At what price you rent your house in Airbnb? An algorithm allows to double revenues

Times are changing, and if not, I would have to taxi drivers and the growing phenomenon of Uber and the likes, but before this sector, it was the turn to the property due to the simplicity and immediacy offered Airbnb. Although people still enjoy renting the space right in front of their apartment to obtain passive income through a cell tower lease for example, more and more people are starting to explore ways of renting their own place, too.

This known web service connects users looking for accommodation for a few days in a certain city with owners, entrusting the firm provide all things. Or complex contracts, or bonds, or problems arise from the housing: the social element corrects behaviors, and thus, if an apartment accumulates positive votes by the different tenants, will be more likely to receive new customers, and the same thing happens with the seriousness of the occupying them.

It allows owners of apartments or rooms in tourist areas or elevated transit to obtain relatively easy money. A business in which seemingly everyone wins, and in which as we saw just a few days ago, the owners get a higher return to renting the house would get through traditional means. The buoyant intermediary of San Francisco allows homeowners with apartments or even rooms in high traffic tourist areas or obtain a relatively easy money, and if the experience is positive, the possibility of increasing tenant turnover increases and with it the profitability the property.

All are simple and apparently safe, although sometimes things go wrong, as in any other network service. But Airbnb has a major difficulty: what amount we have to rent the property?

An algorithm to calculate

Clearly this is not a lease to use, which the owner can approach a realtor who collates income similar homes in the area to propose a figure: Airbnb is the ultimate expression of supply and demand, and also has the effect season hundredfold: is not the same rent an apartment in Pamplona in January, to do it in full sanfermines.

One can raise the finger in the air and risk with a figure deemed more or less adequate, but the truth is that there is always an optimal price the customer is willing to pay and hit profitability. In the heat of this opportunity, the startup Beyond Pricing promises to nearly double their income owners using their services, which, of course, a lot of math algorithm and hides.

The approach of this project that is growing rapidly is that we rose at the beginning: the price of short term rental is much more likely to vary depending on the external elements that may initially consider the owner. Before we made specific reference to the season as part of a greater or lesser number of users, but Beyond Pricing goes beyond and takes as scales not only the street or district property, but the events that happen at the time of hire in city.

We discovered that a meeting of an association of diabetics had more impact on the rents of the San Francisco Apple WWDC. And not always the owner knows all the events taking place in their environment. “We found that a meeting of an association of diabetics had more impact on the rents of the San Francisco Apple WWDC”, argues the co-founder Ian McHenry project.

This firm is already providing services in major cities of the world and their use can not be more simple: the user is discharged Aribnb your account and the algorithm begins to track what they call “health” of the home taking consider multiple variants a priori beyond the human eye.

Mathematics pocket service

Pure mathematics in the service of the pocket and reflecting clearly state that the price of the holiday is a living element that varies depending on many elements. Does it show the end of the month to achieve optimal rental price using mathematics as a scientific approach? Well yes: McHenry has it found that some owners have managed to increase their income by 40% using this criterion variable that takes the real-time temperature of the supply-demand relationship.

McHenry has been found that some owners have managed to increase their income by 40% using this criterion variable that takes the real-time temperature of the supply-demand.

Cited at the beginning of the article the impact of Uber and the like in transportation and real estate market with such initiatives, but it seems that we have not seen it all and is as holding the Wall Street Journal, we would be at the dawn of the generalization of this business model.

Flexible real-time pricing may be more common than we think and so, if you can accommodate a trip to the bargain price at the last minute, also happen in the same table reservation at a restaurant. And in fact the case, or at least that is what is proposed Table8, another young San Francisco company that offers tables in restaurants to book weeks in advance is necessary, and its owners are covered such low last minute. As the overbooking, but in reverse…