Airbnb: How you can make money from your spare bed

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green bedroom in a modern house ...

Who do you think is the world's third largest hotelier, after Hilton and IHG?

Well, it's you - or it could be, as part of Airbnb. Founded in San Francisco in 2008, it's a website that allows people to rent out their spare rooms or other accommodation to travellers on an ad-hoc basis.



The company takes a booking every two seconds, and has more than 300,000 properties listed, including 14,000 in the UK. They include sofabeds, rooms, flats and houses - as well as 500 castles, 200 treehouses and 1,400 boats.

A recent survey carried out by the company found that the typical host earns £2,822 per year; 42 percent are self-employed, freelance or part-time workers, treating it as a second source of income. The average stay is 4.6 nights. Most hosts are letting out space in the property they actually live in, for an average of 33 nights per year.

You don't need to live somewhere fabulous to be an Airbnb host - in London, for example, 72 percent of Airbnb properties are located outside the main hotel areas.

"The price will reflect what people expect," says Even Heggernes, Airbnb country manager for the UK and Ireland. "It's up to the host to decide what to charge, and if you charge £500 per night, then people will expect it to be as perfect as a hotel; but you could be charging £30 for a sofa."

Having said that, characterful properties or those in desirable areas will command a higher price and get more bookings. One such is the clock tower apartment at London's St Pancras Station, which owner Peter Tomkins says often attracts bookings a year ahead. "Put it this way, I'm booked for Valentine's Day next year," he says.

Tompkins said he'd never heard of the site until he was looking for a flatmate and a friend suggested registering with Airbnb instead. "It's more work for me because of the cleaning, changing and things like that, but of course the rents are a lot better," he says.

Creating a listing is free, with hosts paying Airbnb three percent of the price; guests pay a fee too. You can add cleaning charges and make pricing variable, for example charging more for weekends and holiday periods, or offering discounts for longer bookings.

Clearly, trust is a big issue. While many hosts stay in the property while they have guests, many others are letting out their whole property. There have been cases of guests trashing the place - last summer, for example, guests caused more than $6,000-worth of damage to a $2.5 million apartment in Texas.

But, says Heggernes, "We are a marketplace built on trust; we leave each other reviews, so the host reviews the guest and the guest reviews the host. In the few incidents where things go wrong, we have the host guarantee." This covers hosts for up to £60,000-worth of damage - although there are certain exceptions such as cash, valuable art and jewellery.

The company recommends swapping messages with potential guests and reading their profiles carefully, checking references and making sure they have a valid phone number, for example.

Tompkins says he's never had a problem guest - although he has sometimes rejected somebody on the basis of gut feeling. He locks up a few treasures in a cupboard, but says: "I don't keep a lot of precious stuff, and a bit of wear and tear is something I can live with."

The legal position is a little complicated - and, says Heggernes, it's up to the host to make sure that everything's above board. Hosts will need to check with their mortgage company or landlord that subletting is permissible. It frequently isn't, especially if the room's likely to be let for much of the time. You may need to come to a special arrangement, which is likely to cost more.

And while Airbnb will pay up for damage caused by a guest, letting a room may also invalidate a host's own insurance, meaning that unrelated claims could be disallowed. Again, it may well be possible to reach an agreement with the insurance company.

Of course Airbnb isn't money for nothing - you're effectively becoming a landlord or hotelier, after all. "You shouldn't underestimate the work involved - you should expect to spend an hour to an hour and a half a day dealing with enquiries," says Tompkins.

But there are big benefits to being an Airbnb host beyond the financial rewards, he says.

"The best thing is all the people I meet - people from all over the world, but also from the UK," he says. "I had a very nice holiday in Berlin recently, where I went to stay with people that are coming soon to stay with me. They got in touch to make a booking, and when they said they lived in Berlin, I arranged to go and stay with them too."

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