How to use Airbnb to your advantage

Introduction

Leadership is an art, and an opportunity to become a leader can come in different shapes and sizes. Whether it's planning a budget-friendly staycation for friends and family or managing your recently started Airbnb venture. Like any other art form, mastering this art requires practice, asking the right questions, and maybe the help of your Data scientist friend. When it comes to practice, I know you got that covered. And I have got the latter two covered for you in this article.

In this article, I will be using the Airbnb Seattle data as an example to answer some of the important business questions that might help you better lead your new Airbnb venture and hopefully give clarity on what kind of thought process is required to ask the correct business questions. And for the rest of the duration of the article, you might see many weird plots (bar, scatter, and choropleth plots), but don't worry; they are here to facilitate our understanding and help us notice some patterns which answer our business questions.

To make it easier on your part, I have structured the whole article where I show the plots first, explain them, and then answer the question with their help.

Section 1

Bar plots

Here are some bar plots that denote the availability or price trends across all listings. The upper row is for availability rates, and the lower row is for price rates. The first column describes the weekly trend, the second column describes the monthly trend, and the third is the same as the second, just sorted for convenience.

Here are some of the observations we can make from these bar plots:

• From a), b), and c), it can be observed the rate of availability varies by some amount when compared to the month of the year but not for the days of the week.
• From d), e), and f), it can be observed the price rates vary for both days of the week and months of the year.
• The rate of availability can vary due to two reasons:
  - The listing is already booked
  - The listing is down for repair
  - The second reason is rare and will not show any significant change in the patterns.
  - So, we will assume that when the listing is not available, it is because they are already occupied.
• From the variation in the rate of availability for the month, as shown in c), we can observe the following things:
  - The listings are occupied the most during the months (In descending order):
  — January
  — July
  — August
  - The listings are occupied the least during the months (In descending order):
  — December
  — November
  — March
• From the variation in the price for the month, as shown in f), we can observe the following things:
  - The listings are priced highest during the months (In descending order):
  — July
  — August
  — June
  - The listings are priced lowest during the months (In descending order):
  — January
  — February
  — March

Now that we have the facts in front of us, we can think about some business questions.

From the POV of a family person who is going to take a vacation with his/her family and wants to plan a budget-friendly trip, the best way to start is to save some cash on where you stay without too much tradeoff on the quality of your stay. You can do this by planning your trip in the months when Airbnb prices are the lowest. And now that we have analyzed the trends, we are qualified enough to answer this question:

• What is the best month to visit Seattle if you are on a budget?
  January, February, and March are months where the lowest price rates. Especially in January, which is why most of the listings are occupied in January. And the listings are relatively less occupied in February and march because the prices rates increase again.
  So if people want to enjoy their time in Seattle with slightly less cold weather but still fairly low prices February and March are good times to book an Airbnb.

From the owner's POV, your focus should be on maximizing your profits on each of your listings. You can do this by deciding the right price rates for your listings based on the time of the year. And another point that is important to maximize your earnings is choosing the right time of the year to maintain your listings. This brings us to the following questions:

• What is the best time to list your property on Airbnb? And how do set price rates according to the time of the year?
  In summers, especially in July, August, and June, the price rates are the highest because it is comfortable weather, and that is when most of the tourists come and visit Seattle.
  So, from a business point of view, if you are planning to list your property on Airbnb and want to maximize your profits, you should set your prices high during the summer season as the volume of tourist are already very high, and most of the hotels will already be fully booked so there are chances that people would be willing to pay high amount of money to find a place to stay. On the other hand, January is when you should set your prices to be budget-friendly because that will attract people to book your listing in that cold weather.
• What is the best time in the year when owners can take down their listing for maintenance and repair?
  The best months to get the listings repaired without incurring a major loss would be in the month of November and December, as the weather is really cold, and from the bar plots, it can be observed that during these months, the listings are mostly unbooked and the prices are also high as compared to other off seasonal months like January, February and March.

Section 2

This section will analyze the density and average price of Bnb’s for various tracts(areas) in Seattle using choropleth, bar, and scatter plots. And see whether we can find some patterns which might help us maximize earnings for our Airbnb business.

BNB density choropleth graph on the left and bar plots on the right.

• Coming to the above figures, on the left is the choropleth plot which describes the density of the BNBs in a particular area or tract of Seattle. Ranging from pale yellow being the least dense to dark green being the densest. On the right are the bar plots. The top right is for the top 20 BNB dense tracts, and the bottom right is for the bottom 20 tracts.
• From the choropleth and bar plots related, we can observe that tracts 73, 75, 124, 68, and 123… have the highest density of BNBs in it. And the tracts 130, 87, 88, 84, 133… have the lowest density of BNBs.
• We can observe that the BNBs in high-density tracts are between price rates of 30–200$.

Average price choropleth graph on the left and bar plots on the right.

• Here, on the left is the choropleth plot which describes the average price of the BNBs in a particular area or tract of Seattle. Ranging from pale yellow being the least dense to dark green being the densest. On the right is the bar plots. The top right is for the top 20 tracts with high average price rates, and the bottom right is for the bottom 20 tracts with the lowest average price rates.
• From the average price choropleth and bar plots, we can observe that tracts 129, 72, 2, 77, and 3… have the highest price rates. And the tracts 84, 58, 35, 95, 33, 23… have the lowest average price rates of BNBs.

Scatter plots left plot describes the coverage of various property types, and the right plot describes the coverage of various sizes of BnB over the landscape of Seattle.

• Houses and Apartments are the most common property types in Seattle, and the exotic luxury ones are very rare.
• One bedroom and bathroom accommodations are most common.
• And most of the BNB’s 2 or 4 number of peoples.
• The property type scatters plot shows that the main city area is flooded with apartments and condominiums. The main reason is the lack of space and the high land prices in the main city area. This makes it more convenient to have high-rise buildings and hence a high number of apartment complexes and condominiums in the city area, whereas houses are all over.
• Due to the same reason, property types like treehouses and townhouses, which take up more space, are rare in the city area and mostly present on the outskirts or in less cultivated areas.
• From the accommodated scatter plot, we can observe that most Airbnb caters to young bachelors or couples. This can be observed from the huge number of apartments or houses that only accommodate only 1 or 2 people all over Seattle.

From the above observations, we can answer some pretty interesting business questions. Here are some of them:

What patterns observed from the data might help increase the business of Airbnb owners? First point:

• First, let's clear out the misconception that most people might have. The more densely populated the area, the more competitive the prices are. And vice versa. But that is not the case here. The densely populated areas that are the main city area and some other areas such as the outskirts of Seattle are packed with BNBs but land up at the top of the average price list. And some less dense areas or tracts have very affordable prices.
• This can be better explained using the concept of supply-demand. To a normal person or an inexperienced eye, it would appear that the supply in the high BNB density tracts or the main city area would seem to be pretty high and somehow more than the demand. That way, the price rate for each BnB would be competitive to attract tourists. But in reality, the data tells a different story. Bar plots on BnB density and average price rates, the set of tracts with high BnB density has a high overlap with the set of tracts with high average price rates. This confirms that supply is still pretty less in comparison to the demand, and due to that, the BNB owners in the BNB dense areas can get away with above-average prices and still have people booking their listings. Whereas the demand in the less dense BNB tracts is the opposite, the BNB owners have to set competitive prices and fight for the customers.
• So if you are planning to get into the real estate and Airbnb business, curate some cash and buy some apartments or houses in the main city or BNB dense areas. That way, you wouldn't have to care as much about the price rates of your listings and still maximize your profits to a certain extent.

Second point:

• From the right scatter plot, we can observe that major of Airbnb caters to young bachelors or couples. This can be observed from the huge number of apartments or houses that only accommodate only 2 or 4 people all over Seattle. And due to the same reason, major BNBs are one-bedroom listings. This can be justified by the age distribution in Seattle, the major population being young bachelors or young couples. That is why major BNB listings are set up to cater to the larger percent of the age distribution.
• So apart from the above suggestions, another way to maximize your earnings would be to cater to the larger population. Specifically, it would be better to have multiple 1 or 2 bedroom apartments instead of a big apartment. And even if you have a bigger property, say a four-bedroom apartment or a house, it would be preferred to list each room of the property as a separate listing.

This ends the main content of the article. I hope the analysis and the array of business questions answered using them have a solid foundation for the thought process required to make it big in the Airbnb business. But this article has only uncovered a small aspect of the overall game. Analysis of the reviews and amenities are still left to be unraveled. I’ll end this with:

Ask the right questions to get the right answers.

What questions are you going to answer to conquer the Airbnb seas ?

See the link to my Github available here to see more about this analysis.