Share
Renting

AirBnB: Changing The Way For Travellers

Andrew Tan, property manager extraordinaire tell us why AirBnB should be the way to go for property investors looking to rent out their units.

By Reena Kaur on Apr 04, 2016

AirBnb is basically a website for people to list, find and rent lodging. It has over 1,500,000 listings in 34,000 cities and 190 countries. Hailed as the world's largest community-driven hospitality company, AirBnb is taking the hospitality world by a storm. The brand has now reached the shores of Malaysia where it is fast gaining acceleration as the go-to site for accommodation seekers, be it travellers, business professionals or holidaying families.

Getting started

We had the chance to speak to Andrew Tan, Founder of Luxury Boutique Accomodation who spoke about the AirBnb business. He was.one of the pioneers who started listing Malaysian properties on AirBnB, following a proposition from a contact in AirBnB Singapore. Starting with a listing of 10 properties in November 2014, Andrew soon realised that he had struck a gold mine as the revenue obtained from AirBnB rentals were 30% more than what he was obtaining previously from long-term tenants.

Andrew Tan

He cited an example using one of his apartments which fetches a monthly rental tag of RM3,000. Andrew says that he if he were to rent it on Airbnb, he obtains RM300 per night. At 90% occupancy, which is achievable for units in prime locations, he would make about RM8,000 a month. Even at the most prudent estimation, which is at a 50% occupancy rate; Andrew can obtain a monthly income of RM4,500, an amount which clearly surpasses the conventional rental model.

Explaining on how it works, he said that property owners can list their properties free of charge on the website and only have to pay a service fee of 3% upon confirmation of a reservation.

‘Staycation’ is the new black

Backing up AirBnB's huge potential in Malaysia, Andrew reveals that a new trend is picking up among locals – ‘staycation’, short for stay-at-home-vacation, which is a cheaper alternative to travelling abroad. Instead of spending money on expensive airline tickets and hotel stays, many Malaysians are opting to spend their holidays or even weekends in serviced residences in city centres and popular locations instead.

There, they get to relax and enjoy the in-house facilities such as the pool and gym, go on shopping excursions or explore nearby attractions. Also, the convenience of having a kitchen and space for the whole family is especially appealing to locals.

To top it all off, there is the cheaper price tag.For instance, Andrew commented that a family of 4 could rent a 2-bedroom serviced residence at 1,000 sq ft in the KLCC area for RM450 per night. This is in comparison to a hotel room in the same location, where 2-bedrooms (approximately 400 sq ft each) would cost roughly RM1,000 per night.

More than just a place to stay: The human connection

Further championing AirBnB’s winning qualities, Andrew explains that its business model is unique in terms of human connection and valuable experiences.

According to Andrew, this added edge is what drives more people to pick Air BnB over traditional tourism accommodations. These days, millennials particularly are looking for more meaningful experiences. Air BnB, which offers accommodation and the companionship of the host makes it especially alluring to foreign travellers and out-towners.

The landlords stand to gain too, with long-life friends friendships or new business opportunities. For Andrew, Air BnB is a fantastic way of meeting interesting people from around the world while also generating some cash flow. One time, he facilitated a business deal worth RM1.7 million between a friend of his and a businessman from Taiwan, whom he was hosting.

Something has got to give

Andrew admits that there is more work involved in being an Air BnB host. Landlords has to handle cleaning/housekeeping services, checking in/out of guests as well as maintenance of fixtures and fittings. He added, “You will have to invest more time and energy in managing the needs of the tenants from the moment they make a booking up until the moment they check-out.”

On the challenges that might crop up, Andrew said that he has encountered a credit card fraud. Another common problem is the duplication of keys by unsavoury tenants, who intend to stay illicitly in said residences when it is empty.

However, Andrew feels that as long as you are on top of your game and run your Air BnB business constructively, the benefits of Air BnB far outweighs any of the drawbacks suffered. His expanding portfolio is a testament to this as Andrew currently has 58 properties listed on Air BnB.  

In encouraging property investors to climb aboard the Air BnB train, Andrew said, “Not only will you obtain a higher cash-flow, but you will  have the flexibility to owner-occupy from time to time. To all the traditional landlords on the lookout for a tenant, Air BnB might just be your solution.”