Is 50 to 55% occupancy for an Airbnb normal?

Question

I have a four bedroom 2 1/2 bath almost 3000 square-foot house in a very desirable area of San Antonio. I talked with a short term rental manager that told me the occupancy rate was between 50 and 55%. Is that normal? If that is normal I cannot see my way clear on doing a short term rental on this property. The manager is wanting 25% as well.I’m sure there will be people to chime in to say manage it myself and I’m sure they mean well. I have too much going in my opinion the manager myself.

Caroline C. · Answer

So many factors. If your reviews and particularly photos are good, and you are priced right, you can also beat the average. Is there seasonality? That's a big factor. Also sometimes larger and more expensive houses are harder to get fully and consistently booked.

PM fees can be rough. I actually have used more botique pm's - people who essential have their own str's and manage a few others to make it more of a business for themselves, and charge a smaller fee. You could research some listings similar to yours and see if you can if you can find that situation - where 'hosted by' or 'co-host' have a few other listings in their profile, and message them directly.

Neil Henderson · Answer

It really depends on the area, but that occupancy rate would not surprise me. More important to consider would be the monthly revenue, regardless of occupancy. Too many investors get caught up in occupancy management when they really should be focused on revenue management. I've run across so many short-term rental and self-storage owners who thump their chest about being 100% occupied. If you are 100% occupied, odds are you are charging WAY too little.

Typically, larger homes will have a higher vacancy but much higher revenue.

Has the potential manager shown you a market report for the address from something like AirDNA? Have they explained who the primary customer is? Vacationers? Traveling professionals? Have you confirmed that rentals shorter than 30 days are allowed in your area?

25% for a short term rental manager who is going to allow you to be completely hands-off is quite standard.

Aaron Bihl · Answer

@Alice Horn makes a good point too with dynamic pricing software. Pricing software is a game changer and I would want to make sure my management company is using it. I know folks in San Antonio who leave hundreds of dollars on the table monthly by not using it.

Also, with the various tools hosts or management companies use, 5% of the cost going to towards that wouldn’t surprise me at all, but can make a huge difference in how it’s managed and the guest experience.

Aaron Bihl · Answer

50-55 percent is low.  And 25 percent is high.  I think you could do better in both areas.

Brian G. · Answer

@Matt Sandidge you didn’t tag me but we use the following currently: Beyond Pricing which is a dynamic pricing tool; competitors are Pricelabs and Wheelhouse.

We use Your Porter which is a channel manager for auto generated guest messaging; couple competitors are IGMS and SmartBnb.

I also use and really like the digital guest guidebook you can create through Hostfully since you can embed videos for instructions on anything you want (ie how to use the hot tub, tvs, dishwasher, etc.)

Owen Brown · Answer

@Neil Henderson I agree with you. We are between 10-40% occupied right now and are still profiting. We discussed dropping prices but then you need to look at how much faster your asset gets run down. Our place is a little unique though, not a typical home. The premise still remains the same, I would rather concentrate on profit that quantity of night rentals

Matt Sandidge · Answer

@Alice Horn - Can you share the names of the STR software that you all are using?

Brian G. · Answer

@Joe S. it depends on the market and the time of year. If the market averages 50-55% yearly occupancy I would pass personally. Regarding self management, if you use the right tools it’s not a huge amount of work, although you do need to be able to hop in to put out the occasional fire.

Alice Horn · Answer

I'm not familiar with that market but I would always trust someone who gives lower occupancy estimates (and hopefully overdelivers). Ask for specific projections on the home and if the PM is willing to share, actual booking reports on similar homes.In Orlando our average occupancy on 70+ properties was 63% of the 2nd 6 months of 2019, with our top properties averaging up to 85%. The overall average is lower because some homes have quite a few owner stays and owner bookings. We charge 20%, but our software costs alone are 5%. We use dynamic pricing and other software which allows us to outperform the market. Good luck!

Joe S. · Answer

I didn’t ask him that question. That’s a good question to ask. I’m thinking he pulled up averages in that area from the past. If that is the case it would be 50 to 55% long-term.

Is 50 to 55% occupancy for an Airbnb normal?

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