Smart short-term rental investments begin with mastering the art of Airbnb market research. Whether you're scouting for the perfect property or looking to optimize its performance, understanding the local market and competition is crucial. By diving into the behavior of supply and demand, you can uncover the insights you need to make profitable, data-driven decisions.
In this guide, we'll walk you through the key steps of Airbnb market research, introduce tools that simplify and enhance your analysis, share proven tips for success, and highlight common pitfalls to avoid.
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What is Airbnb market research?
Airbnb market research refers to collecting quantitative and qualitative real estate and vacation rental data in different locations, organizing this data, and making calculations based on it in order to draw conclusions about the performance of short-term rental properties and the feasibility of an Airbnb business in that market. Some of the most important Airbnb data points you'll pick up during your research include property prices, Airbnb daily rates, occupancy, revenue, operating expenses, profit, seasonality, and legal regulations.
Airbnb market research generally consists of two key steps. First, it involves collecting and analyzing data across multiple locations in different regions and states to identify the best cities for Airbnb investments. From there, you can choose the most suitable area for your vacation rental strategy. The second step focuses on a detailed analysis of a few top potential areas, thoroughly evaluating them to ensure they align with your budget, investment goals, and revenue expectations.
Airbnb rental market analysis takes into consideration all the factors that affect the performance of a short-term rental property, ultimately leading to better investment decisions and higher ROI.
Why is Airbnb market research important?
As with any real estate venture, location is crucial to the success of a short-term rental investment. Many factors influencing an investment property's performance are directly tied to its location.
Airbnb market research is crucial because it allows investors, hosts, and property managers to:
- Identify profitable locations for investing
- Find Airbnb properties for sale with strong ROI potential
- Understand guest preferences
- Learn about the most in-demand Airbnb amenities
- Define the ideal guest persona
- Design and furnish the property in line with local trends
- Become familiar with seasonality trends and devise strategies to mitigate the negative impact of slow seasons
- Build a targeted vacation rental marketing strategy
- Set competitive prices
- Boost occupancy rates
- Estimate rental expenses
- Be aware of and comply with the short-term regulatory environment
All in all, conducting short-term rental market research before investing as well as while managing a vacation rental property helps you get more bookings on Airbnb, generate better revenue, enhance profit, and outperform the competition.
Where can I find Airbnb statistics?
The accuracy and success of your Airbnb market research relies on the quality of the data you use. That's why it's essential to choose the best Airbnb data sources.
Naturally, the first place to get short-term rental data from is the Airbnb platform itself. The Insights tab on your Airbnb host account provides access to important Airbnb metrics such as booked nights, occupancy, nightly prices, average length of stay, earnings, and others. Moreover, you can use the platform to study the performance of comps in your area to get an initial understanding of the market.
However, using the Airbnb website as the main source of data for your vacation rental market analysis has a few major downsides. First, data is raw and data points are limited and exclude some of the most important metrics such as real estate prices, occupancy rate, net revenue, and ROI. Second, while the data is relatively more detailed for your own listings, you can't access much useful and ready-to-use data on comparative properties and markets.
This means that you need to resort to additional third-party sources, like real estate listing websites (for property prices), local government websites (for Airbnb laws and taxes), and investing forums (for operating expenses and performance). As you can imagine, manually collecting and analyzing all the necessary data is a time- and energy-consuming process.
Traditionally, researching vacation rental markets used to take weeks and even months to complete. This means that more experienced investors with solid knowledge of the industry used to outperform beginner investors each and every time by snatching all the good opportunities and making more efficient management decisions.
Nevertheless, the introduction of Airbnb market research software tools like Forecast in SummerOS gives both newbies and those with decades of experience in the business a chance to study and analyze markets faster and more accurately than ever before. Nowadays, being able to perform efficient research and analysis on short-term rental markets means getting access to the best tools for this purpose.
How to conduct Airbnb market research step by step
While performing Airbnb market study and analysis sounds like an overwhelming process because of the many factors to take into consideration, it can be made significantly more manageable by breaking it down into specific steps and taking one step at a time. Here's how.
1. Define your investment goals
Before you start with research and data collection, sit down and write out your investment goals. This refers to what you expect to get out of your short-term rental business. Make your investment goals as specific and quantifiable as possible as that will make tracking progress easier.
To outline your goals, you need to answer questions like:
- What is your main objective? Generating recurring income, building long-term appreciation, having a vacation home you can visit often while making some money on the side, or a combination?
- What revenue do you expect to earn?
- How much profit do you want to get?
- How many properties do you want to buy and over what time period?
- Do you want a passive investment or do you plan to put some legwork into managing your property/properties?
Knowing the answers to these questions and having clear investment objectives will help you target your research on the markets that make sense for your strategy.
2. Set up your budget (and stick to it)
Another step that should precede vacation rental market search and analysis is putting together your investment budget. You have to take a look at your savings as well as expected earnings and expenses and decide how much you can allocate to your Airbnb investment.
While a short-term rental property should pay for itself and generate positive cash flow from the monthly revenue, it's important to plan for the worst and set up an emergency fund to make sure you can continue making mortgage payments in case things go south temporarily. Take the COVID-19 pandemic and its short-term effect on the Airbnb industry as an example. Similar dips can happen in hyper-local ways, no matter where you invest.
Moreover, you need funds to launch your business before starting to make money from Airbnb. The main costs that go into investing in a vacation rental include the down payment, closing costs, fixes and repairs, design and furnishing, amenities, Airbnb insurance, property tax, and Airbnb management software. Nonetheless, the largest of these expenses remains the cost of the property itself, which is mainly dictated by local prices. Thus, it's important to estimate how much you can afford to spend on an investment property as this will direct your research to the right markets.
3. Find the most profitable Airbnb locations
Once you understand your investment goals and budget, you're ready to dive into the exciting part–the actual Airbnb market research. This starts by collecting nationwide data to locate the best cities or areas for buying an Airbnb property. The most profitable Airbnb locations combine affordable property prices (in line with your budget), lean legal regulations, strong average daily rates, above-average Airbnb occupancy rate, reasonable operating costs, and–ultimately–good revenue and profit.
Needless to say, researching the entire U.S. market to pick a few potentially profitable cities is mission impossible even for the most experienced investor. Thus, following are the best places to identify good areas for Airbnb investing:
- Looking at a few key markets near you if you're staying local
- Real estate investing blogs with lists of top locations based on different criteria
- Real estate investing forums where investors share their experiences
- Working with a real estate agent or broker who specializes in short-term rental investment properties
- Consulting with existing investors and Airbnb hosts
- Talking to Airbnb property managers
- Using Airbnb data software (we'll get back to this point shortly)
If you have no idea where to start your search, check out our list of the top short-term rental markets across the U.S. These cities offer better daily rates, occupancy, income, and ROI than the majority of U.S. markets.
4. Identify a target audience niche
The next step in your Airbnb market research is to decide on the most appropriate type of guests to target. This decision should be driven by the typical visitors that come to your selected market. For instance, business hubs tend to attract business travelers, beach resorts bring in vacationing couples and families, while affordable towns can attract digital nomads and remote workers.
Establishing an ideal guest persona for your market and thus property will help you prepare your rental in line with the needs and expectations of this guest group and target your marketing efforts at them.
To identify a target guest niche, you can:
- Find out the most important tourist and/or business attractions in the area
- Check out local tourism statistics
- Visit the website of local authorities and tourism boards
- Research Airbnb listings in the area to draw conclusions based on their amenities and language
- Talk to local hosts and property managers
Knowing the guests that make the most sense in your market will help you target your efforts at them and generate stronger results for your Airbnb property.
5. Research market demand and seasonality
A crucial step of every short-term rental market research is studying local demand and seasonality trends in demand. Unlike long-term rentals, vacation rentals are subject to seasonality which largely affects performance and should thus drive a lot of your management decisions, such as pricing and marketing. While the impact of seasonality is relatively smaller in big cities and business hubs, it is quite pronounced in other top Airbnb locations, such as beach and ski resorts.
You can research demand trends by looking at monthly tourism statistics as well as studying the daily rates of local listings across the year. This will help you understand when the high season in the market is so that you can increase nightly prices and still generate good occupancy and when the low season is so that you decrease daily rates to bring in more reservations. This will help you maximize annual rental revenue and ROI.
6. Evaluate competitor listings
Competitor analysis is another major step in researching Airbnb markets. After all, in order to rank high, attract bookings, and earn good revenue, you have to perform better than your competitors. This includes having a better property, offering more amenities, creating a superior listing, deploying a competitive Airbnb pricing strategy, and surpassing their marketing efforts.
In this step of your market research, you should use the Airbnb platform to identify the active listings that most closely match the property that you plan to buy or that you own. Focus on an area of no more than a few miles from your location. Look for listings of the same type, with a similar number of bedrooms and bathrooms, and with comparable amenities and extras.
Once you've identified a few such rentals, study them in detail. Consider their design theme and furnishing quality, specific amenities and unique propositions, listing language and photos, daily rates, and the availability or lack of such on their booking calendars. You should use all this information to optimize your own property in line with local supply and demand and make it more competitive than anyone else in the area. As we'll discuss, a tool like Forecast makes this task a breeze.
7. Analyze market trends
The short-term rental market is not static. It's highly dynamic with continuous changes in supply, demand, prices, occupancy, and everything else that matters for the success of your Airbnb business.
Consequently, in addition to taking a snapshot of the current state of the market, it's also important to look at historical and future trends in the location as well. This will help you understand what factors have been driving the market and what changes you can expect in the near future so that you can make proactive investment and management decisions rather than reactive ones.
Most importantly, take into account:
- Whether the number of Airbnb listings is going up or down
- What type of listings are popping up
- Whether daily rates are increasing, staying the same, or decreasing
- Positive and negative changes in the number of visitors to the area
- Whether new Airbnb rules are expected to be introduced by local authorities
In your research, try to distinguish between trends attributed to seasonality and more permanent changes in the market dynamics. It's a much smarter decision to invest in a market that is relatively small at the moment but is expected to undergo major growth in the coming years rather than in a large, strong market that might be already showing signs of oversaturation and slowdown.
8. Study local Airbnb laws
In addition to all quantitative data listed above, you also have to incorporate qualitative analysis into your Airbnb market research. Learn about the short-term rental regulations imposed by state, county, and city authorities. Indeed, Airbnb rules are strikingly different across the U.S. market, and it is the responsibility of the owner to ensure legal compliance for a successful vacation rental business.
The best sources of information about Airbnb regulations include:
- Local government websites
- Local real estate attorneys
- Local Airbnb managers
Local STR rules can impact the process of preparing your property for listing, the licenses and permits you need to hold, the management operations and requirements, the number of days for which you can rent per year, and the fees and taxes that you need to pay monthly and annually. That's why they absolutely need to be factored into your analysis.
9. Use Airbnb market research tools to estimate revenue potential
Finally, when conducting Airbnb market research and analysis, it's crucially important to use the right tools. Going through all above-listed steps is an overwhelming, time-consuming, and tedious process that is nevertheless absolutely necessary in order to find the best area for investing in a vacation rental property that promises to deliver the best results in line with your goals. If you're doing the work, you need data that you can rely on.
Moreover, researching the market is not a one-time process that concludes with buying an investment property. You have to continue keeping track of market trends to optimize your management decisions and outperform competition.
The good news is that you don't have to perform manual data collection and analysis as long as you get access to the best software tools. With them, you'll be able to quickly, easily, and reliably calculate the potential revenue in each market based on average daily rates, occupancy rates, comps, and trends.
So, what are the top tools for analyzing short-term rental markets?
The best Airbnb market research tools
Over the past decade, short-term rental data and analytics platforms have grown rapidly to meet the rising demand for accuracy and efficiency from investors and property managers. With so many tools available, you need to focus on selecting the most powerful and reliable options to guide your investment decisions.
Here are some of the best tech-based tools for researching Airbnb markets.
1. Summer Forecast
Forecast in SummerOS is your go-to tool for finding top-performing vacation rental markets and investing in highly profitable Airbnb properties. With intuitive data, actionable insights, and powerful forecasting tools, you can research and analyze markets at the city, zip code, or address level.
Summer Forecast provides you with a quick summary as well as specific details on the most important Airbnb statistics including but not limited to listings for sale, Airbnb listings, hosts, submarkets, gross revenue, net revenue, RevPAR, average daily rate, occupancy rate, days listed, amenities, and more. You can build and compare your own sets of markets to select the best locations for investing based on your capital and objectives. The advanced mapping feature helps you visualize market performance in a user-friendly way. The built-in cash flow modeling allows you to create pro formas with customizable inputs for simplified financial planning.
Moreover, each market comes with listings available for sale with ready Airbnb investment analysis. In this way, you can find not only the best Airbnb markets but also the top-performing properties in them for smarter and faster investment decisions.
An annual subscription to Summer Forecast costs $4,000, offering superior tools at a lower price than competitors. For beginner investors, more affordable startup plans are also available. Every plan includes a 14-day free trial, so you can experience how Forecast works.
To unlock exclusive Airbnb insights and outsmart the STR market, check out Summer Forecast.
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2. Mashvisor
Mashvisor is another real estate investing platform that facilitates short-term rental market research and analysis across the U.S. Importantly, unlike other tools, this app works with both short-term and long-term rental markets so that investors can enjoy flexibility in case of changing market conditions.
Airbnb investors can use a number of filters, such as home values, property types, monthly revenue, occupancy rate, cap rate, and more to search for the top cities and neighborhoods for purchasing a property to rent out on a short-term basis. The market-level analysis includes the main data points that investors need to consider, like median listing price, listings for sale, occupancy, revenue, and cap rate.
However, some Mashvisor customers report issues with the Airbnb data coverage and accuracy, and they also comment on the difficult-to-use tools.
Access to the Mashvisor platform costs $99.99/month when billed annually for more advanced features, but full access is available only with the Enterprise plan which has custom pricing.
3. Wheelhouse
Wheelhouse is another tool which helps with some of the most important aspects of Airbnb market research and analysis. The market insights provided by the platform include active listings, average nightly rate, occupancy, nightly RevPAR, lead time, and others. Investors can access historical and future performance as well as real-time data insights and trends.
Meanwhile, Wheelhouse is best known for its dynamic pricing tool which eliminates the need for manual market and competitor analysis by suggesting daily rates that optimize both occupancy and revenue.
Wheelhouse pricing starts at 1% of booking revenue or $19.99/month per listing, but access to additional features and market insights costs extra.
4. PriceLabs
PriceLabs tools aim to provide actionable market insights for short-term rental property investors and managers. Some of the key data points offered by the platform include daily rates, occupancy rates, RevPAR, seasonality, and market changes.
Moreover, users can build their own comp sets based on property features and amenities for a targeted market research that focuses on relevant listings in the area. Automated dynamic pricing is also available to reduce the need for continuous market analysis.
While PriceLabs pricing starts at $9.99/month for market dashboard access, the cost depends on the size of the market and the number of markets, so the total price often adds up to a lot more.
Tips for better Airbnb market research insights
Learning how to perform efficient Airbnb rental market research and analysis takes time that beginner investors simply don't have in order to compete with more experienced peers. Thus, we've put together a list of proven tips and tricks to help you get started on the right footing with your research.
These are our actionable tips to boost the results of your short-term rental market analysis:
- Combine data from multiple (reliable) sources for a more complete picture
- Consider both revenue and expense factors to estimate cash flow and profit
- Incorporate both supply and demand forces for comprehensive understanding of the local market
- Understand guest demographics for precise marketing efforts
- Focus on the most relevant rentals in the area via custom comp sets to refine your research
- Read through guest reviews of comp listings and your own listings to comprehend evolving guest demands and expectations
- Keep track of local trends as the Airbnb market is quickly changing
- Keep an eye for changing short-term rental regulations
- Regularly update your research and adjust your management strategy accordingly
- Use the help of professionals such as real estate agents and Airbnb revenue managers
- Network and collaborate with other hosts or property managers for access to first-hand performance data
- Take advantage of the best software tools for fast and accurate research and analysis
Meanwhile, as a savvy investor or property manager, you should learn from the mistakes of other operators in the market and avoid their costly repercussions.
Some of the most common errors that Airbnb hosts commit with regards to market research and that you should avoid at all costs include:
- Basing decisions on outdated or incomplete data
- Ignoring the competition
- Disregarding the submarket and focusing entirely on the big picture
- Overestimating demand
- Underestimating supply
- Not paying attention to seasonality
- Assuming static prices and neglecting the need for Airbnb dynamic pricing
- Dismissing Airbnb laws
- Failing to account for wider political and economic factors
- Not asking guests for direct feedback
By using these tips while avoiding the most frequent mistakes of other investors, you'll quickly be on your way to researching the Airbnb market to find and maintain the most profitable opportunities around.
Bottom line
Skipping Airbnb market research is unthinkable for investors and property managers who want to find the best locations and the top properties for short-term rentals. That's the only way to locate the most profitable markets, understand the competition, and optimize your management strategy for better revenue and more profit. Remember that the best Airbnb strategy is based on reliable data and data-driven insights.
For access to institutional-quality Airbnb data and insights for smarter and more profitable investment decisions, check out Summer Forecast. The forecast is clear: Higher returns ahead.
Your Airbnb revenue forecast: Brighter days ahead
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