100 Profitable Business Ideas
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Learn MoreThe current surge in Airbnb business facilities in Kenya has revolutionized how people find accommodation services. This high demand is attributed to many tourists and travelers shifting gears from traditional hotel-based services to Airbnb’s. Are you planning to venture into the Airbnb market in Kenya and are wondering where to start?
No worries. In this guide, we’ll walk you through all the prerequisites of starting Airbnb’s or online-supported accommodation units in Kenya. We also analyze the requirements for starting an Airbnb and the associated costs. Additionally, we point out other key considerations to keep in mind.
Some Background Information About AirBnB
The history of Airbnb’s dates back to 2007 when three American college graduates, Joe Gebbia, Nathan Blecharczyk, and Brian Chesky, incorporated this idea. These three entrepreneurs observed how many guests were frustrated finding accommodation during the Industrial Designers Society of America and decided to create extra space for them in the apartment.
This idea birthed the Airbnb Company, which has grown to over 6 million ratings worldwide.
In Kenya, the Airbnb business venture started trending around 2015, with at least 1,400 Airbnb units at that time. However, with the coming of Chesky to Kenya that year as part of the then US President Barack Obama’s entourage, the business started booming. Currently, Kenya has over 10,000 listings on the Airbnb website.
What are the Requirements for Starting an Air BnB in Kenya?
1. Register your property with KTRA
First of all, you should register your flat, apartment, villa, or house you intend to use as an Airbnb with the Kenya Tourism Regulation Authority (KTRA). This is a requirement for all accommodation facilities in Kenya.
2. Get necessary permits and licenses
Here are some of the vital permits and licenses you should get;
- KTRA fees
As a first-time owner, you will pay a Ksh 1,000 application fee. You should also get a serviced apartment annual license which goes for Ksh 26, 000 for each unit.
- County fees
You’ll also pay a total of Ksh 10,000 to acquire the mandatory county government’s business permit (this may vary from county to county).
- Other charges
These include the KRA’s 2021 recently introduced Digital Service tax, 16% VAT tax, and the NEMA (National Environment Management Authority) license fee.
How Much to Budget For?
It doesn’t matter whether you are putting up your home as an Airbnb or renting one; you can’t escape from the associated costs like listing charges. For example, on the Airbnb website, you as the owner will pay about 3% of the total paid by each guest. As explained earlier, you will also pay for the necessary permits and licenses.
Starting a homestay business venture in Kenya can cost around Ksh300,000 on the lower side and up to 1 or 2M. Of course, this depends on the location, the amenities, or the items you have in the home.
How much profit can you make from an Airbnb in Kenya?
From our one-on-one interview with some Airbnb owners in Nairobi’s Kilimani, Lavington, and Kileleshwa estates, the business can fetch between 50,000 to 500,000 per month. However, the amount can vary depending on how unique or big the house is, the décor used, or the amenities in the apartment.
Key Points to Note Before Launching an Air BnB
*Market research
Do proper market research of your proposed target area for setting up your Airbnb. Focus on the demand trends, tourist destinations, or urban areas. Once you get a clear picture of the market, choose the facility or structure you intend to use wisely. It can be a cottage, a vacant apartment, or an extra space in your residential place.
*Regulatory and legal compliance
Comply with Kenya’s or your County’s set legal rules concerning the operations of an Airbnb. This will help you to avoid any legal issues that may come up later.
*Property preparation
Make your property guest-friendly. This can be through landscaping, cleaning, or putting up vital amenities. Moreover, use the services of professional photographers to showcase your property; this is a great marketing hack.
*Creation: Listing and pricing
Compare similar listings in your location to come up with a competitive pricing model. You can as well use Airbnb’s dynamic pricing tool to adjust the prices depending on the demand.
*Safety and security
The security of your guests should be your top priority. Ensure the facility is well guarded, install CCTV cameras, fire extinguishers, smoke detectors, innovative lock systems, and so on.
*Guest experience
Every Airbnb owner aims to provide an exceptional guest experience. Always ensure friendly but prompt communication with potential customers. Upon arrival, you can offer them extras like a warm welcome, instructions for using the provided amenities, advice on local activities, etc.
Air BnB Categories in Kenya
Apartments
These are the commonly known and used forms of Airbnb’s in Kenya and worldwide. For this mode, owners can opt to use their rented or bought apartments as Airbnb’s rather than leasing them to tenants. Alternatively, a host can lease or rent single units in a given apartment building and convert it into an Airbnb.
Unique stays
Unique stays are classified as vacation rentals and primarily target people on vacations. These include shared rooms, cottages, villas, private rooms, cabins, and villas.
Houses
Instead of selling residential houses, some homeowners use them as Air BnBs. On the other hand, some investors build or buy homes in gated communities mainly for using them as Airbnbs.
In some other setting, which is now becoming popular in Kenya, some people put up part of their houses they don’t use for this purpose. For example, you put up 1 or 2 bedrooms you don’t use in your house for short stays.
What’s the ideal location for an AirBnB?
The Airbnb business is rated as a real estate investment, just like other housing projects. Thus investing in them requires choosing an ideal location in order to be successful. Remember that people visit Airbnb’s with a purpose; it’s either for social or business errands.
For instance, if your main target is the tourism industry, you should have Airbnb’s in places like the Coast (places like Diani and Watamu), Kisumu, Naivasha, or Nakuru. This is because the hotels in these regions are usually overwhelmed by the demand for accommodation services. However, it is always wise to also target business travelers and in that case, having an apartment in areas like Nairobi, Tatu City etc might be a good idea.
Setting up units in urban areas also has a more significant advantage. Your point of focus is for urban travelers or business people in need of private spaces for layovers or meetings. These units can be in areas near nightclubs, airports, malls, etc.
Host-related AirBnB Issues
As an Airbnb host, here are some pointers you should put in mind before starting this business undertaking. These range from the financial benefits to the challenges you are likely to encounter.
Pros
- Offers more flexibility over your property
- Source for passive income
- Requires less marketing
- Offers networking opportunities
- Cost-friendly in terms of workers
- Secure processing of payments through integration with Stripe
Cons
The cons of Airbnb may vary depending on the owner’s business model and include
- Unruly guest behavior
- General cleanliness of the units
- Insecurity
- Guest flow inconsistency
- Competition from related businesses
Conclusion
Kenya ranks among the top 5 countries in Africa with high Airbnb listings. This is attributed to Kenya being a top tourist destination thanks to the many national parks, lakes, access to the Indian Ocean, conference centers, etc.
Since Airbnb is an online-based hospitality service, its success in Kenya depicts the country’s endeavor to use technology to solve local issues. If you are looking for business opportunities to venture into, then Airbnb’s are great avenues for building an income stream.
With a Diploma in Banking and Finance, Lenah boasts a good understanding of the Kenyan business landscape. She’s a seasoned freelance copywriter who enjoys reading the Bible during her free time.