The Airbnb Cottage

How interesting might this combination be?

I was recently speaking to a potential client and while standing in their backyard I started chatting with the neighbor. In our over the fence chat, the neighbor noted that she converted her garage into a backyard cottage years ago and recently figured out that she will earn more money by renting out her cottage for a few weekends a month on Airbnb than she does renting it out full time to a tenant. This leaves her the freedom to use the cottage for family and friends when she wants, but still come out ahead financially.

We’ve always loved Airbnb. The company is an online marketplace where you can post an apartment or room for rent, and find accommodation for short stays. The idea is that anything “from a couch to a castle” can become a Bed and Breakfast when it wants.  Airbnb has built a very large marketplace that is growing fast. They connect anyone to short term accommodation across 200,000 properties in 27,879 cities and 192 different countries. In June 2012 Airbnb hit 10,000,000 nights booked, up 500% from just 6 months previously in January 2012.

The growth of this marketplace is an exciting phenomenon. We wonder just how prevalent they can become, and how many New Avenue clients will take advantage of this growing trend.

We suspect we’ll see more and more people with what we’ll call the “Airbnb Cottage”.

The Airbnb Cottage will probably have the following routine in it’s humble backyard life:  It will be rented out maybe half the weekends a month. The rest of the time it will be used for visiting friends and family. Like any other BnB or hotel, the rate would probably change seasonally. Most pricing on Airbnb seems to be the market rate for surrounding hotels discounted between 10-40%. Some properties with unique locations or amenities command higher than market rates – sometimes significantly.

Airbnb cottages make the most sense in areas with visitor traffic. Areas like university towns, tourist destinations and neighborhoods close to metropolitan centers would be the best. If you are located in a good area, and we like to think most of the great state of California qualifies, cottages make for very desirable accommodations on Airbnb. They are private spaces with the same full amenities as a house but with added charm and a local connection.

Here’s a quick sampling of Airbnb price ranges around the Northern California Area.

$120-$200 per night in Berkeley.

$100-$500 per night in Lake Tahoe.

$80-$900 per night in Napa.

$75-$450 per night in Sonoma.

Let’s apply easy and conservative math for an Airbnb Cottage in or around these areas. Say it fetches an average price of $100 per night booked rents out 5 nights per month. We have $500 a month in supplementary income and new social interactions with it. $500 would cover dinner parties or BBQing when friends and family visit. The Airbnb Cottage could theoretically bring new potential friends to your backyard and buy dinner, drinks and dessert for your friends and family when they come around.