Airbnb Performance in Phoenix & Scottsdale in Oct 2017
Background: What is RevPAR?
As things are cooling down here in Phoenix, the short-term rental market is just starting to heat up. With all the snowbirds beginning their annual migration, we’d like to share some of the data we’ve collected with anyone currently operating or thinking about operating a rental on the short-term market. You can expect these updates on a monthly basis.
Every time we talk to a homeowner, one of the first questions we get is “How much do you charge per night?” It’s a good question and one that should be at the forefront of anyone’s mind in this business. However, talking about a nightly rate absent the context of occupancy doesn’t make much sense. You could charge $1000/night and get 0% occupancy or you could charge $0/night and get 100% occupancy. Both result in no revenue. The game is in finding the optimal balance point that maximizes revenue.
The industry has coalesced around a common metric known as RevPAR (Revenue Per Available Room). You get to RevPAR by multiplying your total revenue over a period by your occupancy over that same period. For a hotel, it makes sense to calculate this on a nightly basis. As a quick example, say that a hotel has 100 identical rooms and charges $50/night for each one. If 80 are booked for tonight, their RevPAR is $40 ( (80 booked rooms * $50/room) / (100 total rooms) ).
Below, we’ve calculated the RevPAR for Phoenix and Scottsdale for each day in October broken down by the type of home. Think of this as the average revenue made per night per property if the whole market functioned as a single hotel.
If you then take these RevPAR numbers and sum them over the whole month, you get the average performance of different sized rentals in the two cities. You can see these totals below.
Annual Performance for a full-time Short Term Rental
Over the course of the past year, we’ve collected millions of data points to help us understand the potential opportunities within the short term rental market. Looking at that data in aggregate, we can see how the average property on Airbnb performed in Phoenix and Scottsdale.
There are a few things to note about the data above:
- These figures are averages over the entire city. A property’s location, amenities, photographs and level of upkeep will all be factors that heavily influence an individual home’s performance.
- These figures do not include the revenue generated from cleaning fees. They are not included because these fees are typically set at the exact cost to clean the property after every stay. Because they’re a straight pass-through cost, it didn’t make sense to use them in our evaluation of properties. As a point of information, cleaning fee revenue generally makes up ~25% of a property’s total revenue. The numbers above are reflective of the other ~75%.
If you’d like to learn more about turning your home into cash, please do not hesitate to contact us at email@example.com. We look forward to meeting you!