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.
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.
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.
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’:
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:
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?’.
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.
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.