What is the average airbnb occupancy rate in 2022? Listen to the podcast episode and read the transcript below (apologies for typos, this transcript was provided by AI for purposes of speed and accessibility.
What is the average occupancy rate on Airbnb in 2022?
Hi everyone. John again. Welcome to another episode of Vacation Rental and Airbnb Mastery. Today we’re gonna talk about occupancy rates. Airbnb just had their earnings released, but did you know that the occupancy rate for Airbnb in 2021 was actually about 28% across the top 20 US cities? Why do so many hosts think the occupancy rate’s actually 60 to 75% like a hotel? I don’t know. But if you’re basing your assumptions in your model based on how a hotel performs, you may want to reevaluate your occupancy goals. Airbnb has accumulated lots of data on occupancy rates throughout all the largest cities, and none of them are even close to what a hotel actually gets in terms of occupancy. The average occupancy hotel rate is like 66% right now. And if you look at Airbnb occupancy rates across every city, they’re around 20 to 40%. But most of the cities have occupancy rate in the mid twenties.
Calculating average income of an Airbnb listing
For example, in my market, Kissimmee Florida by Disney World, actually has an average occupancy rate of 25% as of 2021 with close to 50,000 active Airbnb listings. So a lot of people are buying homes with the hopes of cash flowing, and the actual average occupancy rate is nowhere near that of a hotel. So while there are some operators who are optimizing for everything, optimizing your listing, their photos, their rates, optimizing their marketing, and getting 70% plus occupancy, most hosts are actually not getting that because the average is sitting around the mid 20% occupancy rate range. So we may have to just think long and hard about where the industry is going as a whole. Why? Because right now we’re in a time of oversaturation. Let’s run some quick math. Okay? If the average nightly rate in Florida for a listing is about $200 per night, if you rent 25% of the year, which amounts to about 91 nights, that’s actually a gross income of $18,200 for that listing for the year.
How much can you expect from an airbnb listing.
That’s pretty close to the average Airbnb income listing of $21,569. Well, here’s a scary thing. I’ve personally seen realtors promise or clients they can make an excess of a hundred thousand dollars per year with just one listing. I’ve also seen owners that have came to me and say they want to make $80,000 plus on one listing. So yeah, there’s definitely a reality gap going on right now. And the slow down bookings will actually be a reality check because the expectation of income, yes, like that’s the primary reason people invest in short term rentals. However, Airbnb was not designed for this commercial multi-unit operator. Our patronage kind of investment. It was actually made for people to share their extra spaces, to have an extra mattress in your house, an extra bedroom, and rent out that extra space to people who are traveling into town.
Airbnb vs hotel occupancy rates
It’s evolved since then and now Airbnbs are operating kind of like hotels. However, the occupancy rate really differs from that of a hotel. So if you’re buying an Airbnb property, if you’re investing or have already invested, and you’re aiming to achieve 70, 80%, 90% occupancy, you have to have something truly different about your rental kick ass marketing. You definitely have to have a standout factor in awesome customer service. We’re talking Four Seasons level to be able to pull off 80 to 90% occupancy. I have seen a lot of hosts make these completely bogus claims on Facebook saying, Well, I don’t know why you guys are slow, because I have tons of bookings. I’m, I’m grossing, uh, $300,000 was two properties. Well, ask them to show you the numbers. You know, show me the numbers, because there are some people who are succeeding because they’re doing everything right.
Airbnb is slow right now, bookings are down.
But that’s not common. And most hosts right now are losing money, uh, with short term rentals. So right now, what’s really crazy is property values are still high, even though they’re falling, they’re super high and there’s a huge disconnect with actual home prices, what people are investing in Airbnbs at, and the nightly rate they’re getting, there’s a huge gap in that gap. It’s a loss because people are buying homes that are super expensive thinking they’re gonna make these great returns, and in all actuality, not making those returns. So yeah, like there’s also that pressure that people are mad because Airbnb’s actually taking supply out of the housing market. So affordable housing is super scarce right now, um, and you have a lot of people buying up rentals and residential communities actually taking away from the housing supply that’s there. So if you’re investing in Airbnbs right now, or you’re making a big switch, I do suggest you target resort towns, resort towns that have good upside potential, but upside potential, meaning that they will have good tourists, um, numbers for years to come.
A ‘wow’ factor or a major differentiating factor can help your vacation rental perform.
Like a major draw, maybe a national state park or, or a theme park like Walt Disney World. And then you just wanna make sure that market’s not oversaturated because it may not always be oversaturated, but you’re gonna buy in in an oversaturated year, and it’s going to be really hard to actually earn a profit that way. And it does take more than a year to earn a profit. The days of, um, post pandemic money, they’re over. So you can’t really expect to earn a profit right off the bat. Um, that’s, it’s not the same environment anymore. So you do want to try to do better than average, but you need to realize that the average occupancy rate for the top 20 US cities is around 28%. Okay? And with that average, you have have to look at what your nightly rates are in your market and try to calculate what the average host would get, and then try to do better than average.
2022 a new normal for short term rental occupancy rates
But you don’t wanna base your model on unrealistic assumptions. So, well, that was a talk for today. I, I do want to explain that after this earnings release with Airbnb, a lot of things are becoming more obvious. So this new normal this year was more normal than the years past because the years past had a lot of post pandemic money and people traveling with that, and there was unreal unrealistic demand. Now, things are much more realistic. We have financial pressure on consumers. The labor market is more expensive right now. Higher fees are gonna cause a decline in demand, but long term Airbnb is going to continue to grow, and you can really make money in this space. So if you’re focused on mastering short term rentals, mastering vacation rentals, and putting out a really excellent product, the money will follow and you’ll really kick butt in this industry.
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However, if you have unrealistic expectations and you’re not willing to put in the work, you just want to as ask yourself is, are you in it for the long haul? Because if you are in it for the long haul, there’s money to be had here. But if you’re not, this may not be the right journey for you. If you haven’t subscribed to the Weekly newsletter where I share my five top insights to level Up your vacation rental game, I urge you, please go to www.vacationhomehelp.com/podcast subscribe. You’re gonna get lots of free resources that will help you run your business more efficiently and grow your business. Also, if you haven’t reviewed the podcast, it helps me tremendously. So if you could go to Apple Podcasts and leave me a review, let me know how I’m doing, let me know what you want to hear, and it helps me get the podcast in front of more owners like you. Thanks, and until tomorrow, take care.