Will FraserPro Member
Real Estate Broker · Salt Lake City & Oklahoma City · Member since 2018 · 3k+ posts · 2k+ votes
3y
Total Revenue > Occ %
In general I'd take a higher Total Revenue with fewer nights occupied if everyone proved to not be a turkey.
4 Reply
Paul Sandhu
Investor · The worst town to live in, KS · Member since 2016 · 4k+ posts · 4k+ votes
3y
When I'm 100% occupied, I can pull in $600 a week. When it's 50% occupied, it's only $250 a week. This is for an apartment complex. 100% is about $7000 a week total. 50% is about $1500 a week total.
0 Reply
John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
3y
I feel great about my occupancy rates.
Setting too low a price is asking for less desirable renters to rent your house and not take great care of it.
9 Reply
Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
3y
More occupancy is better IMHO. You can't just keep jacking up the nightly rates and hope for guests. Keep the rate around market and fairly priced for families and the occupancy goes up. Raise the rates and you MIGHT get guests. You might not.
2 Reply
Carolyn Fuller
Cambridge, MA · Member since 2015 · 651 posts · 736 votes
3y
When I have lowered my rates, in an attempt to keep my listing fully occupied, my ratings have been dinged, on value of all things!

I now keep an eye on my competition and make sure my rates are similar. I no longer focus on being fully booked.
5 Reply
Bryan H.
Member since 2021 · 53 posts · 26 votes
3y
The algorithms favor highest occupancy. The name of the game is being at the top of the scroll.
1 Reply
Leslie Anne Morris
Real Estate Agent · Smoky Mountains, TN · Member since 2022 · 1k+ posts · 984 votes
3y
Yep agree 100%, otherwise you are investing additional capex into maintenance projects that you could have avoided.
0 Reply
Conner Olsen
Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes
3y
Yep, I'd rather have fewer guests if my revenue is the same.
0 Reply
Mel Adams
Investor · San Diego · Member since 2021 · 86 posts · 91 votes
3y
Does it matter? Yes, but I think it's kind of a push and pull with nightly rate.
I read this as either you're in a market that justifies higher nightly rates, but isn't swarming with guests year round. Versus being in a high occupancy market with more supply and lower nightly rates. If revenue is all the same in the end, I'd 1000% rather have less turnover and more time for myself or family to enjoy the property. The higher the nightly rate the better the guests usually are, anyways.
0 Reply
Albert Blair
Member since 2022 · 33 posts · 15 votes
3y
I believe it should be about the revenue you can generate, so occupancy rates shouldn't matter as much.
0 Reply
Zachary Beach
Specialist · Los Angeles, CA · Member since 2018 · 291 posts · 231 votes
3y
@Bailey Kramer ok…. but that’s not how it works. To answer the first question yes occupancy matters as does pricing as does maintaining the property.
If done correctly in the situation you mentioned it would look more like 50% of Nights at 500 average and another 50% at 250 average.
I look at occupancy as a 0% or 100% stat. Every night is a separate sale that is either 0% or 100% if it’s a night we want booked getting it booked at best price with highest quality guest is the goal every night that we want booked not booked is a miss. Nights you don’t want booked maybe repairs or deep cleans like a professional grade carpet cleaning or something of that nature is different as running 100% occupancy for more that a few months straight can be hard on a property and it needed time to breathe.
It is possible to have days so low it’s not worth the work or risk to the property but if run well and in the right market/property that can be nearly completely eliminated.
3 Reply
Christian EhlersBusiness Member
Real Estate Agent · NH & MA · Member since 2021 · 457 posts · 291 votes
3y
I'd agree I'd rather take the lower occupancy rate and higher nightly rate if total revenue is the same. However Airbnb often rewards you with SEO boosts and badges on your listing for properties that have a very high occupancy rate (Not sure what the exact % is or if there is one). Definitely nice to get higher rates though as you end up with less party's and other people that will trash your place and leave bad reviews, in my experience.
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0 Reply
Andrew Ashkar
Member since 2021 · 1 post · 0 votes
3y
@Carolyn Fuller
How bizarre! Is your rental in the Cambridge area? I live by Providence and I know how strange the Boston market it.
To your other point, overall income matters more than a rate. Plus, you hold out for people who would treat your property with a little more respect. Theoretically.
0 Reply
Garrett Kroll
Rental Property Investor · Victor, ID · Member since 2016 · 59 posts · 94 votes
3y
Recommend focusing on "RevPar" instead, which is a metric that combines both ADR and occupancy. Otherwise conversations like this can feel like you're going in circles.
0 Reply
Michael BaumPro Member
Olympia, WA · Member since 2016 · 8k+ posts · 7k+ votes
3y
This is a great thread. I would also like to charge more and have fewer guests. I would like 2 stays a month of 2 weeks each all at $1000 a night.
I am not sure how to make that happen with our place. :)
0 Reply
JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
3y
Personally, I've been looking for that elusive single guest, single night, 100% of my annual revenue rate, but I haven't yet found anyone willing to pay $40k for an overnight yet. :)
I think of course most people would rather have $1000 from one guest than $500 from two. Reduced booking = reduced wear & tear.
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0 Reply
Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3y
There are other variables to consider. In my area, a vacant home during a cold winter storm can result in frozen pipes and serious damage to the property. So depending on the situation, occupancy may be more important than income.
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1 Reply
Kenneth Woodruff
Investor · Lancaster, PA · Member since 2022 · 74 posts · 104 votes
3y
Our experience is property type matters a lot. We have a SFH and single room rental in same area. The SFH typically rents weekends (3-4 days) with an occasional full week rental in peak seasons because its typically family or multiple families staying, occupancy under 50%. The single room runs about 89% occupancy because it attracts single people just wanting a night stay for an event, show, etc.. We have tried lower prices and manage based on competitors in the area but you can't rent a whole house to the same guests who stay in the single room, so it has a higher vacancy. If I had my choice I would have 100 single suite rooms, the flip is easier and the occupancy higher by nature of the guests. FYI both end up very close to same revenue.
0 Reply
Carolyn Fuller
Cambridge, MA · Member since 2015 · 651 posts · 736 votes
3y
Quote from @Andrew Ashkar:

@Carolyn Fuller
How bizarre! Is your rental in the Cambridge area? I live by Providence and I know how strange the Boston market it.
To your other point, overall income matters more than a rate. Plus, you hold out for people who would treat your property with a little more respect. Theoretically.

Yes. My rental is in Cambridge.
0 Reply
Andrew Simms
Rental Property Investor · Marietta, GA · Member since 2017 · 131 posts · 101 votes
3y
Quote from @Michael Baum:

This is a great thread. I would also like to charge more and have fewer guests. I would like 2 stays a month of 2 weeks each all at $1000 a night.
I am not sure how to make that happen with our place. :)
Same here - we've found our sweet spot in the $185-$205 per night range for non-holiday times. We are in the $230-$250 per night range around holidays and slow season dips to $145-$160. We've managed to keep occupancy at around 70%.
For comparison sake, $200/nt average @ 70% occupancy = $465/nt average @ 30%
There's some balance between nightly rate and occupancy... finding that point is the trick. I don't want to be reliant on 30% occupancy at $465 a night (I don't think we would get any bookings at that rate)... and then have 1 cancellation that puts you in a bad spot. That said, I am not going to rent our place @ $75 a night and get trash guests.
1 Reply
John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
3y
Quote from @Andrew Simms:

Quote from @Michael Baum:

This is a great thread. I would also like to charge more and have fewer guests. I would like 2 stays a month of 2 weeks each all at $1000 a night.
I am not sure how to make that happen with our place. :)
Same here - we've found our sweet spot in the $185-$205 per night range for non-holiday times. We are in the $230-$250 per night range around holidays and slow season dips to $145-$160. We've managed to keep occupancy at around 70%.
For comparison sake, $200/nt average @ 70% occupancy = $465/nt average @ 30%
There's some balance between nightly rate and occupancy... finding that point is the trick. I don't want to be reliant on 30% occupancy at $465 a night (I don't think we would get any bookings at that rate)... and then have 1 cancellation that puts you in a bad spot. That said, I am not going to rent our place @ $75 a night and get trash guests.
How did you find your sweet spot on price at different times of the year? Trial and Error?

I am lucky that most people use Vrbo that book our Lake House and they tend to book early. That gives me the opportunity to slightly reduce prices a couple months out for unbooked nights.

Vrbo also has great built in analytics that shows upcoming demand and average booked prices of houses that I mark as being competition.
1 Reply
Andrew Simms
Rental Property Investor · Marietta, GA · Member since 2017 · 131 posts · 101 votes
3y
@John Underwood
We first determined a base, minimum, and maximum price (based on similar properties in our area - looking at properties on Airbnb and VRBO that are similar to ours)
We plugged that Base price and min/max (if you desire a max price) into Pricelabs. The min price is useful as there is probably a number that is not worth the risk of a bad guest... there is also a market dashboard in pricelabs that is similar to VRBO but with a lot more data. We used that for one month (it's an extra fee if you subscribe to it). Since pricelabs adjusts based on demand, it handles a lot of the fluctuations for us (within the set parameters for min/max. You can probably do all this just in VRBO, but we like that it pushes from Pricelabs to Airbnb and VRBO.
Then we just assess our occupancy to make sure we are generating the revenue we want. We don't have a lot of early bookings... it's usually 1-2 months before the stay. If we are in the 65-75% range looking a month ahead, we feel that's where we want to be.
*this was probably a lot of rambling but I was trying to lay out our process as best I can*
1 Reply
John UnderwoodPro Member
Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
3y
Quote from @Andrew Simms:

@John Underwood
We first determined a base, minimum, and maximum price (based on similar properties in our area - looking at properties on Airbnb and VRBO that are similar to ours)
We plugged that Base price and min/max (if you desire a max price) into Pricelabs. The min price is useful as there is probably a number that is not worth the risk of a bad guest... there is also a market dashboard in pricelabs that is similar to VRBO but with a lot more data. We used that for one month (it's an extra fee if you subscribe to it). Since pricelabs adjusts based on demand, it handles a lot of the fluctuations for us (within the set parameters for min/max. You can probably do all this just in VRBO, but we like that it pushes from Pricelabs to Airbnb and VRBO.
Then we just assess our occupancy to make sure we are generating the revenue we want. We don't have a lot of early bookings... it's usually 1-2 months before the stay. If we are in the 65-75% range looking a month ahead, we feel that's where we want to be.
*this was probably a lot of rambling but I was trying to lay out our process as best I can*

You have a good process.
0 Reply
Jacob Mueller
Real Estate Broker · Colorado Springs, CO · Member since 2014 · 47 posts · 12 votes
3y
Asking the wrong question. You should focus on maximizing RevPAL - Revenue per available listing. It's the combination of nightly rate and occupancy. If you want to get really sophisticated, you also implement a floor based on the depreciation of your assets on a per/stay or per/night basis.
0 Reply
Erik Stenbakken
Investor · Nortnern Colorado · Member since 2020 · 157 posts · 131 votes
3y
Rather than repeat, 100% agree with both @Zachary Beach and @Andrew Simms. That's how we roll too. Works very well for us.
Unless I get that $150K/ night guest. For one night. ;-)
0 Reply

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