How Interior Design can Increase Your Airbnb’s Occupancy Rate and ADR

There’s no denying the short-term rental boom is here and, after a year of recovery, it’s only going to continue to grow. In Q1 of 2021 alone, the US hit a record for new bookings, surpassing levels not seen since 2019. 

There’s considerable evidence that amenities like an in-home gym or a chef’s kitchen can increase a guest’s likelihood to book. The latest data suggests this also extends to the design of a space, down to furniture choices, color palettes, and room layouts. 

The sudden demand for travel comes as the hospitality industry embraces something new: flex-living experiences to support a growing population of remote workers. Airbnb and Real Page’s new partnership, Migo, for example, is redefining the home-sharing model by providing a network of fully furnished, thoughtfully designed homes ready to entice digital nomads seeking flexible living experiences. 

Trends come and go, but there are tried-and-true designs for furnishing a vacation rental that consistently win over guests

Factors like audience, location, and always-changing styles can make furnishing a vacation rental seem overwhelming. 

Fortunately, there’s plenty of data to support the correlation between good interior design and increased property value. A recent report from The Modern Space shows that it can add 12% on average to a property’s sale price.  

It should be noted that there’s no one-size-fits-all approach to design, but some of the most sought after design trends among vacation rentals feature thoughtful elements that emphasize relaxation and comfort. 

Biophilic design, made popular today by Justina Blakeney of Jungalow, has an interesting history. The origins of the term trace back to ancient Greece, meaning “love of life,” but it rose to popularity in the 1980s thanks to biologist E.O. Wilson. Describing the inherent human need to connect with nature, it’s applied often in the design world by incorporating natural elements. 

Access to nature has significant influence over social behavior, and guests are willing to pay a premium for these kinds of designs. Terrapin Bright Green found that people are willing to pay 58% more for a property with a view of a waterway, or as much as 127% more for lakefront property.

What are some easy ways to bring nature in? Pull in lots of plants, nature-inspired artwork, green colors, and natural fibers. 

By now, Scandinavian design is a ubiquitous term in the design world. It’s clean lines and neutral tones are always a popular choice. The main purpose of Scandinavian design is to improve daily life in a modern world, so it's a no-brainer when it comes to designing relaxing spaces for guests. 

Bankrate cross-analyzed 10 of the most popular interior design styles with hundreds of house prices on Zoopla to determine which style adds the most value to a home. What made the top of their list? To no one’s surprise, it was Scandinavian design. According to their study, properties that emphasize this style see on average a 59% increase in property value.   

The Farmhouse look rose in popularity in 2020, with people seeking comfort while largely staying indoors, and online searches for the style increased by 50%. The style, which has been popularized by Joanna Gaines, perfectly blends the traditional country look with more minimal contemporary design and can be best visualized through elements like rustic wooden beams, cosy fireplaces, and creamy white color palettes.

This style is quickly becoming more and more popular with time. In it’s analysis of the most popular design trends to raise property value, Bankrate found that the Farmhouse look was a close second to Scandinavian. According to their findings, property owners who choose to invest in the Farmhouse look may see as much as a 55% increase from sale price. 

Amenities are important, but they don’t tell the whole story. 

There’s no doubt guests look to listings that boast certain amenities, like an in-home gym or a chef’s kitchen, but that’s not the only factor at play. 

Guests are increasingly interested in listings with strong visual appeal, and property management companies are investing in furnishing their properties with design in mind.

Fast-growing digital hospitality platforms are looking to design firms to bolster their own operations

Despite an uncertain future for the accommodation market in early 2020, hospitality companies are now growing at an unprecedented rate. Many of these companies are either hiring internal design teams or partnering with design firms in an effort to increase the value of their listings.

Hospitality tech company, Jurny, for example, currently manages a portfolio of over 270 hotel and short-term rental listings across five markets. Recently, Jurny formed a new partnership with turnkey interior design company, Fülhaus, in order to integrate the company’s proprietary property management software with interior design solutions.  

“Guests expect beautiful, modern accommodations each time they book a Jurny-operated property,” says Luca Zambello, co-founder and CEO of Jurny. “The design element is vital to making a notable first impression.” 

Even Airbnb is making a sizable shift toward prioritizing a visual-heavy business model with its new Plus category, which is open only to hosts who demonstrate exceptional attention to design. 

Bridging Design and Hospitality Tech: Sonder 

Apartment-hotel management company, Sonder, has been shaping the hospitality industry since 2012 and is using a design-led approach to revolutionize the way people travel. In a recent presentation for investors, Sonder cited “exceptional design” as one of their core values that set them apart from other major players in the global lodging market. 

Similar to the adage, we eat with our eyes, Sonder knows that guests will look to strong visuals first when scrolling through listings of rentals to book for a vacation. This is why Ashley Redmond, Sonder’s Director of Interior Design, has said their design-led approach has the ability, “to influence how our guests experience the cities they travel to.” 

And their investment in design is paying off. In 2020, Sonder’s monthly revPAR for a single unit was, on average, 2.8 times higher than a standard hotel accommodation, and their average monthly occupancy rate was 3 times higher. It’s this exponential growth that has helped them raise $170 million in 2020, placing them among competitors like Airbnb and Expedia in a relatively short timespan.

What are some properties that use good design to see profitable returns?   

We vetted three existing short-term rental properties across North America designed by interior design company, Fülhaus’, team of experts. Using AirDNA’s Rentalizer tool, the goal was to determine what a property could earn within its respective regional market. What we found was a definite correlation between well-designed spaces and an increase in either occupancy or average daily rate in comparison to the listing’s regional market average.  

1. Maison St. Therese, Montreal, Canada 

Maison Sainte-Therese is a boutique hotel in the historical Old Town district of Montreal, Canada that features 15 rooms. The entire second floor of this building was designed by Fülhaus in 2018. 

According to the AirDNA Rentalizer tool, a one-bedroom, one-bath room at this hotel sees an average occupancy rate of 56%, higher than Montreal’s average rate of 50%. But it’s the average daily rate that shines here at $149, which is a 26% increase from the city’s average. 

The short-term rental market in Charlotte, North Carolina has skyrocketed since January 2021, seeing a 63% average occupancy rate for the year, with travellers looking to book entire homes, rather than private rooms or hotels.  

According to the  AirDNA Rentalizer tool, a three-bedroom, three-and-a-half bath vacation rental redesigned by the Fülhaus team in 2019 sees an average daily rate of $244, a 63% increase from Charlotte’s average of $149. This indicates that even if the listing sees a lower occupancy rate, the property owner may be able to charge more per day in order to recoup any shortage of revenue, thus proving to be more profitable per month than competing listings in the area. 

3. Sonder, The Continental, San Diego, California 

Located in San Diego’s trendy Little Italy neighborhood, The Continental is a newly-constructed apartment building that also offers short-term rental options for digital nomads and business-minded travelers. Six of the building’s rooms geared towards shorter stays were entirely designed by Fülhaus in 2019. 

We tracked a short-term room with the AirDNA Rentalizer tool and found that a studio apartment at The Continental sees an average daily rate of $220, 64% higher than comparable listings in the area that average $134 per day. While the occupancy rate sits at 64%—lower than the San Diego average of 81%—the studio’s high daily rate ultimately makes The Continental more profitable than other short-term rental options in the area. 

If you're furnishing an Airbnb or a vacation rental, listen up: Good interior design for Airbnb vacation rentals has a major impact on occupancy & revenue. Read!