industry.