Airbnb Occupancy Rate by City in the US 2018
In spite of recent efforts by governments around the world to crack down on Airbnb and short-term accommodation, the platform continues to be the world’s preferred way to book vacation rentals with over 5.4 million listings globally. However, not all Airbnbs are created equal. While supply and pricing are certainly important metrics when assessing the company’s impact on the accommodations market, often overlooked is occupancy. What proportion of time are rental properties occupied for each month, and why?
In attempts to hone in on what accounts for the vast discrepancies in occupancy rates between different vacation rentals, AllTheRooms has decided to take a geographic approach. Filtering our unique data based on 522 cities across the United States, we’ve uncovered some interesting takeaways.
Cities With the Highest Occupancy
Considering a high Airbnb occupancy rate to be anything over 65%, top performers max out at around 75%, but those are generally anomalies. The average across the country is 48%, not filtered for full or part-time properties. On the other hand, full-time properties with anything less than 50% are considered to be on the lower end of the spectrum. Some cities have average occupancy rates as low as 20% and even 10%.
It comes as little surprise that of the 30 cities with the highest occupancy rate in the US, 23 are in either California, Hawaii or Florida. Hawaii is especially prominent near the top, occupying seven of the top 10 spots. Places like Honolulu, Venice Beach, and Cocoa Beach stand out in large part due to their warm year-round weather and their location being a traditional vacation destination. When filtering for cities that have at least 1,000 active properties, Kihei, Hawaii tops the list at 69% occupancy rate, with other places like San Francisco at 62%, Pensacola Florida at 62%, and Hollywood at 60%.
For cities that don’t fall into one of those three states, it’s still easy to see why their occupancy rate is much higher than the national average. Port Aransas, Texas (63%) is on an island just off the mainland in the Gulf of Mexico; Sevierville and Gatlinburg (both 61%) are known as the door to the Great Smoky Mountains National Park (the most visited park in the states); and Denver (61%) is known as a year-round destination with plenty to do.
The trend is clear, traditional vacation destinations in sought-after locations with a constraint on supply lead to the highest occupancy rates. Interestingly enough, properties that are instant book tend to benefit from higher occupancies regardless of location.
Cities With the Lowest Occupancy
When scanning our data for cities with the lowest occupancy, there are some interesting counter-intuitive trends. First of all, places that are highly dependent upon a single season seem to fare pretty poorly when their numbers are taken in aggregate over the year. For example, Indio and Palm Desert, the cities that host the annual Coachella Music Festival, are down at 25% and 28%, respectively. Don’t let the low number fool you, properties in these locations are expensive and make up for the short selling season with ADR’s that are significantly higher than the national average.
The same goes for Aspen, Vail, and Crested Butte. These Colorado mountain towns are primarily visited during winter months, with the ability to maintain a high 75% occupancy during the busy season, but end up averaging in the mid 30’s for yearly occupancy. They, like the festival towns, have some of the highest rates in the country, which more than accounts for their short demand season.
Long Island also plays the low occupancy game well, with Southampton, Noyack, and Montauk having occupancies below 30% but revenues in the millions. It seems that having a high-end vacation spot in the backyard of the world’s elite is a wise investment. Larger cities pulling up the rear include Omaha, Nebraska at 38%, Houston, Texas at 40%, and Scottsdale, Arizona at 46%.
A key takeaway is that low occupancy does not necessarily mean low revenues. Additionally, travelers are able to take advantage of significant discounts in more luxurious destinations by traveling in the off-season.
Differences within Cities
In addition to cross-analyzing data between cities, it helps to notice that there are large differences within cities themselves. For example in Los Angeles, Venice Beach has a solid rate of 63%, while Malibu is down at 40%. There are many factors that drive demand, but one can’t ignore the average daily rate. While just 30 minutes away from one another, there is a $600 price difference between the two (Malibu’s ADR is just shy of $800).
There is a similar case in New York City. While all of the occupancy rates tend to be in the mid 50’s, the number of properties varies drastically, from over 20,000 in Brooklyn and Manhattan to just over 5,000 in Queens, and under one thousand listings in The Bronx and Staten Island. The rates vary just as much, with stays in Brooklyn and Manhattan costing 2-4 times as much as the other boroughs.
Occupancy is just one factor to consider when analyzing the vacation rental market, as there are many tradeoffs between the level of maintenance required and the potential revenues one can expect. Potential real estate investors should also be aware of impending regulations on the short-term rental market.