Online marketplaces for private rentals

The three principal online marketplaces facilitating private rental transactions are AirBnB, HomeStay and Tripping.  They are blossoming across Mexico as travelers embrace the idea of using shared accommodation offered in private homes instead of staying at commercial hotels.  The demand has been significant enough to catch the attention of major online travel agents like Booking.com, who have also begun to operate in this market.

For travelers, these shared spaces in private homes offer choice and variety in accommodations; and for hosts there is the prospect of earning additional income by renting rooms, an annex, or even the entire property.

If you’ve got space in your Mexican home to share on a short-term basis, this article explains key points to consider when starting and managing a shared accommodation rental.

Setting-up your physical space

Before you can rent un(der)-occupied spaces in your home, you’ll need to prepare the physical space to receive guests, and set-aside the time and energy to host them.  In these online marketplaces, buyers are given instant access to a copious supply of offers, so even a small handful of lukewarm reviews about the space you offer can prejudice your chances of obtaining the next booking.  If you’re serious about generating an income this way, you should create an agreeable space for others to share and be prepared to invest the time required to operate the endeavor.  Take time to browse the existing inventory of offers in your local area and you’ll discover that there’s something for every taste and budget; you’ll need to consider which ‘local niche’ you want to serve with the space you have on offer.

Setting-up your online profile and marketing

When you’re ready to receive paying guests, you can apply to become a host on one or more of the online marketplaces set-up to market your offer and facilitate bookings.  AirBnB dominates and drives this market, and their presence in Mexico is impressive; consider marketing your home on other platforms too, including HomeStay and Tripping.  To further extend your reach, you might also promote your accommodations through major online travel agencies that serve this market, like Booking.com.  You should use high-quality photographs (or hire a professional photographer) to present your offer and ensure that what you publish online accurately reflects what guests will experience when they arrive.

Managing your shared space rental in Mexico

Here are some tips about managing your shared space rental when it’s being actively promoted using an online marketplace:

Profile updates

You should review your profile(s) regularly to keep up with any changes and improvements you might make to the spaces you’re offering for rent, as well working to actively improve descriptions based on your experience of hosting guests.

Managing availability

If you don’t intend to offer your shared spaces throughout the year, you’ll need to actively manage your availability calendar to shut-out dates when you don’t want paying guests staying in your home. If you are promoting your home lodgings across two or more marketplaces, you’ll need to ensure that you reconcile the availability calendar across all of them when you receive a confirmed booking.

Being responsive

Potential guests may write to you asking questions, and you’ll need to respond in a timely manner.  They might be making inquiries with several hosts in the area and they will be mindful of how quickly each one responds.

Managing reviews

Each guest that arrives to stay in your home – whether that’s a room, an annex or the entire property – will be encouraged to rate the experience and leave a review.  You, as the host, will also be asked to rate the guest as well as have an opportunity to respond to the review left by the guest.  You need to work hard to earn high ratings and positive reviews, and you need to respond to negative ratings and reviews quickly and decisively. Insufficient reviews can put-off potential guests, and a small handful of lukewarm or poor reviews (especially those with an inadequate response) can severely curtail future bookings. Hosts tend to become subservient to guest reviews in an effort to present their offer in a good light to potential future guests.

Covering your costs

The rates you can charge will depend on the level of demand in the location where your home is situated, the quality and style of the accommodations you offer, as well as the extent of local competition—from other guest houses as well as local hotels and inns.  Running a guest service takes time and effort and can be stressful at times. In addition to the expenses incurred as you host multiple guests on a regular basis (e.g. consumables, changing linens, cleaning, etc.) there is additional wear-and-tear to manage and pay for, commissions to pay to the online market operator for each confirmed booking, and taxes to set-aside from the income you earn.

Other considerations

In addition to the practical aspects of opening-up your Mexican home to paying guests, there are some significant matters to consider when you plan to participate in these online marketplaces, which include:

Your resident visa status

Renting out your property in Mexico –even if it’s only a single room– constitutes a remunerated activity.  If you are a foreign resident here, you should ensure that your resident visa privileges allow you to earn an income in Mexico.

Declaring the income

You should talk to an accountant in Mexico about the tax implications of renting your Mexican property using online marketplaces.  The income that hosts earn from renting personal accommodations is taxable, and hosts are obliged to declare and pay income tax on those earnings.  AirBnB in Mexico now reports hosts’ incomes directly to the Mexican tax authorities and hosts may receive letters from the tax office advising them of tax liabilities owed from that rental income.

Home insurance

Some of the online marketplaces offer hosts an insurance coverage if guests damage the property or suffer personal injury while booked-in at the property.  While that may cover you for incidents related to guests who made a booking through the marketplace, note that the practice of hosting paying guests in your home while you are present there will probably invalidate your current home insurance policy. Most residential policies dis-allow what is referred to by insurers as ‘simultaneous occupancy’—renting part of your home (e.g. a room, or an annex) to third parties while you are living on the property. This risk is treated differently by insurance companies and thus a regular domestic policy will not cover you; you’ll need to seek out a commercial policy which is likely to be considerably more expensive. If, on the other hand, you rent the entire property and vacate the property while the renters are present, then a regular domestic policy will probably suffice.  Check the wording of your existing policy and see our guide to insuring your property in Mexico for further guidance.

Mortgages and tenants

If your home is mortgaged, take care to seek permission from the lender before you participate in these online marketplaces as most financiers prohibit their debtors from renting space in the home as part of the terms of the mortgage.  If you are a tenant in someone else’s home, check the terms of your rental contract and seek explicit written permission from the landlord before you attempt to sublet any rooms or other spaces in the house.

Wear and tear

Keep in mind that general wear and tear on your property will be higher when you’re renting it to strangers and you should account for this in your rates to cover for general upkeep and maintenance as well as minor damages which cannot be sensibly claimed on any insurance policy.

Legal issues

All the online marketplaces which offer shared spaces for rent and facilitate the arrangements between guests and hosts state in their terms and conditions that it is the host’s responsibility to comply with local laws and regulations concerning the rental of property. If you are in doubt about any rights or obligations you or paying guests may have while staying in your home, talk with a qualified lawyer in the state where the rental property is situated.

If you decide to rent your entire home on a longer term basis, read our articles about home rental in Mexico, especially the one about the need to know who is renting your home, to avoid possible loss of your asset.

Conversations at dinner parties inevitably include talk about the potential of renting a room or annex in one’s home and about someone else who’s doing it already and earning a worthwhile income.

Travelers actively consider services like Airbnb, HomeAway and Tripping as a choice alongside hotels, and sites like Booking.com are offering shared spaces in private homes alongside traditional hotel rooms.

There are pros and cons of renting a shared space in a private home instead of using a hotel and these are discussed in detail on our main article about the subject.   Irrespective of the wider arguments, shared space rentals led by Airbnb have materially altered the accommodations market in Mexico.

Hosts who tend to do well are those with homes in popular neighborhoods in big cities as well as those with homes in smaller towns and resorts popular with tourists, especially weekend visitors.  Satellite towns and cities within a 2-to-3-hour drive of the capital —including Valle de Bravo, Tepoztlán, Cuernavaca, Puebla, Taxco and Tequisquiapan— are among the places where hosts offering accommodations via Airbnb can do particularly well at weekends.

The local economies of these towns and resorts are getting more trade as they are no longer constricted by static-supply hotel accommodations.  Shared spaces in private homes are increasing supply generally while creating an elastic and dynamic system that flexes to the demand, for example, when an Expo or festival is taking place locally.

A downside of this trend might be oversupply.  Some quiet provincial towns —an attraction for some— are becoming less quaint and more crowded.  In picturesque towns around Mexico City, it’s not unusual to see traffic jams forming on a Sunday afternoon as the scramble to get back to the capital —and Monday morning’s inbox— plays out in places which extended a well-earned break and some fresh air to the capital’s corps of office workers.

For travelers and visitors: If you’re planning to visit or travel across Mexico and don’t mind sharing spaces in private homes, there has never been more (and growing) choice: there’s something for every taste and budget, from off-grid rustic bungalows lost in the countryside to sumptuous rooms carefully appointed to match any comfortable hotel.

For homeowners: If you’ve got a home in Mexico and want to join the ranks of those generating a side income, demand for space is high especially if you live in or near a big city, in a picturesque tourist town near the capital, or a popular ocean-side tourist resort.  As we explain, offering space for rent in your Mexican home can be worthwhile, but there are matters to consider and some upfront investment is required.

AirBnB, HomeStay and Tripping are the principal online marketplaces currently operating in Mexico, and they have become so popular that they are revolutionizing local accommodations marketplaces.

The approach is favored by travelers who now have more choice about the types of accommodation available to them, and it’s alluring to hosts as they see a means of generating an income from unused spaces in their private home.

Conceptually, ‘shared accommodation’ services are offered to guests as a lifestyle proposition: instead of staying at a commercial hotel, you can stay and ‘live like a local’—being welcomed and looked after personally by someone who lives in and knows the area you’re visiting.

Advantages of using shared accommodations

Shared accommodation lodgings offer a range of distinct features, which include:

Experiences instead of packages: The travel market world-wide is changing.  Contemporary travelers are increasingly choosing ‘experiences’ over ‘travel packages’ and with Mexico being one of the world’s top tourist destinations, it’s no wonder that services like AirBnB and HomeStay are blossoming here.

Some shared spaces are self-contained: Some hosts offer annexes or bungalows for rent, which provides a self-contained accommodation space inside a larger private property.  This can be useful for people who want to stay in a private home while enjoying some additional privacy and autonomy.

Pet-friendly: Private residences tend to be more pet-friendly than commercial hotels, so if you’re having trouble finding pet-friendly accommodations for your travels in Mexico, the shared accommodation option might provide a solution for you.

Local knowledge: The best local hosts offer a dedicated space in their home for guests, ideally with a private bathroom. (Some places only offer shared bathroom facilities.)  Some hosts provide a ‘welcome pack’ containing local knowledge and advice about things to see with recommendations of decent cafés, restaurants and bars to be found nearby.  Hosts might be on-hand to answer any questions and provide local knowledge and advice.

Guest vetting and reviews: Guests are vetted by the intermediary and a comprehensive reviews system enables the ‘community’ to regulate itself: guests rate the hosts and accommodations, and hosts rate the guests.

Scouting for places to live or retire: Staying at someone’s private home might offer opportunities to connect with local people more easily than when you’re staying at a hotel.  This way of arranging your accommodations can be ideal when you’re scouting local areas as potential places to live or retire to in Mexico and want to get a genuine feel for the area.

Increase in peak-period supply: Hotel rooms in certain areas tend to get fully-booked during peak-holiday periods like Christmas, New Year and Easter, as well as during popular local festivities and events.  The shared accommodations market has helped to provide an elastic and dynamic supply system that can flex during peak demand periods.  Some hosts in popular places purposely provide additional room space to earn more income during festival times —good examples are Pátzcuaro and Oaxaca during Day of the Dead, and Aguascalientes during the San Marcos National Fair— although note that rates will be set commensurate with local demand, so don’t expect any bargains.

Business trips: If you’re traveling on business, renting a room in a private home can provide an alternative to a hotel (which might be less expensive) and could be useful if local hotel-rooms are sold out, e.g. due to a large convention taking place.

Rent an entire home: Some hosts offer an entire home or villa for rent via these online marketplaces.  This can be useful if you’re traveling in a group or you need enough space for your (extended) family to occupy with the additional benefit of not having to share with strangers.  Hosts either welcome guests personally before leaving the home to them, hire a local person to meet-and-greet the guests, or provide electronic code access for self-service entry.

Disadvantages of using shared accommodations

While shared accommodations have their benefits and are popular with certain kinds of travelers, they do carry drawbacks, which include:

It’s different to a hotel:  While sharing private home spaces may be attractive in some circumstances, commercial hotels offer accommodation spaces and services that shared accommodations in private homes don’t—for example, in-room food service, a full-service concierge (if only to leave baggage after check-out), daily room cleaning, on-site bars and restaurants, etc.  Business trips may require you to offer a professional space to meet with and present proposals to potential new clients.  Sometimes, the natural anonymity afforded by a hotel environment and integrated amenities provided by a hotel or beach resort provides convenience and comfort that shared spaces, even those which are self-contained on a private property, cannot.

Inconsistent descriptions and service levels: While many hosts run their shared accommodation services professionally and diligently, some take a more laid-back approach to the entire arrangement.  While reviews can, in theory, weed-out consistently poor hosts, they cannot account for the fact that you are buying a service from a private individual and therefore subject to a private individual’s personal character and circumstances, some of which may be beyond the individual’s control.

Might not be as inexpensive as you thought: While privately-rented accommodations can be less expensive than a local hotel, they might not be.  Hosts are savvy and have access to the same price information that guests do.  They know when conventions and expos are in town, they know that certain events, fairs, festivals and holiday dates drive local demand for accommodations and adjust their rates (upwards) accordingly.  Headline rates advertised on these marketplaces usually exclude cleaning fees, service charges, and taxes: you need to click-through to the booking review page to see the actual price on offer.

Reviews: The companies managing online marketplaces invest a lot of time and effort to make their review systems as helpful as possible; however, they are not  infallible and, in some cases, might not even be a fair representation—especially if there are not many to go by.  (The first few are usually left by friends known to the host.)  In that sense, more is better and it’s no surprise that hosts with a higher number of good reviews always get more bookings.

The shared space rental market is booming in Mexico: hundreds of new listings for rental rooms, homes and villas are appearing every week—and there is no sign of a slow-down as the concept gains traction in the popular psyche of both travelers and hosts seeking to realize the benefits these markets promise.

As a consequence, these online marketplaces which combine technology with the willingness of travelers and hosts to share private accommodation spaces have significantly extended the choice and variety of places to stay in Mexico.

The booking of cabs using smartphones has been taken-up in earnest by taxi users in Mexico and Uber, the leading App-Cab company operating here, has recently announced further expansion to its services, with the ‘Ubers’ now available in fourteen cities across the country.

Customers using the Uber service can now book cabs in Mexico City, Toluca, Cuernavaca, Puebla, Queretaro, Leon, Aguascalientes, San Luis Potosi, Guadalajara, Monterrey, Hermosillo, Tijuana, Mexicali, and Merida.

Cabify, the principal App-Cab competitor to Uber, operates primarily in Mexico City, although its services are gradually expanding to some other Mexican cities.

The expansion of the Uber and Cabify services has not arrived without issues. Traditional cab drivers continue to feel threatened by the new services and have been staging demonstrations in cities where Uber is launched.  Uber has also been criticized by its own customers, for example, when some Uber cabbies fail to show up for booked fares; and when Mexico City recently implemented additional restrictions to car use in the capital to control air pollution, the company was chastised for allowing fare multiples to rise by up to 9x usual fare levels.

Uber’s rapid expansion does demonstrate that consumers want a choice in the way they hire cabs and its expansion from one Mexican city to fourteen in the space of three years illustrates that real demand for App-Cab services exists in Mexico.

While Uber and Cabify are redefining the relationship between taxi services and their customers in Mexico’s key cities, traditional street cabs and taxi cab ranks – known in Mexico as sitios – continue to operate, and many people will have the telephone number of at least one local sitio stored in their contacts, whether they use Uber or not.

You can learn more about how to get around in Mexico by cab—including street cabs, sitios and App-Cabs—by reading our extensive Guide to Taxi Travel in Mexico, here on Mexperience.

The appearance and rapid expansion of Uber—which is the best-known of the services—had caused significant controversy in Mexico City as elsewhere in the world. Established cab drivers in the capital and other cities blocked streets in protest and demanded that Uber be banned.

Roaming street cabs as well as those associated with a cab company or local bases—sitios as they’re known in Mexico—complained that they were placed at a significant disadvantage because they have to pay all kinds of fees such as rights to license plates, verification of taxi meters, etc. These traditional cabbies argued that Uber and others were offering a taxi service without authorization, and therefore breaking the law.

At first, city police carried out a number of operativos (police operations) against Uber drivers, impounding their cars for running a car service without a permit. The companies fought back, however, and found a great amount of support among users of social media, and even leaders of public opinion who argued that the reason the new services were so popular was that they were so efficient. If we are going to boast about our free markets, then let that show in the treatment of the innovative car services, was the main thrust of the arguments. Furthermore, they added, there was nothing stopping existing cabs from using technology to improve their services.

The advantages of App-Cabs are several:

• The drivers all use GPS and so customers who book the service can see where their assigned cab is in relation to their present location and time themselves accordingly
• When customers are on-board, the driver can find the least congested route to the intended destination
• Payment is made via credit or debit card through the App’s registration system, and so there are no problems with finding change
• If several friends who are all registered on the service are traveling together, the system can split the total cost of the fare across several accounts: this is quite popular with younger people who are on an outing together
• Rates vary, and can get quite high during rush hour, but they are known and agreed to before a ride is booked
• Many people, women especially, feel safer using the service where the drivers are clearly identified.

For many years Mexico City dwellers have been using their mobile phones to call radio taxis, or taxis from established sitios, for reasons of safety—and this continues to be a popular way to hire cabs locally.  A number of these services, which also charge a premium in comparison to roaming street cab rates, accept credit cards and give receipts for payment. Most people have at least one or two sitio phone numbers stored in their phones so that they can call for a cab.

With roughly 140,000 traditional cabs in Mexico City, the relatively few ‘App-Cabs’ are hardly enough to cover all of the demand in a city of 20 million. Where competition between the old and the new is greatest is at weekends outside bars, nightclubs, and other entertainment venues where car services of all kinds can and do charge especially high rates to revelers needing to get home in the early hours, or after a pop concert or show.

The regulations passed in July 2015 formalize the legality of the App-Cab services, and establish a number of requirements for the operators, including paying an annual registration fee, and a duty of 1.5% of the value of all rides—money the city says it will use to develop pedestrian services and promote the use of technology among traditional taxi services. The regulations also include a minimum market value for App-Cab vehicles, eliminating the possibility of using the cheapest autos, and, only slightly ironically, ban them from accepting payment in cash (one of the selling points of the App-Cab services is that they don’t use cash).

Overall Uber and Cabify were satisfied with the arrangements, having said from the beginning that they were prepared to contribute to city coffers.

You can find out more information about Uber and the Spanish company Cabify on their respective web sites.

See Also: Uber Cabs Expand in Mexico