Airbnb & short-term rental revenue projection

Why a single occupancy number destroys STR projections

Almost every short-term rental projection you will see online uses one occupancy figure — "assume 65% occupancy" — multiplied by 365 nights. That single assumption can be wrong by 40% in a seasonal market and it hides the most important operational fact about short-term rentals: your costs are event-driven, not nightly.

A beach market that runs 92% occupancy in July and 38% in January is not a 65%-occupancy business. It is a business that funds eight months of debt service from three months of revenue. The seasonality calendar in this tool exists so you can see the cash trough, not just the annual average.

• RevPAR (revenue per available night) is the STR equivalent of cap rate — it combines rate and occupancy into one comparable number.
• Peak-season ADR premium is real: the same unit often earns 60–90% more per night in high season.
• Minimum-stay rules in peak season reduce turnover cost but cap total nights; model both, not one.

Turnover economics: the cost line everyone forgets

Every stay ends with a turnover: cleaning, laundry, restocking, and a maintenance walk-through. At a 3.4-night average stay, a 70%-occupancy year produces roughly 75 turnovers. At $110 of cleaner cost each, that is $8,250 — a number that does not appear anywhere in a traditional rental analysis.

The nuance is that hosts charge a cleaning fee, so cleaning is partially revenue-neutral. The mistake is treating the cleaning fee as pure profit or ignoring it entirely. The model separates cleaning revenue from cleaning cost and shows you the net turnover contribution, which is usually thinner than hosts assume once supplies and laundry are included.

Turns      = Nights booked ÷ Average stay length
Margin     = Turns × (Cleaning fee − Cleaner cost)
Net        = Margin − Supplies − Laundry & restock

The STR cost stack versus a long-term rental

Short-term rentals have a materially different cost structure to a twelve-month lease, and underwriting them with a landlord expense template will produce a number that is too optimistic.

Platform fees, direct bookings and the host fee trap

Airbnb’s host-only fee structure typically lands between 14% and 16% of the accommodation subtotal. Vrbo charges a percentage to the guest, which shifts the maths but not the total cost of distribution. Booking.com charges commission on the total including cleaning fees, which quietly erodes the turnover margin you calculated earlier.

The strategic answer is a direct-booking channel: repeat guests who book direct cost you a payment processing fee (2.9%) instead of a platform fee (15%). Most hosts who build a modest direct channel in year two see blended distribution costs fall 400–600 basis points, which on a $60,000 revenue base is $2,400–3,600 of pure margin. The model lets you test that by lowering the platform fee percentage while keeping ADR flat.

• Model platform fees on accommodation revenue, not on gross revenue including cleaning.
• Direct bookings move the effective fee from ~15% to ~3% — worth modelling as a scenario.
• Channel mix changes cancellation exposure: platform bookings carry more last-minute cancellations.

Regulation: underwrite the permit, not just the property

The most common reason an STR projection fails is not occupancy — it is a permit that cannot be renewed. Many US cities cap non-owner-occupied permits, require a minimum one-year waiting period, or restrict short stays in specific zones or buildings.

Before underwriting, verify three things: that the property is in an STR-eligible zone, that permits are currently available (not waitlisted), and that the HOA or condo declaration does not prohibit rentals under 30 days. A single restrictive covenant can turn a 7% cash-on-cash STR into a 4% long-term rental overnight.