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Upgrading My Airbnb is Making Me an Extra Ksh40K Every Month
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Upgrading My Airbnb is Making Me an Extra Ksh40K Every Month

EDITOR'S NOTE: This article is part of our Money254 Partner Series produced in partnership with Absa Bank Kenya for the launch of the new Absa Buy Now Pay Later service for Credit Card customers. Our partners may suggest topics they would like readers to know about but do not influence what/how we write about it.

I thought running an Airbnb business was easy until I opened mine. One peculiar habit about us as Kenyans is that we often flow with the tide. Any working business idea is quickly flooded with similar businesses. 

Sometimes it works, you can confirm this with the existence of Luthuli Avenue, Eastleigh, or Kamakis. These places have hundreds, if not thousands, of businesses that run on the same model and similar products - and they still manage to thrive. 

In 2017, my employer sent me to Kampala for a work-related conference where I stayed at a four-star hotel. I was getting a daily per diem of Ksh9,000 and I spent Ksh6,000 per night on half board. It was a great working trip. 

Feedback from Ugandans

The conference was productive and on the sidelines, I got to enjoy Kampala and enjoy the warmth of Ugandas’ love for their Kenyan brothers and sisters. Interestingly, the only complaint Ugandans had about us was our casual dressing whenever we went out to unwind after a hard day at work. 

“You must be Kenyan to come here in jeans and a t-shirt,” one lady told us at an entertainment joint that had a full red-carpet set on its entrance. Anyway, I digress. 

One such evening, one of the friends I had made at the conference informed me that he was staying at a rented apartment which he referred to as an Airbnb. 

This was the first time I learnt of the concept of Airbnbs. I started using them on my work trips and I would spend a lot less for the same standard of accommodation. This often meant that I would save on my per diems and take some money to my young family. 

Tough Times

At the height of the pandemic in 2020/21, I made a resolution to become more intentional about diversifying my income sources. I was hit with a 25% pay cut and watched as many of my friends and colleagues went jobless as various economic sectors shut down. 

I started thinking about side hustles. Many of them were difficult for me to thrive given that my job was quite demanding and often required me to travel. 

It was here that I decided to open an Airbnb. I was already familiar with the business, as a regular client, and I knew it was relatively easy to manage. 

Budget for Starting My Airbnb

In September 2021, I opened the doors to my first Airbnb. I spent about Ksh250,000 setting it up. The initial costs were as follows:

  • Rent and deposits - Ksh45,000
  • Furniture - Ksh70,000
  • TV - Ksh30,000
  • Table top cooker - Ksh5,000
  • Curtains and Carpets - Ksh30,000
  • Fridge - Ksh30,000
  • Miscellaneous - 40,000

It proved to be quite a lucrative business opportunity. It was a one-bedroom apartment in the same apartment complex that I live in along Ngong Road. 

My wife and the house help would often help in checking in and checking out guests whenever I was away. Cleaning was relatively easy to do during the checkouts. 

It was also a relatively new business concept so demand was high while supply remained low. Between September 2021 and December of the same year, I had an average of 70% occupancy. I was charging Ksh3,000 per night and Ksh2,500 for long-term guests. 

The monthly revenues came to about Ksh60,000 while the monthly expenses would vary between Ksh35,000 to Ksh45,000 depending on the guests’ length of stay. This would leave me with at least Ksh20,000 in profits. I was a happy man.

Major Setback

Just as I was getting comfortable with having a steady stress-free side hustle, I started to notice more of my neighbours were opening Airbnbs. 

In fact, the landlord started dedicating a full block of apartments to Airbnbs to avoid conflict with long-stay tenants. 

The increased units also came up with dwindling bookings. The customers were increasingly asking for a discount - knowing that they had options. 

The net effect was that I had to adjust my business model. I changed the nightly price to Ksh2,000 to attract more customers. I also started to actively market on social media as opposed to waiting for potential guests to find me.

For most of 2022, my profits oscillated between Ksh15,000 on a good month - and on months where I was not active, I started to make losses of between Ksh5,000 and Ksh10,000. 

Back to the Drawing Board

The trend continued into this year. I had contemplated closing down the business in March, but I figured that even with Ksh5,000 in profits, I was better off since it proved useful in paying some of my household bills. 

In May this year, I was having a conversation with my neighbour, Karis, who also runs an Airbnb unit. When I told him about my frustration with the stagnating business, he told me that he had actually devised a way to get around the increased competition. 

“Boss, we are still at a very prime location. The Junction is here, Karen, Lavington, and Westlands are all within a five-kilometre radius. This is where every expatriate and tourist wants to stay.”

Karis explained to me that he had decided to experiment by targeting expatriates and foreign visitors who are looking for longer stays. The new market, he said, was less concentrated and was less expensive to maintain compared to the domestic visitors. 

Karis “Ameomoka”

“I have furnished my 1 bed a good one. The mattress is now a super comfortable 12-inch spring bed, cotton bedsheets, and a proper bed that cost me a fortune. Ata TV ni Android,” Karis intimated. 

True to his plan, the upgrade set him apart from the rest of us. He started to attract long-term guests who would stay for up to a month. The nightly charge moved to Ksh3,000 - sometimes Ksh3,500 - and he was still getting more bookings than the rest of us. 

I knew it was time to play it smart. Unfortunately, I did not have enough savings to meet the upgrade. I had just started developing a plot I had bought in Ngong sometime in 2016. 

Any diversion of the construction money would mean that I would be paying rent for longer than I planned. But I also knew that revamping the unit would bring in the much-needed money - in the short term. 

In July, I was still pondering on the best course of action. One Saturday evening while I was doing my shopping at Sarit Centre. I decided to do some window shopping at an electronics shop. 

The Absa BNPL Credit Card

Here, I noticed multiple banners for the Absa Buy Now Lipa Later, which were attached to cookers, television sets, fridges, etc. Being an Absa customer, I was curious and used my friend Google to find out more details about the service. 

The Absa Buy Now Lipa Later service allows credit card customers to make purchases and instead of paying them as credit card debt, they convert them into Buy Now Pay Later (BNPL) with instalments of up to 12 months. 

The conversion allows the customer to maintain their cash flow and still access the service or item they need. This is exactly what I needed. I had a Ksh150,000 limit on my credit card which I was strategically using to take advantage of the 50-day interest window. 

I had not considered using it for the Airbnb upgrade because the 50 days would not be enough for the business to pay it back without hurting my already strained budget. 

A New Beginning

When I went home, I talked to my wife about the opportunity and we agreed we would give it a shot. 

Two days later, we were in Westlands to pick a new king-size bed, a spring mattress, a four-burner cooker, and a washing machine. I swiped my card and within two minutes, I was able to convert my purchase into a Buy Now Lipa Later arrangement - picking 12 monthly instalments.

 I closed the Airbnb for a weekend and did the revamp. My wife was able to pay for new curtains and a Turkish carpet to complete the new look. Then we hired a photographer to take new photos, and changed the pricing to Ksh3,500 on weekends and Ksh3,000 on weekdays. 

Things Are Good, Again

It is now a completely new unit that speaks elegance. The first night we uploaded the photos, we received a week-long stay from a lady who was visiting from Zambia. 

As we speak, I have a guest who checked in on the first weekend of August and is checking out at the end of September. She paid Ksh75,000 per month as part of my discount for long-term guests. 

The good thing is that she does her own laundry since we bought a washing machine. The electricity bill has gone up, of course. Still, I project the monthly cost to be around 30,000 - including rent and other recurring costs. 

This leaves me with a cool Ksh45,000 monthly profit for the next two months. Of course, the priority is to offset the BNPL credit. 

Although I picked the 12 monthly instalments, I plan to commit all the profits to the instalments and if all goes well, I might just clear the first bill by November. 

I might just decide to open a second unit, now that I have such a convenient source of credit. Would you like to try out the Absa BNPL service? You can start by making your credit card application here

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This Article is part of our Money254 Partner Series. Our partners may suggest topics they would like readers to know about but do not influence what/how we write about it. Money254 remains committed to providing objective information to our audience. For more on Money254’s editorial policy, read here.

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