In 2021, experts said that Airbnb predictive analytics would make a huge impact on the real estate industry in 2022. Were they on the right track?
Table of Contents
- How Does Airbnb Use Data Science/Artificial Intelligence?
- Does Airbnb Provide Rental Data?
- How to Check Your Airbnb Analytics
Launched in 2008, Airbnb is a leading brand in the hospitality and travel industry. What started out as a way to generate extra income for roommates trying to make ends meet is now a global icon with listings in over 200 countries.
Because of its huge success, Airbnb needed to look for ways to stay at the top of its game. To remain competitive in the industry, the company employed technology and used it heavily to provide a better user experience to everyone who used the platform.
It is where Airbnb predictive analytics comes into play. Airbnb took advantage of artificial intelligence and made use of data science to improve user searches and increase conversions.
Real estate investors can make use of big data in a similar fashion to give them a better insight into the rental property market of their choice. This article aims to explain the concept of predictive analytics in simpler terms, as well as show you how Mashvisor can help you gather sufficient data for your rental property analysis.
Related: Why You Need Predictive Analytics Tools for Real Estate Investing
How Does Airbnb Use Data Science/Artificial Intelligence?
Before we go any further, perhaps some of you aren’t as familiar with predictive analytics as other tech-savvy investors.
Simply put, predictive analytics gathers large chunks of data and uses them to predict future consumer and market behavior and trends. Airbnb takes advantage of digital technology by incorporating artificial intelligence into its system to widen its reach.
It is no secret that Airbnb grew into a global phenomenon because of its heavy reliance on science and technology. From its humble beginnings of offering air beds and breakfasts to conference attendees to its present status as a game-changer in the hospitality industry, Airbnb is a market leader because of how it utilizes tech to its advantage.
The company makes use of technology in several ways. We will go over some of them in the next section.
Using Data for a More User-Friendly Search Experience
As a service provider, Airbnb initially did not know what type of data to offer its customers. The company originally worked with a model that gathered the highest quality listings within a specific radius based on a customer’s search history.
Eventually, as more users came to the platform, the company obtained more market-accurate data, thus replacing the older model with a more data-driven approach. Airbnb predictive analytics helps enhance the user experience by providing users with a more tailor-fit search.
For instance, if an Airbnb user searches for vacation rental properties in Tampa, FL, the system would then skew towards nearby neighborhoods. They are neighborhoods where people who searched for Tampa Airbnb wound up making bookings instead, like Courier City or West Riverfront.
As someone into real estate investing, being able to access such types of data gives you the upper hand on the competition. It allows you to look into other locations near top Airbnb areas.
Related: How to Buy an Airbnb Investment Property
Using Data to Match Guests With the Right Hosts
In a way, Airbnb’s predictive analytics takes on the role of a matchmaker of some sort. Only this time, instead of pairing Mr. Right with Ms. Right, it matches guests looking for vacation rental properties with those wanting to rent out their homes.
Airbnb hosts can either accept or reject bookings based on their preferences. Based on their goals and priorities, hosts can dictate the way they approve or deny guest bookings. Generally, they decide based on how a particular prospective guest can maximize their Airbnb occupancy rates.
Most hosts want to avoid wide gaps between check-ins and checkouts. They are more inclined to accept requests that will help them minimize those gaps.
Airbnb engineers and data scientists observed host behavior and took note of the different factors, as well as big and small rental market trends, that affect their decisions. The result was a well-developed machine learning algorithm that allowed them to create a more efficient and personalized search system based on both guest and host preferences.
Instead of adding to the algorithm’s noise, they created their own filters and did several tests using different approaches. Their ultimate goal was to determine the likelihood of a guest getting a booking given the different parameters.
As a result of using and applying the above filters and preferences, Airbnb saw a 4% increase in booking conversions and a considerably higher number of successful guest-host matches.
Does Airbnb Provide Rental Data?
Airbnb’s primary objective is to connect travelers looking for more affordable alternatives to hotels with homeowners who are renting out their properties as vacation rentals.
Real estate investors like yourself should always check the condition of the rental market in a particular location before making an investment decision. If you plan to start an Airbnb business, you need to find out what vacation rentals can offer investors in a neighborhood.
As a company, Airbnb only gives rental information that can be found on the platform. You can scrape the website for the rental data you want, but it is a very technical and tedious process. If you’re looking for reliable rental data, you can use a website like Mashvisor to make things easy for you.
Mashvisor is a real estate website that specializes in data analytics, especially when it comes to the short-term rental market. It uses actual data from Airbnb and factors in Airbnb predictive analytics to do all the hard work for you in filtering the results you want.
To learn more about how Mashvisor can help you find profitable investment properties, schedule a demo.
How to Check Your Airbnb Analytics
If you’re a real estate investor and you want to convert your investment property into an Airbnb rental, you will first need to gather enough information to see if the said strategy works for you. Its success depends on factors such as location and seasonality.
It is why we strongly recommend that investors first check out the rental market data in a specific location before buying a potential vacation rental home.
As an investor, you need to be wiser with your purchase and take into account how much your return on investment will be based on your strategy. Some locations are more promising as traditional rental hubs, while others are better as vacation rental markets. You need to determine which rental strategy works best for your location.
Generally, a good Airbnb investment should have the following:
- A property price of less than a million dollars
- An average monthly rental income of no less than $2,000
- An average Airbnb cash on cash return of 2% and above
- An Airbnb occupancy rate of at least 50%
They will ensure your chances of recouping your initial investment in the shortest time possible, as well as give you a positive cash flow on your property.
The good thing about modern real estate investing is that you don’t have to do it manually. You can simply log onto Mashvisor to get access to the top Airbnb data analytics tools available online. Mashvisor takes into account Airbnb predictive data analytics in giving you the most accurate and realistic data in the vacation rental market using rental comps.
The Benefits of Working With Mashvisor
As an investor, you need to ensure the safety and success of your investment. While there are tons of real estate websites out there, it is hard to put your trust in a website that gives you just any piece of Airbnb data. You need to ask yourself what is the best Airbnb analytics platform that will help you achieve your goals.
The answer to this question is Mashvisor.
It may sound like such a bold statement coming from us, but we already have a proven track record to back our claims. Countless real estate investors can testify about how using Mashvisor’s tools helped them find the most profitable vacation rental properties.
As a Mashvisor user, you get to access market-level Airbnb data, including real estate market data, neighborhood data analytics, and Airbnb predictive analytics. You also get access to property-level data, such as Airbnb rental income, costs and fees associated with Airbnb, predictive cash flow analysis, ROI calculator, Airbnb occupancy rate data, and Airbnb comps.
To start looking for and analyzing the best investment properties in your city and neighborhood of choice, click here.
How to Determine Your Current Airbnb Performance
If you’re an investor and you already own an operational Airbnb property, determining your current performance is a lot less complicated than running predictive analytics on your property. There are a couple of ways to go about it, such as:
As a platform, Airbnb assists hosts in keeping track of their performance, so they know which areas they need to improve. On top of using predictive analytics, the platform gives hosts an insight into their performance by sharing dynamic statistics, practical tips to improve performance, as well as feedback on things they’re doing well.
Two of the main things Airbnb use to give hosts an insight into their performance are the Ratings and Views sections, which are found in your account’s Progress tab. The Progress tab also shows you your booking rate, which refers to the percentage of guests that book your place after seeing your listing. It is one of the more important things you should constantly monitor.
As a real estate investor, you need to pay attention to the above things to help you take your Airbnb game to the next level.
That being said, using Mashvisor to evaluate your Airbnb performance is simpler yet much more data-driven. You can use the website to check the following metrics:
- Monthly Rental Income
- Cap Rate
- Cash on Cash Return
- Nightly Rate
- Occupancy Rate
The above metrics will help you get a better understanding of how your rental property fares against other similar Airbnb properties in your neighborhood.
It can be done using Mashvisor’s real estate heatmap. The heatmap will show you how areas of a neighborhood are performing based on the following filters:
- Traditional Cash on Cash Return
- Airbnb Cash on Cash Return
- Airbnb Rental Income
- Traditional Rental Income
- Listing Price
- Airbnb Occupancy Rate
For instance, if you want to see how other properties are doing where Airbnb rental income is concerned, simply go to Mashvisor.com and enter the location of your choice in the search bar. Once you see the map, click on the dropdown menu in the upper left corner to view the filter. In this case, we’re going with the Airbnb Rental Income filter.
You will then see a color-coded map that reflects which areas are doing exceptionally well with retail income from the vacation rentals (darker shade), which ones aren’t doing well (lighter shade), and everything in between.
You can hover your mouse’s pointer over a pin to see a summary of the property. Click on the box to see a detailed view of the property. It will give you an easier time with the comparisons. It will also help you determine whether you’re doing better than the competition or if you need to make certain adjustments to your Airbnb operation.
How to Evaluate a Prospective House as an Airbnb Property
Evaluating a potential property, on the other hand, is a bit different. While predictive analytics can also be used for this, it requires looking at the current state of the local real estate market to see its short-term and long-term benefits.
As an investor, you would want to break even and start profiting as soon as possible. While predictive analytics can help you make long-term predictions, the current market situation gives you a more realistic picture of what you can expect in the next few months.
This is not to take away from Airbnb’s predictive analytics. The platform’s predictive analytics feature will help match you with the right guests as well as determine market behavior and trends over the long term. All we’re saying is that evaluating a potential vacation rental property isn’t as complex.
Using “Traditional” Methods
One way of doing this is to go about the conventional way of gathering data. It simply means that if you want to know how much Airbnb rentals are making in a particular location, you need to go out and drive around town to look for specific properties. It requires plenty of hours spent looking for vacation rentals and talking to lots of people for leads.
Once you acquire the leads, you need to track down the rental property owners and hosts to see if they’re willing to share this type of information with you. Then, you need to log all of that information in a ledger or spreadsheet for a real estate market analysis.
Before real estate websites, this was the go-to for most rental property investors.
Now that we have the technology to our advantage, evaluating a potential property’s Airbnb profitability is easy. Mashvisor allows you to make a predictive analysis of what certain investment properties have to offer.
The process is quite similar to tracking a vacation rental’s performance – by using the site’s investment property calculator.
The site’s calculator allows you to make accurate computations by giving you access to a massive database that covers almost every area in the 2022 US housing market. The database reflects actual data gathered from highly reliable sources like Zillow, Realtor.com, and even Airbnb itself.
The investment property calculator lets you search for the most promising properties that align with your investment goals and actual financial situation. It factors in not just predictive analytics but the real-time comps in the market of your choice, as well as your finances. This makes ROI calculations a lot more realistic and highly accurate, especially if you choose to enter some of the financial data based on your own market study.
The calculator also comes with an Airbnb calculator that’s tailored to your investment strategy. It will show you all the important data and information associated with running an Airbnb business. Working on a rental property analysis has never been easier.
Related: How to Predict the Airbnb Performance of an Income Property
Wrapping It Up
Airbnb has definitely changed the vacation rental industry with its dependence on data science and AI. The Airbnb predictive analytics feature has indeed helped – and continues to help – Airbnb owners and hosts make the most of their business.
As a real estate investor, getting access to helpful data will help elevate your game and take your Airbnb business to a whole new level. While Airbnb doesn’t give you all the data you need to make important investment decisions, you can always turn to Mashvisor for assistance.
Mashvisor’s Airbnb database is updated regularly to reflect the current market conditions. Its investment property calculator, as well as its real estate heatmap, will help you find the right investment properties that make for promising Airbnb houses. All you need to do is sign up to enjoy all of the site’s benefits.
To get access to our real estate investment tools, click here to sign up for a 7-day free trial of Mashvisor today, followed by 15% off for life.