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Company Culture and Financial Realities in the Airbnb Business with Sheri Marnell
If your goal is to get rich off one or two Airbnb properties, you’re in for a harsh awakening.
Scott Quesnell
July 30, 2023
TL,DR
1. Treat the short-term rental (STR) business seriously: STR requires significant effort, employee retention strategies, and financial management.
2. Create a company culture: Retaining help is important. If you don’t have cleaners, you don’t have a business.
3. Be realistic about financial expectations: Building equity in the property and creating cash reserves should be the primary financial goals, rather than expecting immediate money in your pocket.
4. Diversify marketing strategies: Depending solely on listing platforms like Airbnb and VRBO can be risky. Employ independent marketing efforts, like creating a social media presence, to mitigate potential business interruptions.
For all the non-readers out there
When I think about the short term rental business, all I think about is how big of a headache it can be.
There are two major factors that contribute to this thought:
How do I keep the cleaners and property managers bought in so I don’t have to keep recruiting and how do I know how much to reinvest versus put in my pocket.
So I hopped on an interview with Sheri Marnell to get some insights.
View the Short Term Rental Business as a Business.
I believe most people view the STR space as an investment vehicle that you “turn on and never have to touch again”. Here are some issues with that view:
Issue #1: You’re either cleaning up after guests or you have to hire someone to do that. If you hire, they could leave. If they leave, now you’re a recruiter. Creating a company culture will lower the risk of them leaving.
Issue #2: How do you know how much to reinvest or take out in distributions?
Issue #3: Airbnb or VRBO shut down tomorrow and you still have a mortgage, now what?
When I think of my anxieties that come from investing in my own property, these are at the top of the list. After the interview with Sheri, I have clarity on how to keep employee’s longer and take out distributions stress free.
Create a Company Culture
Sheri has a PhD in business where she researched leadership and innovation.
So, she knows a thing or two about keeping her people happy.
Sheri hired her cleaners in October, a couple she found on Facebook that are from the area.
And in May she invited them over to the property for a “company party” and everyone got to know each other and build that connection owners and employees need while working towards a goal
No matter what business you are in, I believe that people buy into people. As a matter of fact it’s one of the top three reasons employees quit.
How Much Should You Pay Yourself: The Financial Realities
Let’s cut to the chase. If your goal is to get rich off one or two Airbnb properties, you’re in for a harsh awakening.
In my interview with Sheri, she talks about how the first year she didn’t pocket a dime and this coming year she expects to break even.
Her goal is to start building equity in the property and build up cash reserves.
Or in simple terms, get rid of that debt and have money saved for things when they break.
This is how you run a Short Term Rental like a business. Build your equity so you have more capital to invest and increase likelihood for a higher ROI.
1+1=4
Build The Business, Don’t Depend on Listing Sites.
This section is just my personal takeaway. Sheri and I barely touched on this in the interview.
My contrarian belief with the Short Term Rental business is that most people depend on Airbnb and VRBO. What happens if those CEOs decide to shut down to “find themselves again.”
You’ll have no business. That’s risky.
As a marketer that serves businesses in this space, I believe it’s important to do your own marketing.
Sheri has a social media page for her STR.
Doing your own marketing will allow you to create an audience that doesn’t depend on the goodwill of outside parties. So if these listing platforms shutdown. You will still have a business.
Run Your Short Term Rental Business Like a Business
There’s not much of a difference between running an STR business, marketing agency or restaurant at its core.
Keep your people happy.
Understand the financials.
Do your own Marketing.
That’s all for today.