Airbnb: Sorting Out This Co-Host Thing

Go to any STR forum or questions-and-answers setup, and you’ll find that a common question is regarding co-hosts. When an owner has a property they want to rent out as a short term rental, but for whatever reason they can’t take care of it themselves, they have a co-host to do it for them.

And that’s a good idea. Today, guests want a much more personal – and often quirky – experience when they travel. A good co-host can make sure that guests have a wonderful and trouble-free time.

But it’s not a job for everyone.

You can’t just grab a handy neighbour or family friend. Hosting is not a job that anyone can do successfully – and let’s face it, you want your rental business to be a success.

The questions that potential hosts ask the most are:

• How do I choose a co-host?
• How much should the co-host be responsible for
• How much should I pay the co-host?

Today, we are going to concentrate on the last question – the biggie. How much should a co-host be paid for their work?

Many owners believe that a percentage of the overall stay income is a fair way to pay the person who is looking after the property and the guest. Is it? I don’t think so. It very much depends on what your co-host is doing on your behalf.

Airbnb has an official co-host system (at the time of writing). You can read about it here. As you can see, it’s possible for an official co-host to do just about everything that the host can do – apart from having the guests’ fees paid into their account.

If a co-host is entirely looking after the listing, then isn’t it fair that the person who is doing the work gets a fair payment for doing so? I think so.

Working with a percentage just isn’t going to work. One party of guests will be completely unlike another and the time they demand from a co-host will differ. Here’s another way:

The owner of the property knows its annual running cost – mortgage if applicable, property taxes, maintenance, condo fees etc. He or she can then add the amount it takes to run the property as an STR – insurance, utilities, occupancy taxes and so on.

For the sake of easy mathematics, let’s say that this figure is $10,000. Now the estimated occupancy has to be evaluated. This depends on the area and how much work the co-host or host is prepared to do to promote the property. But again, for the sake of easy maths, let’s imagine that a realistic occupancy is 75%. That means that 273 days out of the year, the rental should be occupied by guests.

So let’s take the cost of the annual expenses (10,000) and divide that by the number of occupied days in a year (273) and we get a cost-per-day figure of $36.63. (Check it by working it out in reverse i.e. $36.63 x 273 =10,000). So if the owner rents out the accommodation for 75% of the year (273 days) and receives $36.63 per night, he or she has broken even.

So, owner, you’ve done your sums but I’ll bet that there are going to be costs you hadn’t thought of. So let’s round up your $36.63 per night to $40. Not a fortune but it makes our mathematics easier. Now, how much profit do you plan to make? Remember, your investment is about $10,000 per year – how much could you expect to make on that elsewhere? And when I say ‘elsewhere’, I mean without actually doing any work really, you’ve got a co-host, remember.

If you were to invest that money, you’d be doing brilliantly if you got $600 per annum in interest. Now that 600 divided by your 273 night equals only 2.19 so if you’re renting out your property for 2.19 + 40.00 (your cost + a little for contingencies) you’re still providing accommodation for a remarkably reasonable  $42.19 per night. Not that you would – you need a bigger profit margin.

You’ll have some idea about what sort of nightly fee your property is worth. You’ll be aware of what local hotels charge.

But you have to now decide on what you’re going to pay your co-host. The first thing you need to decide – between you – is what responsibilities that co-host will have.

The host owns the property. He/she deals with paying the bills and making sure that they are all paid up, making sure that they have STR insurance, pays the taxes and generally deals with admin matters. The host may or may not also be responsible for running the online aspect of the business.

The co-host may do several or all of these:

• Communicate thoroughly with the guest prior to arrival
• Change the keypad code for every guest
• Meet and greet and perform the all-important house tour 
• Prepare the rental – anything from full cleaning to preparing the small but important details
• Deal with any problems or issues the guests may have during their stay
• Act as a concierge for the guests by recommending restaurants, shops, activities, events and so on
• Deal with the laundry – by doing it themselves or coordinating it with a laundering service
• Maintain, or arrange the maintenance of, the exterior of the property
• Deal with any guests who might be breaking house rules, partying, sneaking in extra people, indulging in illegal activities
• Arrange and coordinate repairs and maintenance to the property
• Acquire and keep up to date various leaflets, tourist information, takeout menus and so on
• Locate and employ emergency tradespeople such as plumbers, electricians etc.
• Monitor the exterior cameras
• Locate and deal with regular workers such as window cleaners, gardeners etc.
• Act as the purchasing department – buying supplies of consumables (paper products, coffee, flowers, magazines etc.) and cleaning materials
• Have the ability to store materials if the rental does not have a lockable owner’s closet
• Keep accurate accounts
• Ensure that the guests aren’t noisy or disturb the neighbours in any way
• Arrange or perform mid-stay cleaning if the stay is for more than eight days
• Communicate with the guest on the day before checkout to ensure that they leave before or at checkout time
• Photograph any damage and report to the host immediately
• Arrange for any repairs/replacements
• Write the reviews of the guest

Depending on the type of rental you’re running, where you are located and a few other factors, there will be other duties for the co-host to perform too. In some cases, for example, the co-host might also be responsible for promoting the rental.

So when we look back at the above, we can see that it’s likely that the co-host is doing the bulk of the work.

I hear ‘15%’ bandied around. Absentee hosts sometimes believe that they can a) find this paragon-of-virtue/Jack-of-all-trades and then b) pay them a mere 15% of the value of the stay.

One way to evaluate how much to pay a co -host is to make a list of everything that the co-host is expected to do. The co-host will need to be on call every day for a certain period of time. This in itself is a valuable commodity that is necessary for you as a host to maintain your standards, ensure good reviews, recommendations and repeats.

It is your co-host who is going to make or break your business so please pay them accordingly.