How to estimate occupancy rate

Question

Hello folks,

I'm considering putting a space on the market as a vacation rental. How can I estimate the annual revenue it'll earn?

I've looked at similar local listings, so I have a general idea of nightly pricing. The main thing I'm trying to figure out is how to determine the occupancy rate.

Thanks!

Paul Sandhu · Answer

There are some things you will never know the answer to until you do it yourself.  I could bench press 305 lbs 20 years ago.  Shoot 70 out of 100 clays on a sporting course when everyone else is shooting 50-60 2 weeks ago.  Redline my Vette and the speedo tops out at 160 mph.  I've seen things you wouldn't believe.  Attack ships on fire off the shoulder of Orion.  I watched C-beams glitter in the dark near the Tannhauser gate.

Jon Crosby · Answer

Hi @Noam Birnbaum, thanks for your post!  Determining both occupancy rate and daily rate (which are the pieces you need for your annual revenue calculation) are a bit subjective.  You can use Airdna.co if you want to get a really good sense of what's possible in a particular market based on data from existing properties.

I usually recommend using a tool like that to get an idea and then do some manual reviews of Airbnb, VRBO, HomeAway of properties in that area to 'validate' what it's reporting.  Then....reduce it all 15-20% for a safety factor just to be safe.  :)

That being said, estimating your returns on other peoples' success (or failures) will only take you so far.  The level of service and experience you provide your guests will determine your revenue when all is said and done because good experiences will lead to good reviews and that is what is going to end up driving your revenue once you get going.

Best of luck!