The Airbnb occupancy rate is one of the most important metrics short-term rental investors need to consider when choosing a market, buying a new property, or evaluating the performance of an existing rental. The reason is that together with the average daily rate, the occupancy rate determines monthly Airbnb rental income and return on investment.
In this article, we’ll cover everything that both beginner and experienced Airbnb hosts need to know about the occupancy rate - from what it is and how to calculate it to where to find the highest Airbnb occupancy rate in the US market and how to minimize the vacancy of a vacation rental.
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What an Airbnb Occupancy Rate Is
The Airbnb occupancy rate is one of the most commonly used metrics to analyze and evaluate the performance of a short-term rental property. It shows how often a vacation rental is booked compared to the time for which it is available for rent.
The Airbnb occupancy rate is usually expressed as a percentage but can also be measured in the number of days. It can be calculated on a monthly or annual basis.
Occupancy can refer both to an entire market (a state, city, or neighborhood) and to individual investment properties. A market Airbnb occupancy rate measures how frequently vacation rentals are booked there on average, while a property Airbnb occupancy rate shows how often this specific property is rented out.
Why Airbnb Occupancy Rates Matter
The occupancy rate is a particularly important concept because it directly affects the monthly revenue and return on investment of short-term rental properties. The higher the Airbnb occupancy rate, the more income hosts will generate per month, and vice versa.
The reason for this is that Airbnb income is the product of the average daily rate (ADR) and the occupancy rate expressed as a number of days. The rental income, in turn, is present in all real estate ROI formulas, like the Airbnb cap rate.
For example, if in a certain month, an Airbnb property is rented out for 20 days for an average nightly price of $230:
Airbnb Monthly Income = 20 x $230 = $4,600
If in the following month, the Airbnb host manages to rent out their property for only 10 days:
Airbnb Monthly Income = 10 x $230 = $2,300
This shows that an investor takes a direct hit as soon as their Airbnb occupancy rate drops.
That’s why when buying a rental property, investors should look for areas with high short-term rental occupancy rates. This is a strong indicator that they will be able to generate good income and profit.
How an Airbnb Occupancy Rate Is Calculated
The Airbnb occupancy rate is calculated using the following formula:
Airbnb Occupancy Rate = Number of Booked Nights / Number of Nights Available for Booking x 100%
Let’s look at a specific example to understand how the occupancy rate of a short-term rental is calculated. In a given year, an Airbnb host marks their property as available for booking for 300 days, while keeping the property for personal use and maintenance for the remaining 65 days. In this year, guests book the rental for a total of 260 nights.
Airbnb Occupancy Rate = 260/300 x 100% = 86.7%
The vacation rental has an occupancy rate of 86.7%.
When calculating the Airbnb occupancy, many investors make the mistake of dividing the number of booked nights over the total number of nights in a month or a year. This is wrong because it makes occupancy look erroneously low. The denominator in the Airbnb occupancy rate formula should be the number of nights for which the property is available for rent.
How to Find Airbnb Occupancy Rate on Airbnb
New Airbnb hosts and property managers need to know that the Airbnb website does not provide aggregated, market-level occupancy rate. This means that you cannot use the platform to find the best cities to buy a rental property for minimum vacancy.
However, you can find occupancy rate data for your Airbnb listings. To do that, you need to switch on the Use professional tools option (for free) in your Account Settings on the platform. Then you can go to the Insights tab on your listing and check out Occupancy and rates.
There you will find data to calculate the occupancy rate of your listings in the last 12 months. You can see your listings historical Airbnb occupancy rate and how they performed compared to similar properties in the area. In this way, you can know whether your short-term rentals perform as expected or you need to boost your marketing efforts to get more reservations.
What a Good Airbnb Occupancy Rate Looks Like
A good Airbnb occupancy rate should be above 50%. Otherwise, it means that your short-term rental is staying vacant for more than half the time for which it is being listed for booking. An occupancy rate below 50% is a sign of excessive ADR or insufficient Airbnb marketing efforts.
While 50% is the minimum, you should aim for an Airbnb occupancy rate of 65% and above in order to maximize the performance and ROI of your investment property. As an Airbnb host, you make zero money when your property is vacant.
Before you look for the best short-term rentals for sale, you need to understand that the Airbnb occupancy rate - like all other vacation rental data points - depends on the location. The average occupancy of short-term rentals varies widely from one city to another and from one zip code to another.
So, to know if a certain listing has a good occupancy rate, you need to consider the market average first. For instance, achieving a 70% occupancy rate in a city where the average is 50% is great, while it is bad in a city with an average rate of 80%.
How to Find Airbnb Occupancy Rate for Any City or Zip Code
The fact that the Airbnb website does not provide readily available market-level Airbnb occupancy rate data is a major setback for beginner investors with no established data sources. This means that they need to connect with local Airbnb hosts, collect manual data, and perform a lot of calculations to get occupancy data for any US city or zip code.
Alternatively, the best way to find Airbnb occupancy rate by city or zip code is to use the Awning Airbnb Market Data tool. All you have to do is to enter the name of a city or a zip code, and immediately you’ll get access to comprehensive Airbnb market performance analysis, including the average occupancy rate. The occupancy data is based on the performance of active Airbnb listings in the area, which makes it accurate and trustworthy.
Other Airbnb data points that the Awning Market Data tool provides include:
- Average price of Airbnb properties
- Short-term rental income
- Airbnb ROI
- Average Daily Rate (ADR)
- Number of active Airbnbs
- Airbnb market size: Small, Medium, or Large
10 Cities with the Lowest and Highest Airbnb Occupancy Rates
The job of a short-term rental property investor is much easier if they know which markets to focus on and which ones to avoid when buying a new rental property.
We’ve calculated the average Airbnb occupancy rate by city across the US market to provide you with the 10 places with the highest and 10 places with the lowest values. In our analysis, we’ve focused on markets with a minimum of 100 Airbnbs.
10 Cities with the Highest Airbnb Occupancy Rates
The locations with the best short-term rental occupancies in 2023 include:
- Lihue, HI: 94.7%
- Mount Desert, ME: 93.2%
- Kihei, HI: 91.7%
- Lahaina, HI: 91.7%
- Wailuku, HI: 91.1%
- Hauula, HI: 90.6%
- Princeville, HI: 90.5%
- Bar Harbor, ME: 90.3%
- Kapaa, HI: 90.1%
- Koloa, HI: 89.9%
As you can see from the Airbnb occupancy rate data above, all top locations for vacation rental investments are located in Hawaii and Maine. However, the Hawaii short-term rental laws are rather restrictive, so we’ve also put together a list of the markets with the highest rates excluding The Aloha State.
10 Cities with the Highest Airbnb Occupancy Rates Excluding Hawaii
If you want to buy a short-term rental with a high chance of being rented out most of the time but do not want to invest in Hawaii, you can look into the following markets:
- Mount Desert, ME: 93.2%
- Bar Harbor, ME: 90.3%
- Southwest Harbor, ME: 87.0%
- Yarmouth, ME: 86.9%
- Northampton, MA: 86.7%
- Bodega Bay, CA: 86.6%
- Culver City, CA: 85.7%
- Berkeley, CA: 85.3%
- Harpswell, ME: 85.1%
- West Hollywood, CA: 84.8%
Most cities with the highest occupancy outside Hawaii are located in Maine and California. Before buying a property in any of these states, make sure to check out the Maine or California short-term rental laws as there are specific requirements and restrictions that Airbnb hosts need to take into consideration.
10 Cities with the Lowest Airbnb Occupancy Rates
Meanwhile, if you’re thinking of buying a vacation rental in 2023, avoid these 10 markets as you might struggle with keeping your property occupied:
- Coulterville, CA: 28.4%
- Big Bear City, CA: 28.4%
- Kiawah Island, SC: 31.1%
- Quincy, WA: 33.3%
- Shaver Lake, CA: 34.1%
- Sugarloaf, CA: 35.1%
- Big Bear Lake, CA: 35.1%
- Joseph, OR: 35.2%
- Sugar Mountain, NC: 35.4%
- Westhampton Beach, NY: 36.0%
What Hosts Can Do to Increase Airbnb Occupancy Rate
The Airbnb occupancy rate of a property is not set in stone, and there are many things that a host can do to push it up (as well as to push it down).
Here are 12 proven strategies recommended by experienced Airbnb hosts and Airbnb property managers to increase the Airbnb occupancy rate of your short-term rental:
- Buy a property in a top Airbnb market: Maximizing your occupancy rate starts before even purchasing an investment property. Focus your rental property search on cities and zip codes that provide an average Airbnb occupancy rate above 50%. You can choose one of the cities with the highest Airbnb occupancy rates from the lists above, or you can use the Awning Market Data tool to find more locations that meet this requirement.
- Furnish your property well: How you furnish your vacation rental will determine how well it will look on photos, how many guests will book it, and whether guests will leave positive reviews after their stay. Provide comfortable, durable, neutral furniture items and top amenities to keep your property occupied. Research the most popular rentals in your market and what extras they provide, then try to offer more benefits than they do.
- Optimize your listing: You need to apply various Airbnb SEO strategies to rank your listing high when guests search for similar properties on the platform. Optimize listing details like the title, description, photos, amenities, and additional information.
- Apply dynamic pricing: One of the best ways to increase your Airbnb occupancy rate is to continue adjusting the nightly rate of your listing to reflect seasonality and changes in local supply and demand. The Airbnb ranking algorithm favors listings that offer competitive rates for the benefit of guests, so you should not ask for more than your competitors. We recommend using a dynamic pricing tool like Airbnb Smart Pricing, AirDNA Smart Rates, or Beyond Dynamic Pricing to automate the process.
- Turn on Instant Booking: You can switch on the Instant Booking feature on the Airbnb platform to approve the reservations of guests who meet certain criteria without manual review. In this way, you will get more bookings and rank higher in search results.
- Automate guest communication: To get more bookings and increase your occupancy rate, you need to respond to interested guests right away. You can use a third-party automation tool like Evolve or RedAwning to send automated messages to guests.
- Actively seek positive reviews: You need to have a high average rating based on numerous guest reviews to rank high and make guests want to stay at your property. In addition to making sure that everything is great with guest stays, you should also check up on them and ask for a review after each stay.
- Provide an experience: In recent years, the Airbnb platform highlights experiences even more than spaces as guests are in constant search of unique stays. As an Airbnb host, try to provide your guests not only with a place to sleep but also with access to the local culture, cuisine, and art scene.
- Achieve an Airbnb Superhost status: Airbnb Superhosts are favored by the platform and trusted by guests. You should put deliberate effort into reaching and maintaining this status to improve your Airbnb occupancy rate.
- Market your short-term rental outside Airbnb: While there are a lot of things you can do to improve the ranking of your Airbnb listing, you cannot maximize occupancy unless you promote your listing outside the Airbnb platform. Share your vacation rental listing on social media and by email and even consider running Google ads.
- Maintain your property in an excellent state: To continue attracting bookings, you need to keep your rental in top shape. This includes diligent cleaning and full restocking between stays as well as addressing any need for repairs in a timely manner, no matter how small it is.
- Hire an Airbnb manager: If you cannot devote enough time to optimizing your short-term rental, it’s worth considering hiring an Airbnb management company. The best vacation rental management company, like Awning, will help you enhance your Airbnb occupancy rate, maximize income, and boost profit while charging only a fraction of monthly revenue.
Takeaway
It is important to work towards increasing the Airbnb occupancy rate of your short-term rental property in order to maximize its performance and profitability. As a first step, you can buy an investment property in one of the markets with the highest occupancy rates, highlighted above. Then you can follow our 12 tips to ensure that your rental never stays vacant.
