Three Tips For Airbnb Hosts Negotiating With Guests

Three Tips For Airbnb Hosts Negotiating With Guests

Nowadays, everyone wants a bargain. There are a plethora of websites and services that make their money by flooding consumers with terrific financial savings for all sorts of products. When people save money, it makes them feel good. It often engenders a feeling akin to earning an extra bit of income.

Airbnb customers are no different. They are constantly in search of the best deal available. Most hosts are aware of this because they’ve likely dealt with a customer who is eager to haggle. You think you’ve set a reasonable price for your listing, but a potential guest has requested a discount. What now? Should you accept it, or do you stay strong and hold your ground?

Answering this question is a nuanced task. There are a number of facts to consider when deciding whether or not to entertain a discount. When working with a bargain-hunting guest, here are three tips to optimize your negotiation outcome.

1. Know Your Guest’s Negotiation Position

Knowing your guest’s negotiation position is essential to establishing a favorable result. This position depends on how much he or she wants to stay at your place. This in turn depends, for the most part, on the availability of comparable alternatives. So, your first step is to do your due diligence and unearth your competition. Here’s how you do it:

  1. Go to the Airbnb search page
  2. Run a search in your neighborhood for the dates requested
  3. Find the three most similar listings (with respect to location, amenities, etc.)
  4. Take the average price of these three listings
  5. Compare this average to your price

How does your listing’s price compare to the alternatives? By putting yourself in the shoes of your potential guest, you get an idea of how attractive your listing is in his or her mind. Moreover, you get a sense of the elasticity of your product.

2. Let Your Potential Guest Make The First Offer

During Airbnb negotiations, it’s typically best to have your opponent make the first offer. Why? Because it allows you to ascertain a superior vantage point. Now, according to the principle of “anchoring,” setting the starting price can often be beneficial for negotiating purposes. Studies have shown that on the whole, sellers who set the initial price often come out slightly ahead with respect to the final price point. While this might be true for certain types of negotiations, I have found that waiting for a first offer from my potential guests serves me best. This finding has been unearthed after two years of rigorous trial and error.

The way I look at it is that I have already set an anchor price: my listed rate. Accordingly, it makes sense to allow my guest to provide a proposal. Once a guest makes an offer, you can begin the choreographed negotiation dance. Consider your need for a guest, the comparable alternatives, and the risk of the potential guest (i.e. an old married couple vs. a group of party hungry 20 year olds). Weigh the appropriate factors and hone your counter offer accordingly.

3. Don’t Look Too Eager

No matter what, maintain a poker face. You always want to project the impression that your listing is in high demand. How can you convey this? By offering a counter offer that is only slightly below your initial asking price.

For example, if your original price is $1000 and your guest offers $800, counter with $975 (even if you would be willing to accept $800). Your potential guest will infer that you have a steady stream of customers, and will readjust his expectations. Now, if he is truly unwilling to meet you halfway, he will likely tell you. You can then exercise your own judgment as to whether you are willing to entertain a drastic discount. But the bottom line is that over the long run, maintaining a poker face and countering with a slight price nudge will net you the highest returns. Yes, you risk losing a few customers along the way, but you will make more money overall.

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