Businesswise: Earning big from your extra space
It is one of the best kept secrets in Jamaica today. Some people have found a way to earn big bucks from extra rooms in their homes or residential properties.
By extra room, I mean a single spare bedroom or two, or even a couch. Yes, it is possible to earn from a couch. By residential properties, I mean studio, one, two and three bedroom apartments or entire homes. How do they do it?
I'll get to that shortly. How much are they earning? In some cases, tens of thousands of US dollars per year - from a low of US$10 per night for a shack in Roaring River to US$2,143 per night for a luxury villa in Discovery Bay.
Here are a few examples of the income one can earn from extra space, per night, across the island:
n US$25-$75 for a single furnished bedroom in Spanish Town, Portland, Ocho Rios, Negril, Montego Bay, Mandeville, Treasure Beach;
n US$95 for a furnished one bedroom apartment in Kingston;
n US$27 for a single furnished bedroom in Portmore;
n US$15 for 'Kingston's most comfortable couch'.
Theoretically speaking, based on the rates above, it is possible to earn $636,000 per year from a single couch in a home in St Andrew to $4 million to $5 million per year for a one bedroom apartment in Kingston, Negril, Montego Bay, Portland or Ocho Rios at full occupancy.
In reality, I know quite a few people who have made more than $450,000 per annum for a single bedroom, and more than $2 million per annum for one bedroom apartment in Kingston.
Of course, this is income, not profit. There are many costs to be factored in such as interest, electricity, insurance, cleaning, maintenance and repairs, commission, property management costs, etc.
The secret is Airbnb, a platform that connects travellers to accommodation globally. It's described as a 'trusted community marketplace for people to list, discover and book unique accommodations around the world' either online or from their mobile telephone. It offers an easy way for people to make money from extra space, with accommodation listings in 190 countries and over 34,000 cities.
The 7-year-old company has been wildly successful, booking over 25,000,000 guests since its inception and increasing revenues from US$1 million in 2009 to nearly half a billion in 2014.
If you have extra space, want to earn extra money and feel comfortable renting it to visitors, then Airbnb may be worth exploring. There's no upfront fee to list, they find the guests, you set your prices, and they collect and remit payment to you, charging a three per cent service fee.
As with most opportunities, there are also risks, such as fraud, damage to property, theft, security, safety and privacy concerns, among others. Airbnb tries to manage some risks by registering and approving guests, using a secure payment platform and offering a 'Host Guarantee' to replace 'covered' damaged property or loss of income.
My own experience with Airbnb was very positive. Last year, I travelled to Argentina to conduct business training for women entrepreneurs from Latin America and the Caribbean.
After the training which took place at a remote resort, a few of us decided to spend our last day in the heart of Buenos Aires. We rented the lower level of a home for US$300 which comfortably accommodated four, allowing us to pay a fraction of the cost of a nearby hotel. The owners, known as hosts, lived upstairs & greeted us warmly with hugs and kisses.
The place was charming and homey. The area wasn't sterile or highly commercialised, it was rustic and authentic. Our flat had wi-fi, cable, comfortable bedrooms, clean bathrooms, a living and dining area, full kitchen, and an outdoor patio. Having grown accustomed to staying in hotels, it was a refreshing experience that I enjoyed immensely.
While Airbnb has may fans it also has staunch critics. Affordable housing advocates have blamed the company for ballooning housing costs and severe reduction in available housing stock, and some residential complexes have banned short term rentals citing safety, privacy and property value concerns. Some tax officials claim hosts are evading hotel/income taxes, while wealthy hoteliers have lobbied fiercely for Airbnb's regulation to curb unwelcome competition.
In my view, the concept of renting extra space in our homes to travellers may provide a great opportunity for more ordinary Jamaicans and communities to benefit directly from tourism. An audacious goal that has eluded us for decades. It may also add tremendous value for tourists and travellers by creating more rooms in underserved areas like Kingston, and providing unique opportunities to explore Jamaica and experience our culture.
To be clear, for us to realise these benefits over the long term we must ensure minimum standards of quality/safety of guest accommodations. Hosts need training in hospitality, the country needs a massive reduction in crime and we all need to combat tourist harassment.
I understand that Airbnb has caught the attention of the tourism minister, who was reported in this newspaper as vowing to introduce legislation to 'regularise' those offering their properties for short term rental on sites like Airbnb.
One can only hope that regulatory measures will enable not thwart the opportunity now available to ordinary Jamaicans to truly engage in the tourism sector & earn from their properties even while they sleep.
n Yaneek Page is an entrepreneur and trainer in entrepreneurship and workforce innovation.