What Is Occupancy Rate in Short-Term Rentals?

Summary

What is occupancy rate?

The percentage of time a vacation rental property is booked compared to the time it is available for bookings.

Why it matters

Nailing your occupancy rate helps you hit the pricing sweet spot—empty rooms mean missed revenue, while constant bookings might signal it's time to raise your rates.

Who should know it

Hosts, property managers, and real estate investors—really anyone analyzing rental performance to make smarter pricing and marketing decisions.

Where you’ll see it

You'll typically first encounter occupancy rate inside your listing platform's performance dashboard. Inside AirDNA, you'll see it everywhere because it's used to both calculate and optimize performance through our Airbnb calculator, dynamic pricing tool, and property performance dashboard, to name just a few! You'll also find it in industry reports tracking overall market performance. 

Occupancy Rate Overview

Occupancy rate shows, as a percentage, how often your property is booked versus how often it's available for booking. It's a vital metric that helps you understand if your rental strategy is working—from pricing to marketing to amenities.

How do you Calculate Occupancy Rate?

Reserved Days / Available Days x 100 = Occupancy Rate

Let's break this down into clear steps:

1. Count your Reserved Days: These are the days guests actually booked your property during the month.
2. Determine your Available Days: This is how many days your property could have been booked that month. Remember, days you block off for personal use don't count here.
3. Do the math: Divide Reserved Days by Available Days and multiply by 100 to get your percentage.

For example: If your property was available for 25 days in July and booked for 20 of those days, your calculation would be: 20 / 25 x 100 = 80% occupancy rate

How to calculate your annual occupancy rate 

Looking at occupancy over time helps you spot patterns and track your rental's performance. It's especially useful when analyzing seasonal shifts or year-over-year changes.

The same formula we used before works for annual calculations—just look at your entire year instead of a single month:

If your beach house was booked for 220 days out of 300 available days last year (after excluding your personal stays), your annual calculation would be 220 / 300 x 100 = 73.3% annual occupancy rate. 

Inside AirDNA, you'll find even more ways to analyze occupancy:

• Occupancy rate change: Compare your current rates to the same period last year
• Annual occupancy: See total occupancy rates across different areas over a 12-month period

You'll find these metrics throughout AirDNA's market reports and investment analysis tools, helping you spot trends and make smarter decisions about your rental strategy.

Try our Airbnb calculator to see occupancy rates and potential earnings for any address in the world.

Why Does Occupancy Rate Matter for Short-Term Rentals?

Understanding your occupancy rate is critical for unlocking your rental's true earning potential. It's not just about knowing how often your property is booked—it's about using that knowledge to make smarter decisions. Here's why it's so valuable:

• Revenue optimization: having a clear understanding of occupancy rate trends can help you optimize your pricing and marketing to maximize your earnings throughout the year.
• Market positioning: Comparing your occupancy rate against local competitors helps you spot opportunities in your market—whether you're outperforming and can raise rates, or need to adjust your offering to stay competitive.
• Investment insights: These rates are crucial for making informed investment decisions, helping to determine the viability of potential upgrades or expansions.
• Seasonal planning: Monitoring how occupancy rates change with seasons enables you to capitalize on peak times and strategize to fill vacancies during slower periods. Read our full guide on mastering short-term rental seasonality to maximize profits throughout the year.

Strategies to Improve Occupancy Rates

Enhancing your short-term rental occupancy rate boosts both revenue and guest satisfaction. Here’s how:

• Dynamic pricing: Keep your pricing dynamic by analyzing market trends and adjusting rates accordingly. Price competitively during peak seasons and consider lowering rates slightly during slower periods to attract more bookings.
  You can use AirDNA’s Dynamic Pricing to fine-tune your rates automatically.
• Marketing: Elevate your property's profile with professional photos and compelling, detailed descriptions. Ensure your listings are optimized for search engines to improve visibility.
• Booking channels: Use multiple platforms like Airbnb and Vrbo to list your property. A dedicated website for direct bookings can also help save on fees and give you greater control over the guest experience. Consider offering discounts for longer stays or last-minute bookings to keep your occupancy rates high.
• Customer experience: Outstanding service can set your rental apart. Prompt responses, personalized touches, and impeccable property maintenance are key to winning great reviews and encouraging repeat stays.

What Is a Good Occupancy Rate?

What's considered "good" varies significantly based on your location, property type, and current market dynamics. Average occupancy rates are just that—averages.

Think about it this way: a beach house might hit 90% occupancy in summer but drop to 40% in winter—and that could be perfectly healthy for that market. Meanwhile, a city apartment might maintain a steady 75% year-round.

To understand what's good for your property:

• Compare your rates to similar properties in your area
• Look at seasonal patterns in your market
• Consider your revenue goals (sometimes lower occupancy with higher rates can be more profitable)
• Track year-over-year trends to spot improvements or issues

The key is using data from your market to set realistic goals that make sense for your specific situation. Of course, we can help with that. You can connect your Airbnb to AirDNA to see your property’s booking performance score and how it stacks up against the competition.

If your occupancy rate isn’t where you want it, don’t freak out. We’ve got 17 different ways you can improve your occupancy rate.