Running a successful Airbnb business requires continuous tracking of your property's performance and comparing it to market averages to stay competitive. One of the best ways to evaluate your short-term rental's success is to analyze trends in average Airbnb occupancy for performance evaluation and compare those trends to your property's own occupancy rate. This comparison helps you understand whether your property is underperforming or if broader market conditions are at play.
This article shows Airbnb hosts and property managers how to determine if their property is underperforming or the market is getting worse. We will go over the factors that need to be taken into consideration, the current state of the U.S. Airbnb market, and what tools can help with this analysis before concluding with some tips on how to increase your occupancy rate if you think your property is not reaching its potential.
Meanwhile, if you need access to reliable property- and market-level vacation rental data and analytics including but not limited to occupancy, check out Summer Forecast.
This is your go-to platform for building a high-performing Airbnb portfolio, designed by property managers for property managers. With intuitive data and powerful forecasting tools tailored to the needs of STR professionals, you can analyze market trends, compare properties, and generate revenue projections—all in one place. Whether you're managing a single property or an extensive portfolio, Forecast empowers you to make smarter, data-driven decisions to maximize your short-term rental profits.
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How to Determine if Your Airbnb Property Is Underperforming
Your Airbnb occupancy rate is one of the key factors to use when evaluating the performance of an investment property and comparing it to the market average. In your analysis, keep in mind that occupancy is a product of both supply and demand forces in the market that affect the results of your property as well as other properties in the area. When you look at how your short term rental is doing, never do it in a vacuum, but rather in the context of the market where your property is located. While a good Airbnb occupancy rate is generally defined as 60% and above, such a rate might be simply unattainable in certain markets.
These are the key factors to take into account when deciding if your Airbnb investment property is underperforming when it comes to occupancy and daily rates.
Location
The specific market where an Airbnb is located is the single most important factor to determine how it performs. Occupancy varies widely from one location to another.
According to AirDNA data, Kauai, HI has a 12-month average occupancy rate of 74.4%, while it is only 34.9% in Oxford, MS. This means that if your property in Oxford has an occupancy of 50%, it's outperforming the market, but if your rental in Kauai has the same rate, it's falling behind.
Moreover, Airbnb markets are not static. Occupancy might be strong one year and weak the year after, and vice versa. So always make sure that you compare your property performance to recent trends in the market.
Airbnb Comps
Take a look at the results of properties similar to yours and located within the same area when determining if your investment is underperforming or performing adequately.
Just like it doesn't make sense to compare apples to oranges, it doesn't make sense to compare a luxury condo with a lot of amenities in the city center to a basic single family home in the suburbs. For accurate occupancy rate performance evaluation, consider listings that are of the same type as yours, similar size, and offer comparable amenities and experiences.
Seasonality
Seasonality in the market is another major determinant of Airbnb occupancy rates. Supply and - even more so - demand changes between weekdays and weekends, around holidays and major events, and between seasons. The high season and the low season once again depend mostly on the location of your property.
For example, beach towns see spikes in demand in the summer, while ski resorts are most popular in the winter. Look at trends in the occupancy rates of your property and its market at least 12 months back before jumping to conclusions. If you see fluctuations month to month, that might be due to seasonality. But if you see a consistent downward trend over the past 12 months, this is an indicator there might be something wrong with the way you price and market your property.
Unique Features and Experiences
When evaluating the performance of your Airbnb, account for what it offers and doesn't offer compared to other listings in the area.
If your rental has more extras such as a pool or a hot tub and provides unique experiences and you get the same occupancy rate as other listings, then your property is underperforming. If, on the other hand, your property is less special than competitors' listings and you still get similar occupancy rates as them, then you are performing better than they are.
Pricing Strategy
Your Airbnb pricing strategy affects occupancy, so you should always compare your average daily rate (ADR) to competitors when determining how your property is performing in terms of occupancy.
If you charge more than other similar listings, you might expect fewer bookings, but you might still be generating the same revenue as others. But if you have lower nightly prices than comps and your occupancy is lower, then this is a red flag.
Guest Reviews
When analyzing how your Airbnb is performing, always look at the number of guest reviews you have and your average ranking and compare it to competitors.
This factor has a huge impact on future occupancy rates. Listings with a lot of 5-star reviews are able to bring significantly more reservations than similar listings with mediocre reviews.
Other ROI Metrics
Finally, when determining if your property is underperforming, don't forget to take into account other measures in addition to occupancy. While the occupancy rate is crucially important, so are other factors such as daily rates, revenue, operating expenses, cash flow, and profit.
If you are able to rent out your Airbnb for a higher nightly rate than comps and have a slightly lower occupancy than them, you might still be pocketing more money at the end of the month than they are. Similarly, if you're able to keep costs at bay, your ROI might be exceeding the average return in the market.
Factors that Affect Airbnb Occupancy Rates
As mentioned above, Airbnb occupancy rates - both at the property and at the market level - are not set in stone. They can change quickly depending on various factors.
Here are some that you need to keep an eye on when tracking trends in average occupancy rates and trying to make sense of them.
- Supply: The supply of short term rentals is not constant in a market, and it can majorly affect the performance of your property. When an Airbnb market heats up, there might be an influx of new investors, pushing occupancy rates down for existing hosts. So, if you see a drop in the performance of your property in such a situation, it doesn't necessarily mean that you are managing your rental wrong; this is a result of market forces. Alternatively, if property prices in your area suddenly go up, some Airbnb hosts might decide to sell and invest in two properties in more affordable locations, which would decrease supply and enhance occupancies.
- Demand: Demand is not fixed either. For instance, after the COVID-19 pandemic and the increase in remote working, properties with access to nature and outdoor activities saw a quick growth in demand, which means that occupancy rates there went up. Meanwhile, many cities saw a decline in bookings.
- Airbnb laws and regulations: New short term rental regulations might also affect your market and occupancy. For instance, some cities prohibit renting out on a short term basis for more than 90 days per year, which means that you cannot achieve an Airbnb occupancy rate of more than 25% no matter what you do.
- Events: If your city started organizing or hosting any new large-scale events such as concerts, festivals, or conferences, this might lead to more bookings and increase occupancy. If major events get canceled or relocated, the opposite is expected to happen.
- Local attractions: New attractions and things to do around your property impact occupancy rates too. For example, if a new convention center is built close to your listing, this will lead to more bookings and higher occupancies.
The Airbnb industry is very dynamic and your property does not operate in a vacuum. When determining if your vacation rental property is doing okay, analyze its performance in the context of nationwide trends and local market achievements and consider multiple factors. Even if you've seen a dip in occupancies in recent months, this might be due to seasonality or a bunch of new listings that showed up on the market. But if the market is doing fine, then it might be a sign that your property is underperforming, and you need to step up your game. In a bit, we'll give you actionable tips on how to increase your occupancy rate.
How to Determine if Your Airbnb Market Is Softening
When conducting performance evaluation of your property, analyze trends in average Airbnb occupancy and other performance metrics across the market. Whether your property is underperforming or outperforming depends largely on how it does compared to competition. Thus, it's important to determine if the Airbnb market overall and your specific location are getting worse or not.
The main factors to identify a slowdown–or a rise–in the Airbnb market include:
- Number of listings: Whether the number of active listings on Airbnb and other short term rental websites is going up or down indicates whether the industry is growing or shrinking, as a whole. Overall, Airbnb listings are increasing, which means that the business is not softening, but it is definitely becoming harder for existing hosts to retain higher occupancy rates.
- Number of bookings: The total number of reservations and stays that happen is another indicator of how the market is doing. Remember that this depends on both supply and demand. If the number of listings is staying the same, but bookings are slowing down, this might be a sign of downward trends in the Airbnb market.
- Guest searches: The search volume for listings across the U.S. market or in your specific market shows how well the business is performing. If the number of guest searches on Airbnb and other platforms is declining, this translates into less interest from guests, either because of preference for hotels and other more traditional lodging options or due to wider economic factors impacting travel and tourism.
- Booking lead time: When the market is hot, guests tend to book their stays well in advance to make sure there are available accommodations. Alternatively, if most bookings happen at the last moment, this might indicate that the market is softening.
- Average daily rate (ADR): One of the strongest indicators of a slowdown in the hospitality industry is decreasing nightly prices, and vice versa. Thus, you need to check out average Airbnb listing prices before determining if the market is improving or worsening, whether at the national or local level.
- Average Airbnb occupancy rate: Another major factor is the occupancy rate that rentals are able to drive. If you identify negative trends in average Airbnb occupancy rates over 12 months, this is a major indicator that the market has peaked and is now going down.
- Tourism trends: After all, Airbnb is part of the travel and hospitality industry, so its performance should be analyzed in the context of the wider tourism industry. In case both hotels and short term rentals are experiencing lower prices and occupancies, then there is a problem with travel. It could be that fewer foreigners are visiting the U.S., that Americans are traveling abroad, or that inflation and poor economic outlook are forcing people to generally travel less. If, on the other hand, hotels are doing well, while vacation rentals are slowing down, that's an indicator of challenges within the short term rental industry.
- Legal regulations: While many U.S. destinations have already introduced Airbnb laws, some are still adjusting them, and others are now setting them up. Changes in the regulatory framework governing short term rentals can cause the market to soften or blossom.
When identifying trends in the Airbnb market, it's important to consider all the factors above to get a comprehensive picture and draw reliable conclusions. You cannot focus entirely on the average Airbnb occupancy as it has to be considered in the context of the wider market drivers and performance indicators.
Where the Airbnb Market Is Right Now
There have been ongoing rumors that the Airbnb industry has already reached its peak and is now slowing down, especially after the global pandemic. But is this really the case?
It depends. Airbnb data shows that the U.S. short term rental market is growing and is set to reach new all-time highs in 2024. According to data from Airbnb, Q4 2023 witnessed 99 million booked nights and experiences, which marked a 12% year-over-year growth. Booking activities on the Airbnb platform are one of the main indicators of the industry performance. This trend is continuing into 2024, so we can expect similar growth this year.
However, AirDNA reported a continuous decline in the national Airbnb occupancy rate over the course of the last three years. The number was 60.3% in 2021, while it went down to 58.6% in 2022 and further down to 55.4% in 2023. Most recently, the average occupancy in the period March 2023-February 2024 decreased to 55.1%.
However, in the wider industry context, this is not necessarily a negative signal. This decline in average Airbnb occupancy happened along with an increase in the total number of listings available on the Airbnb website. At the end of 2023, there were a total of 7.7 million active listings, up by 18% year-on-year. This means that the market is not softening and the industry has not been saturated yet. This is simply an indication of strong growth where existing hosts naturally see a slowdown in the occupancies because of newly emerging competitors. Moreover, average daily rates are also growing, which means that revenue is not declining together with occupancy.
Another important trend in the Airbnb market is variability by location. While some markets see lower occupancies, this metric is going up in other areas. Based on Mashvisor data, in Reunion, FL the average Airbnb occupancy rate by city went up from 36% in 2023 to 56% in 2024. Similarly, San Diego, CA experienced a 25% increase, and the increase in Houston, TX was 21% year-over-year.
At the same time, the highest Airbnb occupancy rate by city was 85% in Rosemead, CA and Redding, CA, while the lowest average values were only 21% in East Hampton, NY and 22% in Remsenburg, NY. These stark regional differences need to be taken into consideration when analyzing trends in average Airbnb occupancy in the market.
One more positive indicator in the industry are STR regulations. Certain locations are now introducing vacation rental laws to regulate the industry, but others are actually reversing prohibitive laws that severely limit Airbnb activities.
What Tools Can Determine Airbnb Market and Property Strength?
Analyzing trends in average Airbnb occupancy for evaluating the performance of your property requires large amounts of data and calculations, which makes it extremely time-consuming and challenging for hosts and property managers, especially beginners. Thus, Airbnb investors often need to resort to available tools to help them automate and streamline Airbnb market and property analysis to know if their rental is underperforming or not.
The main Airbnb data and analytics tools to evaluate and track trends and performance include the following.
Summer Forecast
Summer Forecast is the leading Airbnb data analysis software that helps both small-scale and large-scale short term rental operators compare the performance of their portfolio against the national and local market.
With Forecast, Airbnb hosts and managers can focus their trend analysis on all metrics that matter in the Airbnb industry, including but not limited to occupancy, booking revenue, cleaning revenue, daily rates, cash flow, and more. In addition to raw data, the platform also provides intuitive analytics that can provide answers to the most pressing questions that owners have when evaluating performance of their short term rentals.
Moreover, data is presented in customizable graphs and charts that highlight all key performance metrics. Property performance can be compared to market averages as well as custom-built comp sets.
All in all, Summer Forecast operates as a one-stop-shop for owners and property managers who want to identify and analyze trends in the Airbnb market to better understand the performance of their property in the wider context.
AirDNA
Another software tool for vacation rental data and analysis is AirDNA. The platform offers access to market- and property-level short term rental data that covers the U.S. as well as international markets. However, many customers complain about data inaccuracy.
The tool allows hosts and managers to analyze local market trends, track property performance, and compare the two. Available data points include occupancy, ADR, revenue, ROI, and others.
AirDNA pricing depends on the user (individual vs business), access to tools, market coverage, subscription duration (monthly vs annual), and other factors. While there is a free plan with very limited features, it is not enough for analyzing trends and evaluating performance. More sophisticated plans that provide access to all necessary features are rather costly.
In general, it's not recommended to rely on AirDNA as the only data source for your Airbnb market and property analysis and evaluation due to the low accuracy.
Mashvisor
Mashvisor is unique among rental data providers because it provides both short term and long term rental data and analytics. This means that if investors detect negative trends in the Airbnb market or realize that their property is underperforming compared to peers, they can check whether switching strategies makes more sense. However, similar to AirDNA, Mashvisor has poor data accuracy that makes it an unreliable choice.
Mashvisor helps hosts find out average Airbnb occupancy rates and other ROI metrics at the city and neighborhood level for all markets across the U.S. They can use this data to evaluate the performance of their own properties. Historical data is also available for identifying and analyzing trends.
Compared to Summer Forecast and AirDNA, Mashvisor has very limited capabilities in tracking and comparing the performance of a specific property on the dashboard as the platform focuses more on helping investors buy new properties rather than keep track of existing ones.
How to Improve Your Airbnb Occupancy Rates
If after going through these steps, you realize that your Airbnb property performance falls behind the average for the industry and your local market, that's not the end of the world. There are many things you can do to increase occupancy and boost performance.
You can start with these steps:
- Introduce dynamic pricing to optimize nightly rates
- Offer discounts and deals
- Avoid excessive additional fees
- Improve your listing for Airbnb SEO
- Add multiple professional photos of your property to the listing
- Turn on Instant Book for automated booking approvals
- Market your property outside the Airbnb platform
- Make use of social media
- Add new amenities
- Consider professional vacation rental interior design and furnishing
- Offer unique experiences
- Ask for reviews after stays
- Work on becoming an Airbnb Superhost
- Automate operations and boost guest experiences with Airbnb management software
- Hire the best Airbnb management company in the market
With these strategies, you can immediately address the underperformance of your Airbnb property compared to the market or competitors. Moreover, you can use these tips to further improve occupancy even if your rental is already outperforming the industry averages.
Bottom Line
While some hosts are observing declines in occupancy, this doesn't mean that the Airbnb market is collapsing or that their property is underperforming. When evaluating the performance of a short term rental property, it's important to analyze trends both in the average Airbnb occupancy in the market and the occupancy rate of the property itself.
The Airbnb industry is dynamic and monthly fluctuations are normal, but downward trends over 12 months or more could be an indicator that your property is underperforming and needs a boost in your pricing and marketing efforts. Use these tips or work with the team at Summer to improve your property!
