With the high growth in the home-sharing industry, owning an Airbnb property has quickly turned into a lucrative real estate investment strategy. However, not all Airbnb markets and Airbnb rental properties are created equal. The profitability varies for each market and property. One key performance indicator to take into consideration when looking for an Airbnb rental property is the Airbnb occupancy rate. You see, you aren’t going to generate profits by merely listing your property on Airbnb. As a host, getting Airbnb bookings and maintaining a good occupancy rate is crucial. But what occupancy rate is ideal for an investor? In this blog, we will walk you through what constitutes a good Airbnb occupancy rate. However, before we explore what a good occupancy rate for Airbnb is, let’s first understand how to calculate Airbnb occupancy rate.
Airbnb Occupancy Rate Meaning and Calculation
Airbnb occupancy rate is the ratio of booked nights to the total number of nights that an Airbnb rental is made available for booking. It’s a measure of how often your Airbnb listing is occupied by guests.
In the Airbnb occupancy rate calculation, the total available nights include the nights that the Airbnb listing was booked and those that were available for booking. For accuracy, it should exclude the blocked nights. Airbnb hosts might block their listings off when they want to use them for personal reasons.
Here’s the basic Airbnb occupancy rate formula:
Airbnb Occupancy Rate = Number of Booked Nights/ Total Available Nights
Airbnb occupancy rate influences the profitability of your investment property. However, it is not as straightforward as most people may think. As a matter of fact, the highest Airbnb occupancy rate is not necessarily the best for an investor. So, what is a good Airbnb occupancy rate? What occupancy rate should an Airbnb investor aim for? Read on to find out.
What Is a Good Airbnb Occupancy Rate?
Airbnb occupancy rate and rental rate are the key real estate metrics that determine Airbnb rental income. Technically, you’d think that an ideal Airbnb investment property is one with the highest Airbnb occupancy rate. However, higher Airbnb occupancy rates don’t necessarily mean more profits. There’s a point at which a higher Airbnb occupancy rate will lead to lower rents and vice versa. If the occupancies are very high, it may also mean that your listing is likely leaving some money on the table.
This inverse relationship between occupancy rate and rental rate means that 100% Airbnb occupancy rate is not the point at which the income property makes the most profit. An Airbnb host needs to strike the right balance between occupancy rate and rental rate. A good Airbnb occupancy rate is basically one that allows an Airbnb host to charge an average rental rate that yields the highest total Airbnb rental income. The percentage at which this ideal Airbnb occupancy rate ultimately sits will vary depending on the location, the position of your listing in the overall market, and the time of the year. Sometimes, lower Airbnb occupancy rates may be ideal for maximizing your total profits.
Neighborhoods in close proximity to tourist hotspots can have both a high rental rate and Airbnb occupancy rate thereby generating a good Airbnb rental income. There are also neighborhoods with low Airbnb occupancy rates but high rental rates. It is still possible to have high Airbnb rental income in such neighborhoods if the high rental rates more than make up for the low occupancy rates. Neighborhoods with both low rental rates and low occupancy rates would be undesirable to Airbnb investors.
Finding Rental Property with Good Airbnb Occupancy Rate
As you can see, finding a neighborhood and property with a good Airbnb occupancy rate is not as simple as just looking at a single metric. That’s where Mashvisor comes in. If you are looking for an Airbnb property with a good occupancy rate, you can do it quickly and efficiently using Mashvisor.
First, you can easily find the Airbnb occupancy rate by city in the US housing market on Mashvisor’s blog. Moreover, our real estate investment tools use Airbnb analytics to give you accurate Airbnb data for neighborhoods and rental properties. You can use Mashvisor’s heatmap to find Airbnb rental income, Airbnb occupancy rate, and other important real estate metrics for neighborhoods in your city of choice. The heatmap tool displays different ranges or percentages of real estate metrics using different colors. With this visual, it becomes easier to find a neighborhood with a good balance between average Airbnb occupancy rate and average Airbnb rental income.
To find an income property in the neighborhood of your choice that has a good Airbnb occupancy rate, you should take a step further and analyze individual properties. Investment property analysis can be done using our Airbnb profitability calculator in a matter of minutes. This tool allows you to calculate occupancy rate for individual income properties in your target neighborhood. You can also use the tool to check other metrics like rental income, cash flow, cap rate, and cash on cash return. This is a must-have tool if you want to find an Airbnb rental with a good ROI.
Want to find rental properties with a good occupancy rate in your neighborhood of choice? Start searching right away!
Maintaining a Good Occupancy Rate
Your efforts to optimize the Airbnb occupancy rate of your short-term rental should always begin even before you acquire it. Analyzing the neighborhood and individual investment property before making a purchase is only the first step. Sometimes actions by competitors or changes in the market may also make it hard for investors to maintain a high Airbnb occupancy rate. However, regardless of your current Airbnb occupancy rate data, you can still influence it. Here are some tips to help you boost your occupancy rate and maximize your return:
- Market your Airbnb property well
- Have a dynamic pricing strategy depending on seasonality
- Offer better amenities that cater to the specific needs of your Airbnb guests
- Keep in touch with your previous guests
- Enable the Instant Book feature on your Airbnb listing
- Use professional photos and have an attractive description on your listing page
- Prepare your Airbnb rental property for each season
- If you own multiple Airbnb rentals, hire a professional property manager to optimize the process of renting them out
- Respond quickly to guest issues
- Maintain a good overall rating and positive reviews
All in all, to have a high occupancy rate, you have to be a good Airbnb host. Read our guide on becoming an Airbnb host to learn all that’s needed.
The Bottom Line
A good Airbnb occupancy rate can help you achieve a higher Airbnb rental income for your listing. However, getting an income property with an ideal occupancy rate is no easy task. First, you have to understand what a good Airbnb occupancy rate is. You should pay close attention to the Airbnb occupancy rate relative to the total Airbnb rental profits. Mashvisor makes this much easier for you since our tools allow you to conduct an accurate analysis of the market, neighborhood, and individual property in a matter of minutes. You also need to constantly monitor it to ensure that you are not leaving money on the table and make necessary adjustments.
If you are looking to buy an Airbnb rental, be sure to use Mashvisor for your analysis. You can also learn more about investing in vacation rentals on our blog.