Since its launch in 2008, Airbnb has revolutionized the hospitality and vacation rental industry.
Although Airbnb is based in the U.S., it quickly spread to Canada thanks to its concept of creating a peer-to-peer sharing and accommodation economy. According to Airbnb News, new Canadian hosts earned more than a combined $230 million (CAD) in 2021, with the average new host earning $6,000+.
With a plethora of diverse landscapes, stunning natural environments, bustling cities, and warm-hearted locals, Canada has quickly climbed to the top of the Airbnb totem poll.
In this article, we take you through everything you need to know about running an Airbnb in Canada, from factors to consider before starting to setting your Airbnb up for success.
If you are trying to jumpstart your Airbnb venture in Canada, this article is for you. Keep reading to learn all about the perks and challenges of running an Airbnb in Canada, as well as many practical tips!
Why Should You Consider Running an Airbnb in Canada?
Canada’s reputation as a welcoming and picturesque destination draws millions of tourists every year.
With a wide mix of serene nature and culture-filled urban areas, Canada has a lot to offer to residents and visitors alike. The country as a whole draws in millions of tourists per year and earns billions in revenue. In 2021, more than 3 million tourists visited Canada, with total tourism revenue surpassing $13 billion.
The opportunity to earn supplemental income is one of the biggest and most compelling reasons to become a Canadian Airbnb host. With the right strategy, hosting can be a lucrative endeavor, helping you cover key expenses like your mortgage and property taxes, as well as helping to fund your own travels.
Additionally, hosting enables you to meet people from different walks of life, fostering cultural exchange and expanding your horizons.
The Pros and Cons of Running an Airbnb in Canada
Like any business venture, running an Airbnb comes with its own set of advantages and challenges. Knowing what you are up against can give you tremendous insights into how to run a successful Airbnb in Canada that keeps guests coming back time and time again.
Let’s take a closer look at the pros and cons of operating an Airbnb in Canada:
The Pros of Running an Airbnb
- Financial Gain: Hosting can be a substantial source of income, especially during peak tourist seasons. When first starting out, your Airbnb venture is likely to be a strong source of supplemental income. Yet, as you grow your business and gain a regular clientele, you can expand your business to include more properties and transform it into a primary income stream.
- Flexibility: As an Airbnb owner, you are your own boss. You can set your own availability and adjust pricing according to market demand, allowing you to optimize each reservation you receive. Plus, with a little help from an Airbnb management company, you can even operate your Airbnb remotely from elsewhere in the country or even outside of Canada’s borders.
- Cultural Exchange: Hosting travelers offers you a chance to learn about different cultures, hear unique perspectives, and meet people from all over the world. As an Airbnb host, you are likely to encounter more people than you ever would in a standard desk job, expanding your horizons and potentially opening up new opportunities.
- Utilize Empty Space: If you have an extra room in your primary residence or an additional property you’re not sure what to do with, Airbnb allows you to monetize these spaces effectively. Whether you plan to rent out rooms within your home or entirely separate spaces, the key is to make your rentals warm and welcoming to your guests.
The Cons of Running an Airbnb
- Time-Consuming: Like any business, running an Airbnb comes with its challenges. Managing bookings, communicating with guests, and preparing the property demand time and effort that you may or may not have depending on your current work and living situation. As such, it is crucial to consider the time commitment of an Airbnb business before diving in.
- Uncertain Demand: Tourism can be seasonal, leading to fluctuations in bookings and income. This is especially true in Canada, where many tourists flock to the country during the summer and winter months but tend to adventure elsewhere in the fall and spring. You can still work this to your advantage by optimizing the busiest times of the year to make up for slower months.
- Regulatory Challenges: Navigating local regulations and zoning laws can be complex. Each province and city in Canada has its own unique laws regarding short-term rentals, including Airbnbs. The first key step to overcoming this challenge is determining which authority in your area handles these regulations — your local Department of Tourism is a good place to start.
- Wear and Tear: Frequent turnover of guests may lead to increased maintenance and cleaning for your property. In some cases involving particularly unruly guests, you may even experience moderate to major damage to your property. To keep yourself and your property safe, consider investing in AirCover, Airbnb’s official financial protection service for hosts.
What is the Cost of Running an Airbnb in Canada?
Before delving into your hosting journey, it’s crucial to understand the financial aspects of hosting.
Running an Airbnb involves both direct and indirect costs that can quickly stack up if you are not mindful of the expenses you are accruing. As such, to run a successful Airbnb business in Canada, you need to closely track your finances and keep up with the accounting involved in each and every stay.
Here is an overview of the direct and indirect costs of running an Airbnb:
- Listing Fees: Airbnb charges a fee for each booking made through their platform. In general, this fee is between 3% to 5% of the booking cost. Check out the Airbnb Resource Center for more information on fees the Airbnb platform charges for hosts.
- Cleaning and Maintenance: Regular cleaning and upkeep are essential to provide a positive guest experience. To save money, you can cover the cleaning and maintenance responsibilities yourself — however, hiring a professional company can result in better overall quality. Luckily, Airbnb does allow hosts to include cleaning fees in their pricing models to help cover these costs.
- Utilities: You’ll need to account for the costs of electricity, water, heating, and internet usage accrued during your guests’ stays. Ideally, you should calculate the average use and cost of utilities per month and build those costs into your nightly price.
- Insurance: Specialized insurance for short-term rentals can safeguard you from potential liabilities. Along with AirCover — Airbnb’s in-house insurance model — you can also seek out additional insurance designed for vacation rentals to protect your property and belongings.
- Supplies: Stocking up on essentials like toiletries, linens, and kitchen supplies is necessary when running an Airbnb. While these items may not seem that costly, the prices can quickly stack up if you are not careful with your finances and bookkeeping.
- Opportunity Cost: Hosting might mean giving up personal use of a space or long-term tenants. If this is something that may affect your current income, you will need to weigh the potential gain against the potential loss to determine whether or not this venture is worth it.
- Taxes: Income generated from Airbnb hosting is subject to taxation. Consulting a tax professional is highly recommended to make sure all your necessary paperwork and payments are in order. Additionally, Airbnb offers a full guide for tax collection and remittance in Canada to help you determine your tax requirements.
- Furnishing and Decor: Depending on the state of your property, you might need to invest in furniture and decor to create an appealing environment. High-quality furnishing help to create a great experience for guests but can also include high upfront costs.
3 Tips For Running an Airbnb in Canada
Now that you’re aware of the benefits, challenges, and costs of running an Airbnb in Canada, all that’s left is to get your rental set up and running for your first guest.
Here are three essential tips to ensure a successful Airbnb hosting experience in Canada:
1. Know Your Local Regulations
Canada is highly mindful of the impact of tourism on both residents and the local environment. As a result, each Canadian province and municipality has its own set of specific rules and regulations regarding Airbnbs and other short-term rentals.
This makes having a clear understanding of your local regulations one of the most important considerations before starting an Airbnb business in Canada.
Whether your property is nestled in the heart of a city or surrounded by the serene beauty of nature, hosting an Airbnb in Canada allows you to open your doors to a global community — so long as you adhere to the relevant laws within your local area.
2. Create a Local Guide for Guests
To enhance your guests’ experience, put together a well-organized local guide to leave in your Airbnb for each guest’s convenience. The best way to create this type of guide is by laminating printouts and securing them in a binder to leave in an obvious location, such as on a dining room table.
Within your local’s guide for guests, include recommendations for:
- Restaurants, breweries, and bars
- Outdoor adventures and sightseeing
- Paid and free attractions
- Hidden gems in your local area
- Walkable neighborhoods and nearby trails
Additionally, you should include a page at the start of your guidebook that lists all the nearest emergency services a guest may need, such as hospitals or auto shops.
This personal touch will make each guest’s stay more memorable and can help you win higher ratings.
3. Connect with Other Canadian Airbnb Hosts through Airbnb Setup
Airbnb Setup is a service offered by Airbnb that allows you to connect with both experienced hosts and guests. With the guidance of these individuals, you can ensure your Airbnb is poised for success from the start of your Airbnb hosting journey.
In addition to utilizing Airbnb Setup, you can also join local hosting communities or online forums to connect with fellow hosts. Sharing experiences, tips, and advice within these communities can be incredibly valuable, especially for newcomers.
Running an Airbnb in Canada offers a unique opportunity to share your space, culture, and hospitality with travelers from around the world.
While there are challenges to overcome, the benefits of financial gain, cultural exchange, and personal growth make the journey worthwhile. With a little hard work and effort, you can create a highly profitable Airbnb business that supplements your income — or even becomes a new source of primary income.
As you embark on your Airbnb hosting journey, remember to always keep track of your expenses, stay on top of local regulations, and connect with your local community of hosts.
Good luck and happy hosting!