How Do You Research Your Occupancy Rates In Your Area?

[Cole Simpson]

Occupancy plays a very important role for those wanting to generate a notable income from short-term rentals. It goes without saying that bookings are your bread and butter – having an empty, un-booked property is obviously never ideal.

In some cases, a low occupancy rate indicates that something is wrong with the property, such as its location or available amenities. In other cases, low occupancy rates may mean the facility is poorly managed by its existing owners or it is in an undesirable location.

The key is to always do your research first.

You can use AirDNA or rabbu and they will give you an average of the occupancy rates in your area. If you want more anecdotal reach out to hosts and buy them coffee, ask them about their experience (offer value, I’ll book your place when it usually wouldn’t be, etc) Hope this helps!

What about you? What data provider are you using for your occupancy metrics?

[John Underwood]

I check my competition manually to see their occupancy and rates. This is the best and most reliable method.

[Bruce Woodruff]

Like @John Underwood I go on both VRBO and AIR and search nearby similar properties. If they are booked during a certain month for so many days for so many weeks, then that is data I can use.....I can also use Holiday bookings to see how high I can go on those dates.

I prefer real world info, not some info collected from an algorithm. Yes it's easier to do it that way but it only takes a few minutes to get the real data and it's fun looking at your competitors vacation homes.....

[Chad McMahan]

Quote from @Cole Simpson:

Occupancy plays a very important role for those wanting to generate a notable income from short-term rentals. It goes without saying that bookings are your bread and butter – having an empty, un-booked property is obviously never ideal.

In some cases, a low occupancy rate indicates that something is wrong with the property, such as its location or available amenities. In other cases, low occupancy rates may mean the facility is poorly managed by its existing owners or it is in an undesirable location.

The key is to always do your research first.

You can use AirDNA or rabbu and they will give you an average of the occupancy rates in your area. If you want more anecdotal reach out to hosts and buy them coffee, ask them about their experience (offer value, I’ll book your place when it usually wouldn’t be, etc) Hope this helps!

What about you? What data provider are you using for your occupancy metrics?

Cole,
the advice you are giving to investors is extremely unreliable.

Investors- either check the data manually from AirBnB (tends to be most utilized by landlords and PM's), or connect with an investment specialized local realtor that truly knows the market and the business. If the realtor gets their data from AirDnA, Rabbu or similar unreliable sources, this should be considered a red flag.

[John Ellis]

I agree with doing it manually. That has been a pretty tried and true method. However, I do know some people that use AirDNA as a preliminary method for an area and then back it up with a manual once they have a property in mind. 

[Luke Rorech]

@Chad McMahan, I used AirDnA & Rabbu high level and then will dive into the numbers more once I've identified a property. Would you mind sharing a bit of your process when searching for STR's on clients behalf? Thanks.

[Chad McMahan]

Quote from @Luke Rorech:

@Chad McMahan, I used AirDnA & Rabbu high level and then will dive into the numbers more once I've identified a property. Would you mind sharing a bit of your process when searching for STR's on clients behalf? Thanks.

Hi Luke.

I'm happy to elaborate. For my clients, I draw on my 20 years of real estate experience to first identify the properties that will likely give the best cash flow. Then, I cross check Airbnb + VRBO and check rent rates for comparable properties within relevant proximity, and I mentally slide the scale, depending on features, views (in our area, red rock views), location, construction quality, other finishes, quality of furnishings, etc. During this process I look at nightly rates for the comp listings- and average the 3 *other* seasons, to determine ADR. In my area, depending on the town, polished STR's have 75% - 85% occupancy. If it's an especially challenging property to income estimate, I also loop in my go-to local STR property manager to provide a rental income estimate. Of course, I share the plan for the improvements/furnishings so it's more accurate. Usually, averaging both estimates, gets us VERY close to the real numbers. Because I'm so narrow focused on the STR markets where I specialize, my shooting from the hips is very accurate 95% of the time.

[Bonnie Low]

While I understand that AirDNA and Rabbu can be considered inaccurate and many people prefer to search bookings manually, isn't part of the problem with that method that it only shows you bookings that are coming up and not historical performance? I want to see both when underwriting. I understand that past performance isn't a guarantee of future, but having both the retrospective data as well as current and future data gives a more complete picture. Seems there's a place and value for all of these methods.

[Josh Green]

I would recommend talking to a couple PM companies that have properties in the area and ask them - seems to be the best way to get accurate data on occupancy in my experience.