How My Subletting Business Was Transformed by Listing on Airbnb
The
idea of websites that let people rent short-term homes, like Airbnb, has
changed the real estate market worldwide by providing renters and property
owners with new sources of revenue. As an entrepreneur running a subletting
company in the United Arab Emirates, I can honestly say that listing on Airbnb
completely changed my company's operations and financial performance. I'll
talk about my experience and the actions I took to build my subletting company
in this post, from starting using Airbnb's platform to develdevelopinguickly.
Establishing
a Business: Establishing the Base
Before
discussing how Airbnb changed my company, it's critical to understand the
requirements for establishing a subletting enterprise in the United Arab
Emirates. Subleasing, or renting out a home you have already leased, maybe a
very profitable business, especially in a place like Dubai where tourism is
year-round. However, it does come with responsibilities in terms of law and
business, particularly in a controlled market like the UAE.
I
needed to get the necessary owner approvals before starting my subletting firm
because subletting without their approval could lead to contract termination or
legal action. Following that, I chose to register my business under a Free Zone
in the United Arab Emirates, and I was able to lawfully act as a subletter by
selecting a real estate-related license.
How to Open a Business in the United Arab Emirates:
●
Select a Business License: In the United Arab
Emirates, entrepreneurs are presented with a variety of business license
options, including mainland and Free Zone. A Free Zone license designed for
real estate and leasing worked best for renting out.
●
Obtain Legal Permissions: To assure
security, I needed to obtain permissions from owners and align my
business with the local Real Estate Regulatory Agency (RERA) rules.
●
Employ a Financial Adviser: It is essential to
have a financial consultant to help you manage the complexity of VAT, costs,
and profit margin in a business-driven climate such as the UAE. I was able to
give the company a solid financial base thanks to this action.
● Work with Legal Consultants: To make sure that my contracts with owners and subletting agreements complied with local legislation, a legal expert was very helpful. Legal advisors in the UAE can reduce the dangers involved in subletting, particularly when working with outside renters like Airbnb visitors.
The
Early Challenges of Subleasing
My
subletting company was limited to long-term leases before listing on Airbnb.
This model had moderate growth and a fixed income, despite its relative
simplicity. In the United Arab Emirates, rental property is extremely
successful, particularly in regions like Downtown Dubai and Dubai Marina.
I had to offer distinctive services, including
equipping the properties and including utilities in the rent, to set my
business apart from competitors. However, my profit margins were impacted by these
additional expenses.
Client
turnover was another danger that my renting-out business had to deal with. There
would be vacancy periods once a renter left because it would take time to
attract a replacement. Cash flow was also impacted because I had to pay the
entire rent during these pauses.
Now
for Airbnb: A Revolution in Business Development
My
first property listing on Airbnb was the turning point for my subletting
business. Short-term stays replaced long-term clients, which changed my revenue
model and increased my client base. Here are some significant effects that Airbnb
had on my company:
●
A rise in rental income
By
listing on Airbnb, I was able to attract short-term visitors to my business who
were ready to pay more per night than long-term residents. These visitors were
usually tourists and business travelers. For instance, a house I used to rent
out for AED 8,000 a month could now bring in AED 500 a night on Airbnb,
assuming 20 nights of availability on average. That increased the income from
the same property by 25% to AED 10,000.
●
Improved Cash Flow
Rather
than waiting for a monthly rent check, I started getting paid more regularly
using Airbnb. After a guest checks in, money is given away via Airbnb's payment
system, greatly enhancing the company's cash flow. I was able to grow my
portfolio and reinvest in property maintenance faster with frequent payments
than I could have done with long-term leasing.
●
A Variety of Guests Profiles
Airbnb
attracts a wider spectrum of users, including business and leisure travelers
attending conferences as well as visitors visiting Dubai. Because of this
diversity, I was less dependent on any one type of renter and could spread my
risk more evenly. For example, even in the off-peak travel period, I could
still draw in business travelers who required quick stays for work-related
objectives.
Problems
and Solutions: Getting Around the Airbnb Environment
Although
Airbnb had many benefits, there were also difficulties along the way. The
largest challenge was keeping track of several listings and making sure that
every property was of the same standard. This is how I overcome those
obstacles:
●
Real Estate Administration
The
more properties I listed, the more time-consuming it was to manage daily
operations like visitor check-ins, cleaning, and maintenance. I collaborated
with an experienced property management business to optimize operations. These
businesses usually take a cut of the rental income, but they saved me time and
made sure the properties were kept up properly and the guests were happy.
Property
management companies in Dubai usually take 10% to 15% of the rental income.
However, compared to long-term rentals, the higher nightly rates on Airbnb
easily cover this expense.
●
Seasonal Fluctuations
The
seasonal nature of short-term rentals presented another difficulty. Due to the
extreme heat, travel to the United Arab Emirates slows down in the summer but
picks up in the winter (November to March). I changed my pricing strategy to
offset this and draw in tourists on a tight budget by providing discounts
during off-peak times.
In
addition, I automatically modified nightly rates according to demand using dynamic
pricing technologies. For example, I may increase taxes to take advantage of
the rush of guests during large events like Expo 2020.
●
Agreement with Laws and Regulations
In
Dubai, owners using Airbnb are required to follow certain rules established by
the Department of Dubai Tourism and Commerce Marketing (DTCM). I made sure all
of my properties were registered with DTCM and I paid the required tourism fees
to avoid penalties. My legal advisor also kept me informed about local
legislation, which spared me from paying large penalties.
Growing
the Company: Expanding Beyond Dubai
After developing a profitable Airbnb subletting business in Dubai, I started looking at potential growth areas in other UAE states, namely Abu Dhabi and Ras Al Khaimah. I modified my approach to the unique laws and market conditions that each region possesses.
For example,
Abu Dhabi has stricter laws governing short-term rentals, necessitating more
paperwork and more expensive fees. However, corporate travel, government
events, and tourism are driving an increase in the demand for short-term
rentals there.
●
Expansion Plan: Analyzing Current Market Trends I looked at
daily and monthly occupancy rates around the UAE to determine which places
would be profitable to expand into.
●
Making Connections with Brokers:
To find properties that would be good for Airbnb listings, I
collaborated extensively with real estate brokers and worked with owners to get
advantageous lease conditions.
●
Financial Planning: To make sure that expansion was both
realistic and long-term sustainable, I developed a financial model with the
assistance of my financial consultant.
Effect
on the Financials of the Business
My company's financial performance significantly improved when I decided to list on Airbnb. The following charts show the major financial indicators both before and after I put my properties on Airbnb:
|
Metric |
Before Airbnb |
After Airbnb |
|
Monthly Revenue (per property) |
AED 8,000 |
AED 10,000 |
|
Occupancy Rate |
90% (long-term lease) |
60%-70% (short-term) |
|
Cash Flow |
Monthly |
Weekly (Airbnb payout) |
|
Profit Margin |
20% |
35% |
|
Portfolio Growth (properties) |
3 |
7 |
The
UAE's Opportunities for Airbnb and Subletting
I
expect further room for expansion in the short-term rental sector in the United
Arab Emirates.
Future
Objectives:
●
Increasing the Variety of Property Types: To serve wealthy clients who can afford to pay more per night on Airbnb,
I intend to diversify into luxury villas and serviced flats.
● Offering Extra Services: I want to set myself apart from the competition by providing value-added services to Airbnb hosts, such as personal support, guided tours, and airport transfers.
● Embracing Technology: I'm investigating how smart house features like automatic check-ins, keyless entry systems, and energy-saving appliances might improve visitor experiences.
Conclusion:
A Business Transformed
I never would have guessed how my subletting business would change until I saw how listing on Airbnb did. Compared to typical long-term leasing, it boosted cash flow, created new revenue streams, and made it possible for me to quickly grow my property portfolio. The benefits greatly passed the risks, even though there were certain difficulties, such as the requirement for operational management and legal compliance. My recommendation to any business owner or entrepreneur thinking about getting into the UAE short-term rental industry is to start by learning about the market dynamics and regulatory requirements.
Get in touch by using the details provided below to seek professional
assistance from the author of this blog Wasiq Suhail.
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Contact: +971 50 505 3319
Email: abz.wasiq@gmail.com