Maximize vacation rental returns with data-driven decisions, optimization, and diverse strategies.

22 Tips to Maximize the Return on Your Vacation Rental in 2024

Maximizing the return on your vacation rental takes more than creating a good guest experience.

Optimizing your listing and listing across platforms are just two ways to boost your returns, but there are others you should also implement.

Data-driven decision-making is the most effective way to influence your property’s performance. 

What does it take to unlock a vacation rental property’s full earning potential? For many property owners, deciphering how to improve short-term rental income is more nuanced than creating a great guest experience. While prioritizing guest experience is always a good idea, there are many other steps you can and should take to give your rental the boost it needs. 

In this comprehensive guide, we’ll take a closer look at the best tips to maximize the return on your vacation rental. Whether you're a seasoned host or just getting started, here’s how to earn more from your short-term rental (STR) business and stay ahead of the competition.

Which Factors Affect Vacation Rental Profitability?

While there’s no exact science for getting the most out of your vacation property, certain key factors influence profitability more than others. AirDNA data shows that a few of the factors that most affect your profitability are: 

Investment income vs. the cost of the property

Some of these factors—location, for instance—come down to the property you buy. Others you can optimize as you go to give your vacation rental business the best shot at success. Next, we’ll explain how to do just that. 

Data-Driven Tips to Maximize the Return on Your Vacation Rental Home

Planning and effort are the heartbeat of any successful vacation rental property and are key to getting more out of your real estate investment. Focus on updating and optimizing your rental listing for prospective guests, then put in the work to keep them happy during their stay. 

Here are the 22 best tips to maximize the return on your vacation rental:

Your listing should evolve along with the vacation rental landscape. During COVID-19, for example, travelers wanted to see details about cleanliness. Now, many guests have turned their eye to eco-friendliness. 

Regularly review and update your vacation rental listing so that it stands out to potential guests and speaks to their preferences. Some of the best ways to optimize and improve your listing are to: 

Post high-quality photos from a professional photographer. Listings with professional-level photographs earn 40% more revenue than those without.

Write thoughtful descriptions that accurately describe your rental property to entice prospective renters and get them excited about your property.

List all relevant amenities to attract more guests and keep your competitive edge in the vacation rental market.

Utilize pre-booking messages to create a positive impact on your guest experience.

2. List Your Vacation Rental Property on Multiple Platforms

Plan to list your short-term rental on more than one site. Occupancy rates increase when a rental is listed across multiple sites. For example, Airbnb’s occupancy rate is 53.9%, and Vrbo’s is 51.8%. Meanwhile, cross-listed properties see a 58.1% occupancy rate. 

Increase your vacation property's visibility and booking potential by listing it on multiple vacation rental sites, like Vrbo, Vacasa, and Booking.com. By making your rental easy to find, you can attract more guests and maximize your rental income.

3. Get Insurance to Protect Your Property

Not all renters value vacation homes the way they should, posing risks that are unique to short-term rentals. Comprehensive vacation rental insurance is critical to safeguarding your property against unexpected damages, liabilities, and other unforeseen events. That way, cleaning up after an accident won’t eat into your returns. 

AirDNA’s STR Insurance Guide offers insights into how insurance coverage can provide peace of mind and financial protection should something go wrong.

Dynamic pricing lets you optimize rental rates based on factors like demand, seasonality, local events, and competitor pricing. AirDNA’s Dynamic Pricing Tool can help you price your rental competitively, attracting more bookings and maximizing your rental income.

Minimum stay policies can help you fill up your rental calendar and maximize the return on your vacation rental. During off-peak periods, shorter minimum stays cater to more intermittent travelers, while longer minimum stays during high-demand times keep your rental earnings as much as possible. 

In urban cities, 24% of properties utilize minimum stay policies of 28 days or more.

6. Offer Mid-Term Stays in the Off-Season

During the off-season, consider seeking long-term guests by offering mid-term stays and monthly rentals. This strategy can help you stabilize vacation rental profits during slower periods and reduce the risk of vacancies.

At the end of the day, nothing is more important than delivering an experience that guests will love. 

Best practices for property managers include making sure to provide:

Clear communication and prompt assistance with any issues that arise during a stay

Welcome baskets, personalized messages, and even in-person greetings can provide a more memorable guest experience that leads to favorable reviews and repeat bookings. 

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

8. Communicate Effectively with Your Guests

Respond to inquiries as soon as possible, give clear instructions for check-in and check-out, and be helpful throughout every guest’s stay. This is essential to building trust with guests and enhancing their overall satisfaction, which in turn leads to positive reviews and repeat bookings.

Unlike other real estate investments, the success of a vacation rental hinges on delighting guests. Listings with an average rating of 4.9 stars or above enjoyed a 9.7% higher occupancy rate, a 7.7% higher average daily rate (ADR), and 18.2% higher revenue in 2023 compared to listings with lower ratings.

The best way to encourage positive guest reviews on listing sites is by providing exceptional service and amenities. Guests who see their issues addressed promptly are more eager to share their five-star experience and help your property rank higher on vacation rental platforms.

Consider providing incentives for guests to return, such as offering discounts or loyalty offers for their next stay. Providing a memorable experience and maintaining open communication can lead to repeat bookings, resulting in a steady income stream for your vacation properties.

A thorough guest screening process helps to ensure the safety and security of your investment property. Don’t be afraid to ask potential guests about the purpose of their visit as well as past rental experiences. 

Guest screening platforms can also verify a prospective guest’s identity and assess how suitable they are for your vacation rental. By carefully screening new guests, you can mitigate potential risks and maintain a positive rental experience for everyone.

Vacation property owners can save time and headaches by automating repetitive tasks such as guest communication, booking confirmations, and cleaning schedules. 

Property managers should use software and automation tools to help with administrative duties and avoid double bookings, ensuring consistency and reliability for your vacation rental business.

13. Offer Add-On Services and Experiences

Every short-term rental business wants to increase revenue. 

You can achieve that by offering add-on services and experiences such as:

Additional services like these not only cater to the diverse needs of your guests but also create opportunities to upsell and generate extra income.

Cleaning fees shouldn’t come as a sticker shock to guests. Set competitive cleaning fees that cover cleaning expenses and hosting fees without setting off renters. 

When calculating cleaning fees, consider:

Size: Average cleaning fees in the U.S. for a private/shared room on Airbnb were $48 per stay, while fees for a house with five bedrooms reached $303.

Location: Cleaning fees averaged $166 per stay for a three-bedroom listing in large urban cities and only $128 per stay in smaller or rural cities.

Rising costs: Since Q1 of 2020, Airbnb cleaning fees have increased by about 27%.

Market research can provide you with a ballpark figure of cleaning charges in your area so you can adjust fees accordingly. Offering transparent and reasonable cleaning fees will enhance guest satisfaction and contribute to positive reviews, ultimately maximizing rental income for your vacation rentals.

Homes that allow pets can earn a 6% higher ADR, however, travelers with pets can sometimes leave a mess. Pet fees help cover any cleaning costs associated with pet damages, keeping your vacation rental well-maintained and profitable. It’s important to communicate this fee clearly in your listing to set expectations for pet-owning guests.

Making a dedicated website for your vacation rental lets you bypass booking platform fees while maintaining full control over your booking process. As long as there’s a user-friendly interface with secure payment options, you can cut out the middleman and offer a seamless experience for direct bookings.

Vacation rentals can take on a life of their own, leading to direct bookings that boost profitability. Take advantage of social media platforms and create engaging content that establishes credibility and shows off your property. 

Photo and video content on platforms like Instagram and TikTok can work wonders for attracting new guests. Encourage past guests to tag you in their content so that their followers can easily find your page.

You should also consider investing in search engine optimization (SEO) strategies to improve your rental's search engine visibility, driving organic traffic to your listing.

Email marketing lets you maintain connections with past guests and nurture potential leads. 

Emails like these keep your property top-of-mind and encourage repeat bookings. With email automation tools, you can streamline your marketing efforts and maximize engagement without too much effort.

Your vacation home won’t be the perfect fit for every traveler, which is why it’s important to tailor marketing efforts to those who are a great fit. Learn your target audience's preferences, demographics, and booking behaviors, and make use of the messaging and visuals that resonate with them. 

By targeting the right audience, you can maximize vacation rental revenue through increased visibility and appeal, driving more bookings and revenue.

There’s an art to turning potential guests into confirmed vacation rental bookings. 

Some of the best lead-capturing and closing tips are to:

Use persuasive language in your communications

Provide timely responses to any inquiries

21. Claim All Available Tax Deductions to Maximize Your Vacation Rental Income

Consult with a tax professional to claim all applicable deductions. Doing so will reduce your taxable income, which in turn keeps more money in your pockets.

22. Measure the Success of Your Vacation Rental Business

Tracking key performance metrics will help to gauge the effectiveness of your vacation rental business and make changes to improve it.  

Measuring your business is easier with platforms like AirDNA, which gather and analyze data to help you make informed decisions about how to optimize your rental strategy for maximum success.

Plan your STR strategy based on real booking activity and trends—plus, see how things change year over year

FAQs - Maximizing the Return on Vacation Rentals

What Is a Good Profit Margin for a Short-Term Rental?

A good profit margin for a short-term rental typically ranges between 20-50% of annual rental income. 

However, this can vary based on factors such as:

It's essential to analyze your specific situation and aim for a margin that ensures profitability while remaining competitive in the market.

Are There Hidden Costs Involved in Owning a Vacation Rental?

Yes, many new property owners are surprised by unforeseen costs associated with their vacation rental. 

Vacation rental owners need to budget for these potential costs to ensure profitability and financial stability in the long run.

How Do I Know If My Vacation Rental Is Profitable?

Accurately tracking income and expenses is key when determining your vacation rental’s profitability. Compare your rental income to your total costs, including mortgage payments, maintenance, utilities, and property management fees. Analyze your cash flow and calculate your return on investment (ROI) to assess profitability accurately. 

Using tools like the AirDNA Pricing Tool can provide detailed insights into your rental's financial performance.

What Is a Good Rate of Return on a Vacation Rental?

Rates of return vary depending on factors such as location, property type, and market conditions. However, vacation rental owners usually aim for a return on investment (ROI) of at least 8% to 10%. This ROI accounts for rental income, expenses, property appreciation, and potential tax benefits. 

Monitoring key performance indicators and using data-driven insights from platforms like AirDNA can help investors gauge and optimize rental profitability and ROI.

Want to increase your rental revenue? Start with data. Read our 22 data-driven tips to maximize the return on your vacation rental in 2024 and beyond.

Factors That Affect Vacation Rental Profitability

Key Takeaways: 
Maximizing the return on your vacation rental takes more than creating a good guest experience.
Optimizing your listing and listing across platforms are just two ways to boost your returns, but there are others you should also implement.
Data-driven decision-making is the most effective way to influence your property’s performance. 

What does it take to unlock a vacation rental property’s full earning potential? For many property owners, deciphering how to improve short-term rental income is more nuanced than creating a great guest experience. While prioritizing guest experience is always a good idea, there are many other steps you can and should take to give your rental the boost it needs. 

In this comprehensive guide, we’ll take a closer look at the best tips to maximize the return on your vacation rental. Whether you're a seasoned host or just getting started, here’s how to earn more from your short-term rental (STR) business and stay ahead of the competition.

Which Factors Affect Vacation Rental Profitability?

While there’s no exact science for getting the most out of your vacation property, certain key factors influence profitability more than others. AirDNA data shows that a few of the factors that most affect your profitability are: 

Location
Property amenities
Seasonality
Supply and demand
Competition
Pricing strategies
Investment income vs. the cost of the property
Daily pricing

Some of these factors—location, for instance—come down to the property you buy. Others you can optimize as you go to give your vacation rental business the best shot at success. Next, we’ll explain how to do just that. 

Data-Driven Tips to Maximize the Return on Your Vacation Rental Home

Planning and effort are the heartbeat of any successful vacation rental property and are key to getting more out of your real estate investment. Focus on updating and optimizing your rental listing for prospective guests, then put in the work to keep them happy during their stay. 

Here are the 22 best tips to maximize the return on your vacation rental:

Find your next investment

1. Optimize and Update Your Listing

Your listing should evolve along with the vacation rental landscape. During COVID-19, for example, travelers wanted to see details about cleanliness. Now, many guests have turned their eye to eco-friendliness. 

Regularly review and update your vacation rental listing so that it stands out to potential guests and speaks to their preferences. Some of the best ways to optimize and improve your listing are to: 

Post high-quality photos from a professional photographer. Listings with professional-level photographs earn 40% more revenue than those without.
Write thoughtful descriptions that accurately describe your rental property to entice prospective renters and get them excited about your property.
List all relevant amenities to attract more guests and keep your competitive edge in the vacation rental market.
Utilize pre-booking messages to create a positive impact on your guest experience.
Update your Airbnb calendar daily.
Enable Instant Booking on Airbnb.
2. List Your Vacation Rental Property on Multiple Platforms

Plan to list your short-term rental on more than one site. Occupancy rates increase when a rental is listed across multiple sites. For example, Airbnb’s occupancy rate is 53.9%, and Vrbo’s is 51.8%. Meanwhile, cross-listed properties see a 58.1% occupancy rate. 

Increase your vacation property's visibility and booking potential by listing it on multiple vacation rental sites, like Vrbo, Vacasa, and Booking.com. By making your rental easy to find, you can attract more guests and maximize your rental income.

 Learn about short-term rental data

3. Get Insurance to Protect Your Property

Not all renters value vacation homes the way they should, posing risks that are unique to short-term rentals. Comprehensive vacation rental insurance is critical to safeguarding your property against unexpected damages, liabilities, and other unforeseen events. That way, cleaning up after an accident won’t eat into your returns. 

AirDNA’s STR Insurance Guide offers insights into how insurance coverage can provide peace of mind and financial protection should something go wrong.

4. Use a Dynamic Pricing Tool

Dynamic pricing lets you optimize rental rates based on factors like demand, seasonality, local events, and competitor pricing. AirDNA’s Dynamic Pricing Tool can help you price your rental competitively, attracting more bookings and maximizing your rental income.

5. Optimize Your Minimum Stay

Minimum stay policies can help you fill up your rental calendar and maximize the return on your vacation rental. During off-peak periods, shorter minimum stays cater to more intermittent travelers, while longer minimum stays during high-demand times keep your rental earnings as much as possible. 

In urban cities, 24% of properties utilize minimum stay policies of 28 days or more.

Learn about Dynamic Pricing

6. Offer Mid-Term Stays in the Off-Season

During the off-season, consider seeking long-term guests by offering mid-term stays and monthly rentals. This strategy can help you stabilize vacation rental profits during slower periods and reduce the risk of vacancies.

7. Provide a Seamless Guest Experience

At the end of the day, nothing is more important than delivering an experience that guests will love. 

Best practices for property managers include making sure to provide:

A clean, well-maintained rental  
Easy check-in procedures
A thoughtful guidebook
Clear communication and prompt assistance with any issues that arise during a stay

Welcome baskets, personalized messages, and even in-person greetings can provide a more memorable guest experience that leads to favorable reviews and repeat bookings. 

How is your STR performing?

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

See your score
8. Communicate Effectively with Your Guests

Respond to inquiries as soon as possible, give clear instructions for check-in and check-out, and be helpful throughout every guest’s stay. This is essential to building trust with guests and enhancing their overall satisfaction, which in turn leads to positive reviews and repeat bookings.

9. Collect Five-Star Reviews

Unlike other real estate investments, the success of a vacation rental hinges on delighting guests. Listings with an average rating of 4.9 stars or above enjoyed a 9.7% higher occupancy rate, a 7.7% higher average daily rate (ADR), and 18.2% higher revenue in 2023 compared to listings with lower ratings.

The best way to encourage positive guest reviews on listing sites is by providing exceptional service and amenities. Guests who see their issues addressed promptly are more eager to share their five-star experience and help your property rank higher on vacation rental platforms.

10. Encourage Repeat Bookings

Consider providing incentives for guests to return, such as offering discounts or loyalty offers for their next stay. Providing a memorable experience and maintaining open communication can lead to repeat bookings, resulting in a steady income stream for your vacation properties.

11. Screen New Guests Carefully

A thorough guest screening process helps to ensure the safety and security of your investment property. Don’t be afraid to ask potential guests about the purpose of their visit as well as past rental experiences. 

Guest screening platforms can also verify a prospective guest’s identity and assess how suitable they are for your vacation rental. By carefully screening new guests, you can mitigate potential risks and maintain a positive rental experience for everyone.

12. Automate Behind-the-Scenes Tasks

Vacation property owners can save time and headaches by automating repetitive tasks such as guest communication, booking confirmations, and cleaning schedules. 

Property managers should use software and automation tools to help with administrative duties and avoid double bookings, ensuring consistency and reliability for your vacation rental business.

Become a better host

13. Offer Add-On Services and Experiences

Every short-term rental business wants to increase revenue. 

You can achieve that by offering add-on services and experiences such as:

Grocery delivery
Airport transfers
Local tours
In-house spa treatments

Additional services like these not only cater to the diverse needs of your guests but also create opportunities to upsell and generate extra income.

14. Optimize Your Cleaning Fees

Cleaning fees shouldn’t come as a sticker shock to guests. Set competitive cleaning fees that cover cleaning expenses and hosting fees without setting off renters. 

When calculating cleaning fees, consider:

Size: Average cleaning fees in the U.S. for a private/shared room on Airbnb were $48 per stay, while fees for a house with five bedrooms reached $303.
Location: Cleaning fees averaged $166 per stay for a three-bedroom listing in large urban cities and only $128 per stay in smaller or rural cities.
Rising costs: Since Q1 of 2020, Airbnb cleaning fees have increased by about 27%.

Market research can provide you with a ballpark figure of cleaning charges in your area so you can adjust fees accordingly. Offering transparent and reasonable cleaning fees will enhance guest satisfaction and contribute to positive reviews, ultimately maximizing rental income for your vacation rentals.

15. Charge an Additional Fee for Pets

Homes that allow pets can earn a 6% higher ADR, however, travelers with pets can sometimes leave a mess. Pet fees help cover any cleaning costs associated with pet damages, keeping your vacation rental well-maintained and profitable. It’s important to communicate this fee clearly in your listing to set expectations for pet-owning guests.

16. Create a Direct Booking Website

Making a dedicated website for your vacation rental lets you bypass booking platform fees while maintaining full control over your booking process. As long as there’s a user-friendly interface with secure payment options, you can cut out the middleman and offer a seamless experience for direct bookings.

17. Build an Online Presence

Vacation rentals can take on a life of their own, leading to direct bookings that boost profitability. Take advantage of social media platforms and create engaging content that establishes credibility and shows off your property. 

Photo and video content on platforms like Instagram and TikTok can work wonders for attracting new guests. Encourage past guests to tag you in their content so that their followers can easily find your page.

You should also consider investing in search engine optimization (SEO) strategies to improve your rental's search engine visibility, driving organic traffic to your listing.

Customize Your Pricing
Start for free
18. Leverage Email Marketing

Email marketing lets you maintain connections with past guests and nurture potential leads. 

Consider sending:

Personalized messages
Exclusive offers
Updates about your vacation rental 

Emails like these keep your property top-of-mind and encourage repeat bookings. With email automation tools, you can streamline your marketing efforts and maximize engagement without too much effort.

19. Market to Your Target Audience

Your vacation home won’t be the perfect fit for every traveler, which is why it’s important to tailor marketing efforts to those who are a great fit. Learn your target audience's preferences, demographics, and booking behaviors, and make use of the messaging and visuals that resonate with them. 

By targeting the right audience, you can maximize vacation rental revenue through increased visibility and appeal, driving more bookings and revenue.

20. Learn How to Capture and Close Leads

There’s an art to turning potential guests into confirmed vacation rental bookings. 

Some of the best lead-capturing and closing tips are to:

Create enticing offers
Use persuasive language in your communications
Provide timely responses to any inquiries
21. Claim All Available Tax Deductions to Maximize Your Vacation Rental Income

Consult with a tax professional to claim all applicable deductions. Doing so will reduce your taxable income, which in turn keeps more money in your pockets.

Potential deductions include:

Property maintenance
Utilities
Insurance
Property management fees
Depreciation
22. Measure the Success of Your Vacation Rental Business

Tracking key performance metrics will help to gauge the effectiveness of your vacation rental business and make changes to improve it.  

Metrics to consider include:

Occupancy rates
ADR
Total vacation rental revenue
Guest satisfaction scores
Return on investment (ROI)

Measuring your business is easier with platforms like AirDNA, which gather and analyze data to help you make informed decisions about how to optimize your rental strategy for maximum success.

Ditch the guesswork

Plan your STR strategy based on real booking activity and trends—plus, see how things change year over year

Get started
FAQs - Maximizing the Return on Vacation Rentals

What Is a Good Profit Margin for a Short-Term Rental?

A good profit margin for a short-term rental typically ranges between 20-50% of annual rental income. 

However, this can vary based on factors such as:

Location
Size
Rental rates
Occupancy rates
Operating expenses

It's essential to analyze your specific situation and aim for a margin that ensures profitability while remaining competitive in the market.

Are There Hidden Costs Involved in Owning a Vacation Rental?

Yes, many new property owners are surprised by unforeseen costs associated with their vacation rental. 

These may include:

Maintenance and repairs
Property management fees
Premiums for vacation rental insurance
Taxes
Utilities
Marketing expenses
Unexpected vacancies

Vacation rental owners need to budget for these potential costs to ensure profitability and financial stability in the long run.

How Do I Know If My Vacation Rental Is Profitable?

Accurately tracking income and expenses is key when determining your vacation rental’s profitability. Compare your rental income to your total costs, including mortgage payments, maintenance, utilities, and property management fees. Analyze your cash flow and calculate your return on investment (ROI) to assess profitability accurately. 

Using tools like the AirDNA Pricing Tool can provide detailed insights into your rental's financial performance.

What Is a Good Rate of Return on a Vacation Rental?

Rates of return vary depending on factors such as location, property type, and market conditions. However, vacation rental owners usually aim for a return on investment (ROI) of at least 8% to 10%. This ROI accounts for rental income, expenses, property appreciation, and potential tax benefits. 

Monitoring key performance indicators and using data-driven insights from platforms like AirDNA can help investors gauge and optimize rental profitability and ROI.

Want to increase your rental revenue? Start with data. ead our 22 data-driven tips to maximize the return on your vacation rental in 2024 and beyond.

22 Tips to Maximize the Return on Your Vacation Rental in 2024

ARTICLE SUMMARY

QUICK NAVIGATION