Higher Occupancy Rate over Average Daily Rate on Airbnb? Think Again.

Higher Occupancy Rate over Average Daily Rate on Airbnb? 

This is a question that all beginners on Airbnb will inevitably encounter. 

Should I target a market with a high rate of traffic (i.e. many visitors) or perhaps buy an STR in a less-traveled destination but with the ability to charge higher nightly rates. 

Let's examine both sides of this issue. 

High Traffic Destination pros are:

You can easily get a last-minute booking by dropping nightly rates.

Be confident from the start you will get business. It's just a matter of maintaining the quality of your listing.

The cons are:

You have more competition.

You can get drowned out by other less desirable listings. 

Low traffic destinations pros are:

You have the ability to stand out and grab attention.

You can command higher prices if there is a dearth of quality listings in your market.

The cons are:

You may have a low occupancy rate when you go live for the first time. It may take a while to fill up your calendar

The reality is that you may have no bookings due to low traffic to your market.

To consider apples to apples, I would argue that low-traffic destinations are more attractive investments for the following reasons.

For one, you are off the radar. The last thing you want is for some online research tool to trumpet your destination as a profitable place to have an Airbnb. 

Second: There may be low occupancy rates in the first few months until the reviews start rolling in, but once you get past this initial hurdle, the chances are high you will be able to stand out from any competition and command higher rates. 

Let's put this in context. Your Airbnb vacation home is the value of 1 or 2 hotel rooms. There are hotels just about everywhere in the USA with a hundred rooms available. All you are adding to the hospitality market is ONE hotel room. How hard do you think it will be to get someone in the door? Quite easy, right. So there is no need to fair a low occupancy unless you park yourself in the desert.

Let me know if you agree or disagree. If you believe it is better to have a vacation rental in a high destination market, let me know why in the comment section below. 

Thank you for reading,

Jacob Morgenstern