What Is A "Good" Occupancy Rate For STR's In DSM

[Andy Algreen]

How is occupancy rate actually defined and why is it important? The Airbnb occupancy rate is defined as "the ratio of the number of days in a month or a year for which a short term rental listing is booked by guests divided by the total number of days for which the listing was available for bookings." Knowing and having an understanding of the occupancy rate is important because it is one of the two factors that ultimately determine your rental income (the other factor being your Average Daily Rate). 

The occupancy rate for short-term rentals in Des Moines, Iowa varies throughout the year mainly due to the seasonality of the Iowa weather.  The average occupancy rate for ALL short-term rentals in Des Moines since April of 2018 is 64%. We see the occupancy rate at the end of February and beginning of March start to gradually increase around 75%-80% over the spring and summer months. We see a decline in occupancy rate starting the first couple weeks in August and it will typically sitting around 50%-55% through the winter months. 

Knowing the average occupancy rate gives a good baseline and sets expectations for how your property should perform based on others in the area. In theory the higher the occupancy rate, the better. But if your property is sitting around 85% or higher occupancy rate, you may be losing out on potential revenue because your average daily rate is too low. It's important to note that these figures are averages and can vary depending on the individual property and other factors such as competition, pricing strategy, marketing effectively, setting competitive prices, and providing a high-quality guest experience.

[Michael Baum]

It's always a balancing act. High occupancy doesn't always mean your rates are too low. Low rates doesn't always guarantee higher occupancy.

I am always looking at other properties on the lake to see how we compare. We are very seasonal and we are at about 59% for the year, year over year so I am happy with that.

Knowing your area is key.