Vacation Rental Occupancy

Vacation Rental Occupancy measures how many nights a vacation rental listing was booked in a given period of time. Borrowing the term from the Hotel Industry, Occupancy, measured as “Occupancy Rate”, works alongside ADR as one of the two metrics that have more impact on Total Revenue for a Vacation Rental Owner or Property Manager.

▶ How is vacation rental occupancy measured?

Occupancy rates are calculated by the number of days that are booked divided by the number of days that the property is available during a certain timeframe. For example, if your property was available for 10 days in 1 month and it gets booked for 5 days, you would have a 50% occupancy rate.

▶ Why is vacation rental occupancy important?

Occupancy Rates and ADRs are the two components of your Total Revenue as defined by the following formula:

Total Revenue = Occupancy Rate x ADR

That is why Occupancy Rates are so important for any Vacation Rental manager.

▶ Is an Occupancy Rate of 100% the desirable objective?

One could easily think that a higher Occupancy Rate would yield a higher Total Revenue, but the reality is that Occupancy Rates are easily affected by ADRs. The higher your ADR the less demand it will usually have, and the lower your ADR is, the more demand it will likely attract.

It is not uncommon to hear Vacation Rental Property Managers brag about having a 100% Occupancy Rate. To really understand if this is a good or a bad metric to achieve, Property Managers should compare it to the Occupancy Rate and ADRs of their competitors in their market of reference. Three things can be happening when you observe a higher Occupancy Rate than your competitors’:

• 1. If your ADR and your competitors’ ADRs are similar, having a higher Occupancy Rate is an indicator of good management of a vacation rental.
• 2. If your ADR is lower than your competitors’, you might be pricing your vacation rental too low, and depending on the ADR and Occupancy Rate of your competitors, you could be making more money if priced it higher.
• 3. If your ADR is higher than your competitors’ and you still have a higher Occupancy Rate… keep up the good work! But, check if you are comparing yourself against the right competitors. You may be competing in the wrong category (more luxurious, bigger spaces...) without realising.

▶ What else can I do to obtain a higher Occupancy Rate if my ADRs are already in line with those of my competitors?

Does your property have high ratings and good reviews? Is your property well-photographed? Do you list all your features and amenities? Do you reply to enquiries as soon as possible?

A good vacation rental listing is essential to ensure you are optimizing the highest possible occupancy. In order to maximise occupancy, you must ensure that your property stands out from the rest, paying attention to:

• The title and description - be descriptive and punchy, focusing on the target audience
• Key features - what will draw customers to your listing?
• Photos - upload professional photographs

For more information on ‘what to list’ and ‘how to list’ your property, please check out the article ‘What Makes a Good Vacation Rental Listing?’.

▶ What else should I take into account about Occupancy Rates?

Every property is unique

Although many property managers use algorithms to update their prices, nobody understands the property and the local property market like you. Unlike the hotel industry, whereby a guest can book similar rooms in a similar area for a similar price, every vacation rental property is unique (See Roberto Manzo’s expert interview on why he believes availability is the most important KPI).

Not all properties are booked far in advance

Short term rentals are becoming more available and visitors are booking them less far in advance. If your property has booked out months before, there is a high chance that you are pricing your listing too low.

▶ How does Transparent track vacation rental occupancy?

Transparent continuously monitors millions of vacation rentals around the World. Our Dashboards can tell you every week the vacation rental occupancy in your market so that you can adapt your prices to it. You can also filter by your competitor’s name so that you are able to directly compare your Occupancy Rates and ADRs with those of your competitors. It also allows you to understand how fast occupancy is rising for a particular date in the future, so that you don’t miss out on market trends and particular events affecting the vacation rental occupancy rate in your market.