Successful Airbnb hosts are obsessed with bookings, and for good reason—it’s the name of the vacation rental game. But when hosts talk about “bookings,” they’re most likely referring to occupancy. And whether or not their occupancy rate is trending up or down. But don’t be scared off by this industry lingo; calculating your own occupancy rate is a breeze. In this blog, we help you do just that, as well as understand how to maximize your occupancy throughout 2023.

Airbnb Hosting Tips: What You Need to Know About Occupancy in 2023 | AirDNA

Successful Airbnb hosts are obsessed with bookings, and for good reason—it’s the name of the vacation rental game.

But when hosts talk about “bookings,” they’re most likely referring to occupancy. And whether or not their occupancy rate is trending up or down.

Don’t be scared off by this industry lingo; calculating your own occupancy rate is a breeze. All you have to do is divide your property’s total number of reserved days by the total number of available days. (Days you block for yourself aren’t counted.) The result—expressed as a percentage—is your occupancy rate.

Also important to note: Occupancy is typically measured over a 12-month period.

So let’s run through an example. Say you want to know the occupancy rate for a property—maybe a beach house in North Carolina—that you’re currently listing on Airbnb.

Imagine your rental was available for 340 days during the last 12 months, and it was booked or reserved by guests for 240 days.

The math is easy: 240 divided by 340 equals 70.58%. That’s your occupancy rate. And it’d be a very high rate compared to global averages. But is a high occupancy rate always a positive sign? The answer is a bit more nuanced than yes or no. Basically: It all depends on your goals.

Being booked 70% of the time sounds great, right? Guests are enjoying your property. Steady revenue is coming in. Everything’s going as planned.

However, high occupancy can sometimes be a sign that you’re leaving money on the table. That you’re not charging enough for your property given its type, amenities, and location.

Just think about it: A property with a 50% or 60% occupancy rate could earn more revenue than one that’s booked 70% of the time. It’s all relative to pricing.

A property booked more often at $100 per night may not outearn a property that’s booked less often at $300 per night.

It’s important to ask yourself: Do I want higher occupancy or higher average daily rates (ADRs)? And an accurate data tool can help you sort out which strategy is best for your bottom line. (Why guess when you can know exactly what you should be charging guests?)

In our latest Short-Term Rental Outlook report, we forecasted average occupancy rates would be 56.4% for 2023. While this is slightly lower than 2022 and 2021’s rates (58.3% and 60.3%, respectively), it’s still well ahead of rates in 2019 and 2020 (53.3% and 52.9%).

For context, the vacation rental space has benefitted from unprecedented popularity since the onset of the COVID-19 pandemic. Many travelers initially felt more comfortable staying in rentals than traditional hotels, and historically low mortgage rates prompted a real estate gold rush.

2021 and 2022 were especially attractive years to enter the rental game, and many new hosts and investors did just that. Opportunities still abound in 2023, but rentalpreneurs will need to be savvier than ever to beat new competition and ensure meaningful profits. Especially given new economic realities—inflation, relaxed consumer spending (particularly with goods, not services), etc. Supply and demand are both still forecasted to grow (+9% and +5.5%, respectively) but at slower, more normalized rates than before.

Every market and listing will require different recipes for success. No two vacation rentals are exactly the same. And it’s imperative that you dial in your occupancy strategy sooner rather than later.

In the event your occupancy rate is lower now than it was this time last year, that doesn’t mean your rental business is in trouble. Perhaps you’ve fallen out of step with your market or are offering outdated rates or amenities?

Beyond data tools, AirDNA offers tons of resources that will help you solve these problems and optimize your property’s performance.

Should your four-bed, two-bath beach house in North Carolina charge lower rates in order to boost occupancy? Or is it worth sticking to your desired rates in order to generate more revenue—even if it means lower occupancy?

Don’t guess your way through 2023, and trust an accurate pricing tool to help you make these decisions in the weeks and months ahead.

“So supply-demand dynamics mean that occupancy is falling,” said our own Jamie Lane, AirDNA’s vice president of research, on a recent episode of The BiggerPockets Podcast. “So, in November, occupancy was down about 5% year over year. But ADR growth, so the average rate that a guest is paying, has actually been outpacing the declines in occupancy. So we’ve been seeing 5% to 6% increases in ADRs, which have outpaced the occupancy decline. So average revenue per listing is still positive. People are still making more money than they were last year.”

We recommend you check out the full episode to hear Jamie’s thoughts on trends (including occupancy) that could impact your properties in 2023.

“That needs to be a really clear thought for people looking forward,” he said. “Let’s say you can decrease your rate by 5% and maintain similar occupancy. You’re only losing 5% of revenue. But at the same time, if you could maintain your rates or even increase those rates and maybe only lose 2% or 3% of occupancy, that’s going to put you in an overall better place in terms of [revenue] growth and more than likely profitability, too.”

Airbnb Hosting Tips: What You Need to Know About Occupancy in 2023 | AirDNA

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