Europe's strong short-term rental market in May signals a promising summer ahead for STR hosts, with early travel trends and increased occupancy setting the stage for potentially higher earnings and sustained demand through the upcoming peak season.

European Market Review: May Showcases Soaring STR Demand and Occupancy

May experienced a record 24% increase in demand year-over-year, pushing occupancy rates to the highest since August at 57%.

Average daily rates (ADR) modestly increased by 2.2% year-over-year to €166.

Despite a 16% growth in listings, stringent STR regulations in cities like Barcelona, Lisbon, and Rome continue to hinder full supply recovery.

May European short-term rental (STR) performance ushers in the start of another roaring summer of demand. Last month, total demand nights for the European continent reached a record high of 40.4M nights. 

After last summer’s blistering heat and massive crowds, travelers appear to be starting their trips earlier this year. May saw a remarkable 24% increase in demand compared to last year, while supply grew by 16%. With demand growing faster than supply, average occupancy across Europe reached 57%, a 6% increase year-over-year (YOY) and the highest occupancy rate since August.

While occupancy soared, nightly rates saw modest growth last month. Average daily rates (ADRs) across the European continent averaged €166, up 2.2% YOY. 

At a Glance: May STR Performance in Europe

Available listings were up 16% year-over-year (YOY)

Demand reached 40.4M, an increase of 24% YOY

Average daily rates (ADR) rose 2.2% YOY to 166 €

Occupancy was up 6% YOY and up 8.1% compared to 2019

Revenue per available rental (RevPAR) increased 8.3% YOY to 95 €

Gain insights into the revenue and occupancy trends in your market.

European Central Bank Announced Its First Interest Rate Cut 

In a momentous turn, the European Central Bank (ECB) announced its first interest rate cut in five years on June 6th. Rates were lowered from 4% to 3.75%. While the ECB suggested this could be the start of further rate reductions, it emphasized that future rate decisions would depend on how inflation behaves. They cautioned that they are not committing to a specific rate path yet.

The ECB decided to cut interest rates in response to the steady and consistent decline in inflation that Europe has experienced over the past year and a half. As of last month, inflation in the Euro area was at 2.6%. In contrast, the US has not made the same progress, with inflation at 3.3% as of May. The Federal Reserve has yet to announce its first interest rate cut.

With its first interest rate cut in place, the European Central Bank is set to boost consumer confidence, private spending, and economic activity in the second half of this year. Lower borrowing costs should also make it easier to get home loans.

Major Cities in Italy, Spain, and Portugal See Slow Listing Recovery 

May was another strong month for listing growth in Europe. Available listings reached 3.6 million, up 16% from last year. With 154,000 new listings added, they made up 4.5% of all available listings in May. Overall, available listings in Europe are now 21.7% higher than in 2019.

However, not all European countries have seen the same supply recovery.  Five countries still have fewer listings than in 2019. Supply over the last year has been anywhere from 1% to 25% lower than 2019 levels in:

In these countries, lagging demand has significantly contributed to the slower recovery in supply.

Where demand hasn't returned, it's understandable that supply hasn't either. However, it's puzzling when supply doesn't recover despite strong demand. This is the case in Italy, Spain, and Portugal. Since 2019, demand in these countries has increased by 11% to 22%, but available listings have grown by less than 7% since the pandemic.

STR regulation that suppresses supply in major tourism cities may play a large role in why these 3 countries have seen limited supply growth since the pandemic. 

Below are two of the largest cities for short-term rental (STR) supply in Italy, Spain, and Portugal, respectively, along with a snapshot of the STR regulations in place:

Properties must obtain a tourism license to legally operate a short term rental. Eligibility depends on whether the property has a separate street entrance from any permanent residential units in the building. Renting out individual rooms or apartments within residential buildings with common entrances is effectively prohibited. There is currently a freeze on new licenses for short-term rentals. 

Properties must get a tourism license to legally operate a short term rental. Private room rentals are prohibited and new tourism licenses have been under a moratorium for several years. Properties with licenses can only be rented for a maximum of 120 days per year if the owner does not live on-site.

Lisbon's STR regulations require properties to get a local accommodation license. The city has imposed caps on the number of rental licenses issued in certain historic neighborhoods to manage the impact of tourism. As of October 2023, with the enactment of the new “Mais Habitação” laws, no new licenses are being issued in Lisbon.
Porto, the second largest city in Portugal, has adopted the same regulations as Lisbon. 

Properties must be registered with SUAR (Sportello Unico Attività Ricettive), the centralized service for accommodation activities, to operate as a short term rental. In central areas of the city, only detached single family properties can be rented. Properties may only be rented for a maximum of 60 days a year.  

Airbnb owners in Florence must register with the local authorities and get a unique identification code. Since October 2023, there has been a ban on new short term rental licenses in the city’s historic center. 

Prior to the pandemic, STR supply in Barcelona and Madrid made up an impressive 11% of all supply in Spain. Listings in Lisbon and Porto made up an astounding 27% of all supply in Portugal. STRs in Rome and Florence made up 9% of all supply in Italy.

Since the pandemic, these cities remain leaders in STR listings in their respective countries. However, many have not yet returned to 2019 levels and their weak recovery is reflected in the slow supply growth at the national level.

Despite strong demand recovery with the return of international travelers over the last year and a half, STR regulations in these cities are effectively limiting supply growth. Across the 6 major cities named above, supply is still well below or just slightly above 2019 levels. While demand is above 2019 levels in several cities, the lack of supply is artificially holding back demand in places like Barcelona and Lisbon.

Your vacation rental may be amazing, but is it better than your competition? Connect your Airbnb listing to AirDNA to see its Booking Performance Score.

Supply Growth Leads to Declining Occupancy  

Slow supply recovery is true in other major cities across Europe as well. Among the top 50 European cities, supply has grown over 20% year-over-year (YOY) but remains 3% below 2019 levels.

When looking at individual cities, supply growth has varied over the last year. Cities that have experienced the most supply growth, have seen the steepest occupancy dips. Cities with the most supply growth have seen the biggest drops in occupancy. For example, Warsaw, Poland; Belgrade, Serbia; Napoli, Italy; and Paris, France, have experienced more than 35% year-over-year growth in available listings. Occupancy has consequently dropped by over 10% in all four cities. This declining occupancy has also led to lower revenue per available rental (RevPAR) for hosts, as they face more unbooked nights and have to reduce their nightly rates.

On the other hand, in Porto, Portugal; Madrid, Spain; and Barcelona, Spain, regulations have slowed listing growth. This slower growth in listings has led to stable or increasing occupancy and RevPARs for short-term rentals over the past year.

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Europe Demand Pacing Up 18% for the Next Six Months 

Bookings for Europe continue to grow steadily. Current demand on the books for July and August is up 18% year-over-year (YOY). Similarly, the shoulder months of September and October are also seeing an 18% YOY demand increase.

Among the top 20 European countries, the following nations are currently leading for growth in demand on the books, July through September:

On the other hand, demand pacing is lagging in: 

For those looking to travel off the beaten path this summer, here are four popular destinations where demand for July through September is skyrocketing year-over-year. Travelers aiming to avoid the crowds and stick to a budget are finding Eastern European destinations to be a great option.

AirDNA’s vacation rental pricing tool uses data-driven recommendations to propose the best daily rates.

Sporting Events are Heating Up Summer Demand

Between the EURO 2024 football championships, the Paris Olympics, and the Tour de France, this summer is going to be an eventful one for sport fans.

The group stage games for EURO 2024 are happening as we speak. In our recent blog, we took a look at how demand, supply, and rates were shaping up leading up to the Group Stage. Don’t miss our blog on EURO 2024 if you want a sneak peek at which matches are booking up STR listings the fastest and what hosts should expect in knockout rounds.

The Paris Olympics are just one month away, and we’re seeing demand and supply reach record heights in Paris and its suburbs. Current demand on the books within Paris is up 27% compared to the two weeks leading up to the start of the games.

In the suburbs, demand is up an astounding 79% compared to the two weeks prior. Parisians are seizing the opportunity to earn some extra cash during the Olympics, and new listings are coming online at a record pace. May listings were up 45% YOY in Paris and up 73% YOY in its suburbs. Check out our interactive Olympics dashboard to get an idea of where demand, supply, and rates are heating up the most

Do you want to be at the finish line for this year’s Tour de France? If so, head to Nice. This year is the first time since 1975 that the Tour de France will not be concluding in Paris. The race will end in the south of France on July 21st. Current demand on the books for July 20th and 21st is up 36% versus the week prior. While booked rates are not seeing a significant increase, rates for available listings are currently up 12% versus the week prior. 

Understand the investment potential of any address in the world.

Early summer vacationers were already clambering for European accommodations in May, setting the stage for a lucrative summer for STR hosts.

Airbnb Occupancy Rate: Insights and Tips

Key Takeaways
The Airbnb occupancy rate is a vital metric for success and is calculated by dividing the number of booked nights by the available nights. The occupancy rate reflects how often your property is rented out compared to its availability.
Understanding and monitoring your occupancy rate is key to maximizing earnings, as it indicates property performance and influences pricing and marketing strategies.
How you interpret your occupancy rate is essential; high and low occupancy rates don’t always mean what you think.

Successful Airbnb hosts are obsessed with bookings, and for good reason—it’s the name of the vacation rental game.

When hosts talk about Airbnb bookings, they're really talking about occupancy rate: the percentage of available nights that guests book. Monitoring your occupancy rate is important because it shows how well your Airbnb stacks up against the competition. The occupancy rate can also indicate whether you need to switch up your strategy or pricing to boost your rental income.

Whether you’re new to short-term vacation rentals or an industry expert, it’s important to understand the methodology and best practices behind your occupancy rate. 

Learn about short-term rental data

What is Airbnb Occupancy Rate?

In its simplest form, the occupancy rate is the percentage of time a vacation rental property is booked compared to the time it is available for bookings. 

To make understanding occupancy rate easier, let's use a straightforward example.

Imagine you own a cabin that's available for guests all year. That means it could potentially be booked for 365 nights. Throughout the year, guests book your cabin for 90 of those nights. We can use that number to calculate the occupancy rate and see how often your property was rented out compared to its availability. 

By dividing the booked nights (90) by the total available nights (365) and multiplying by 100 to get a percentage, we find an occupancy rate of approximately 25%. This means your cabin was rented out for about a quarter of the year.

Reasons Why Your Occupancy Rate Matters
Maximize Revenue Potential: Physical products can be sold at any time if they’re not immediately purchased. However, a vacant vacation rental represents a unique challenge. If a property goes unbooked for a night, it's impossible to "sell" that night again. Each unbooked night directly translates into a tangible loss of potential income. That’s why the occupancy rate is crucial for owners looking to maximize their earnings. 
Reveal Property Performance Insights: Consider two similar properties in the same location. Property A consistently achieves an 80% occupancy rate, while Property B struggles to reach 50%. This stark difference signals that Property A might be better aligned with guest preferences or have better marketing. Analyzing occupancy rates helps identify performance gaps and areas for improvement, whether that's improving your listing or adjusting pricing strategies to meet market demand.
Determine Market Demand and Inform Pricing Strategies: High Airbnb occupancy rates indicate strong market demand, while low occupancy rates can reflect lower demand. This information informs your pricing strategy. Let’s consider an apartment near a convention center that has high occupancy during events but low occupancy rates otherwise. This trend suggests that you may want to consider adjusting your rates in relation to the convention center’s event calendar. Dynamic pricing takes into consideration trends like this and uses them to optimize revenue during peak and off-peak times.
Guide Investment and Enhancement Decisions: Evaluate occupancy rates before and after making upgrades, like installing high-speed internet or renovating the kitchen, to assess the return on investment (ROI). This analysis is crucial for prioritizing property improvements that make your listing more appealing and, subsequently, improve the occupancy rate.

Learn about Dynamic Pricing

How to Calculate the Airbnb Occupancy Rate

Understanding the occupancy rate of your Airbnb property is pivotal for optimizing your rental strategy. Yet, it all comes down to a single equation.

Airbnb Occupancy Rate Calculation

Reserved Days / Available Days x 100 = Occupancy Rate

With that in mind, here's a simple guide on how to find Airbnb occupancy rates:

Step-by-Step Calculation
Determine the Total Number of Reserved Days: Start by counting how many days guests booked your property over a specific period of time, usually 12 months. 
Identify the Total Number of Available Days: Calculate the total days your property was available for booking over the same time period, excluding any days you blocked off for personal use.
Calculate the Occupancy Rate: Divide the total number of reserved days by the total number of available days, then multiply the result by 100 to convert it into a percentage. These steps represent AirDNA’s version of an Airbnb occupancy rate calculator.

Example Calculation:

Imagine you own a house on the water in North Carolina and you're evaluating its performance on Airbnb over the last 12 months. The property was available for 340 days and booked for 240 days within this timeframe.

Reserved Days: 240

Available Days: 340

Occupancy Rate Calculation: 240/340 x 100 = 70.58%

Calculate potential earnings

Understand the investment potential of any address in the world. 

See your STR revenue potential
Interpreting Your Occupancy Rate

While a 70% occupancy rate may seem ideal, signaling guest satisfaction and consistent revenue, it's essential to delve deeper. High occupancy could indicate underpricing, meaning you might be missing out on potential income. It's crucial to balance occupancy with your average daily rates (ADRs) to maximize revenue. 

Think about it: A property with a 50% or 60% occupancy rate could earn more revenue than one that’s booked 70% of the time. It’s all relative to pricing. A property booked more often at $100 per night may not outearn a property that’s booked less often at $300 per night.

It’s important to ask yourself: Do I want higher occupancy or higher average daily rates (ADRs)? An accurate data tool can help you sort out which strategy is best for your bottom line. (Why guess when you can know exactly what you should be charging guests?)

What is a Good Airbnb Occupancy Rate?

Average Airbnb occupancy rates vary from market to market and year to year. You can see how the national average occupancy rate has fluctuated:

Trailing twelve months (TTM), March 2023 to February 2024: 55.1%
2023: 55.4%
2022: 58.6%
2021: 60.3%

The occupancy rate in 2022 reflects a recovery trend in the industry after the pandemic brought the average occupancy rate into the low fifties in 2020.

Determining a "good" rate is less about finding a universal number and more about understanding local market conditions, historical performance, and your personal goals for the property. Knowing your market's average helps inform decisions on pricing, marketing, and operations.

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Average Airbnb Occupancy Rates by City: Top 10 Highest Occupancy Rates

If you’re new to the short-term rental market, understanding the average airbnb occupancy rates by city can help you choose a location that’s likely to generate a healthy revenue.

These markets had the highest trailing twelve-month short-term occupancy rates (March 2023 to February 2024):

Kauai, Hawaii: 74.4%
Oahu, Hawaii: 73.4%
Maui, Hawaii: 72.4%
Maine DownEast/Acadia Coastal: 67.7%
Big Island, Hawaii: 67.1%
New York City: 65.5%
Denver: 65.3%
Anaheim, California: 65.2%
Boulder, Colorado: 64.3%
 Outer Banks, North Carolina: 64.3%

Many of the markets with the highest occupancy rates are located in Hawaii. However, seeing as the vacation rental market in Hawaii is subject to fairly heavy restrictions, let’s consider the markets with the highest occupancy rates in the contiguous U.S.

Maine DownEast/Acadia Coastal: 67.7%
New York City: 65.5%
Denver: 65.3%
Anaheim, California: 65.2%
Boulder, Colorado: 64.3%
Outer Banks, North Carolina: 64.3%
San Diego: 64.2%
Sarasota, Florida: 64.1%
Lincoln City/Newport, Oregon: 64%
Gatlinburg/Pigeon Forge, Tennessee: 63.9%

Average Occupancy Rates by City: Top 10 Lowest Occupancy Rates

The average Airbnb occupancy rates by city in the following areas leave hosts wanting more. These markets currently have the lowest trailing twelve-month occupancy rates:

Oxford, MS: 34.9%
Big Bear, CA: 39.6%
Southbend, Indiana: 40.4%
Texas East Area: 41.4%
College Station, Texas: 41.8%
Mississippi area: 42.1%
Augusta, Georgia/South Carolina: 42.8%
Pocono Mountains, Pennsylvania: 43.2%
California South area: 43.7%
 Louisiana area: 43.9%

If you’re looking to invest in vacation properties, avoid these markets because you likely won't get a good ROI. Property managers and hosts in these markets may need to lower their rates to encourage guests to book with them rather than other Airbnbs.

Hottest Airbnb Markets
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Why Airbnb Occupancy Rates Differ from Hotels 

Hotels offer a consistent product and pricing strategy, but STRs vary widely in terms of property type, location, amenities, and host engagement. It’s crucial to assess STR occupancy differently than traditional hotel occupancy in order to accurately reflect performance in the vacation rental market.

AirDNA only considers active listings in its occupancy rate calculations, whether it’s for a specific market or when someone uses our Airbnb calculator. We define active as having at least one calendar day classified as reserved or available during the reporting period. If we included every available night from every available listing in our occupancy calculation, it would return a falsely low occupancy rate. This is due to variations in vacation rental host behaviors and motivations. We’re talking about host attentiveness in managing listing calendars and their responsiveness to reservation requests.

Here are three host cases that would falsely skew occupancy downward if we included them in the occupancy rate calculation: 

Event-Based Hosts: Hosts who list properties temporarily to take advantage of specific events, causing temporary market fluctuations that don’t reflect regular hosting activity.

"Make Me Move" Hosts: Hosts who set their prices significantly above the market rate, using Airbnb as an opportunistic platform rather than a committed hosting venue.

Dormant Listings: Properties that appear available but haven't seen a booking for months, often due to a shift in host priorities or property usage.

AirDNA ensures that its occupancy rate calculations reflect genuine market activity and trends by focusing on active listings. We stand by the accuracy of our data and use this methodology to help stakeholders understand the true dynamics of the STR market. Our insights are distinct from those that can be gleaned from hotel occupancy data.

How to Get High Occupancy on Airbnb

Occupancy rate may not be a complete picture of your property’s performance, but it’s still important. After all, you’re only making money if guests are staying at your property. If your occupancy rate is falling short of expectations, take these data-driven steps to learn how to increase occupancy rate on Airbnb. 

Increase Your Airbnb Occupancy Rate

Occupancy Rate is Just the Beginning  

According to ou annual best places to invest report, most of the destinations at the top of the list have occupancy rates of 60-70%. If you're interested to learn more about a market's occupancy rate, visit the AirDNA app.

While Airbnb occupancy rates are important, you need to track a range of metrics to assess how your Airbnb is performing overall. Our insights can help you optimize your properties for the best possible occupancy rate, average daily rate (ADR), revenue per available rental (RevPAR), and overall profitability.

Frequently Asked Questions:
What is a good occupancy rate for an Airbnb?

There is no universal “good" occupancy rate. Determining whether your occupancy rate is optimized requires understanding local market conditions, historical performance, and your personal goals for the property. Keep in mind that lower occupancy rates don’t necessarily indicate lost revenue. If you are charging a higher average daily rate, you might not need as many bookings to make as much money as a competitor with higher occupancy but a lower nightly rate.

Where can you see Airbnb occupancy rates?

You can see the occupancy rate for your listing as well as that of competitors in the area on your AirDNA dashboard. 

Find out what “Airbnb occupancy rate” refers to, how to calculate it, and tips for improving your occupancy rate and increasing your STR income.

European Market Review: May Showcases Soaring STR Demand and Occupancy

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