The key to success with short term rental investments is optimizing your Airbnb pricing strategy to hit the right balance between occupancy and income potential.
While some investors prefer renting out properties for long term tenants, many have realized that short term rentals can generate higher rental yields. Home-sharing sites like Airbnb, Vrbo, and Booking.com have made it possible for anyone to list their vacation homes or a part of their primary residence online for guests and travelers from all over the world to book.
However, Airbnb rentals are very competitive today, so hosts need to know how to attract potential guests. An important tip for hosts to achieve this is by charging the right Airbnb price – or ADR – for your vacation rental property.
What Is ADR in Airbnb Pricing?
The average daily rate (often shortened to ADR) is one of the most important metrics used in the short term rental market. ADR is one of the key performance indicators that inform Airbnb hosts how much revenue is earned per room over a select time period. Average Airbnb rates tell hosts how profitable rental property is while allowing them to make comparisons with nearby competitors. Of course, a high ADR signifies a good litmus test for how well a property has performed in the past in addition to its future outlook.
One mistake some hosts (unknowingly) make is that they charge way too much compared to other Airbnb rentals in the area. However, charging too little won’t solve the problem. Instead, it creates another issue and that is not making enough rental income to cover your costs.
So, the best way to understand how much to charge for rent is by checking the average daily rate for Airbnb in the market. Understanding and analyzing Airbnb prices of other short term rentals in the area where you’re investing allows you to set your own competitive rent price. But, how and where can you find the average Airbnb daily rate for entire cities and neighborhoods?
We’ll come back to this in a second.
How to Calculate Average Daily Rate in Airbnb Pricing
The formula for calculating the average Airbnb daily rate is fairly easy. It entails dividing the total Airbnb rental income earned for a certain period by the number of booked nights.
ADR = Total Rental Income/Number of Booked Nights
If a vacation rental property generates $30,000 in rental income, and it is booked for 150 nights during that period, the average Airbnb daily rate would be:
ADR = $30,000/150 nights = $200
Now, let’s go back to how to find the average Airbnb price by city and neighborhood in order to know how much should I charge for my Airbnb.
Enter Mashvisor’s Short Term Rental Data
Mashvisor is a real estate investment software that aims to help investors make the best decisions for their businesses with data analytics. We offer both traditional and Airbnb data that lets you zoom in on entire city investment performance. So instead of digging online to find the average Airbnb prices by city, Mashvisor will provide you with this data readily calculate and in an easy-to-understand format for your city and neighborhood of choice in the US housing market.
Mashvisor’s data goes beyond the Airbnb average daily rate (ADR). Using our tools, investors and hosts can search for the best Airbnb properties for sale and analyze their rate of return in a matter of minutes. You’ll get pre-calculated rent estimates and ROI metrics like cash flow, cap rate, cash on cash return, and Airbnb occupancy rate. So thanks to Mashvisor’s Airbnb analytics, you can run a rental market analysis and an Airbnb investment analysis more efficiently.
Once you know the prevailing rates in your market, it’s much easier to determine how much your Airbnb is worth.
Average Airbnb Prices by City for 2023
According to Airbnb statistics calculated by Mashvisor, the average Airbnb daily rate per city that US hosts receive in $209 at the moment.
To help you figure out the best cities for Airbnb investment in 2023, we’ve put together a list of the top 35 cities with the highest average daily rate figures (over $400 and up to $800+!). The estimates have been calculated by Mashvisor’s Airbnb profitability calculator. This is a special type of rental property calculator which runs Airbnb investment analysis.
Besides Airbnb rates, we’ll show you more data including the Airbnb occupancy rate per city, monthly Airbnb rental income, and more. Our calculations are based on nationwide Airbnb big data taken directly from Airbnb.com, so you can guarantee accuracy when using Mashvisor.
While these numbers tell guests how much it is to rent an Airbnb in some of the hottest destinations in the US market, more importantly, they tell hosts how to calculate the Airbnb price in these top markets.
|City and State||Average ADR||Airbnb Occupancy Rate||Monthly Airbnb Rental Income||Median Property Price||Average Price per Square Foot|
|#1 Rancho Palos Verdes, CA||$817||35%||$12,550||$1,768,074||$814|
|#2 Glen Ellen, CA||$660||46%||$10,256||$2,311,871||$1,032|
|#3 Port Chester, NY||$636||52%||$3,885||$517,034||$559|
|#4 Angwin, CA||$617||52%||$18,976||$4,349,600||$1,142|
|#5 Healdsburg, CA||$614||39%||$5,150||$2,753,496||$1,031|
|#6 Glen Head, NY||$606||45%||$6,133||$929,823||$505|
|#7 Sea Cliff, NY||$590||46%||$7,410||$1,224,444||$582|
|#8 State College, PA||$581||37%||$4,729||$682,919||$418|
|#9 Prospect, KY||$579||54%||$4,398||$729,029||$198|
|#10 Kamuela, HI||$578||51%||$7,217||$4,344,957||$1,604|
|#11 Woodbury, CT||$576||35%||$3,545||$790,650||$487|
|#12 Peconic, NY||$564||33%||$5,023||$861,043||$483|
|#13 Riverhead, NY||$561||33%||$5,126||$753,093||$388|
|#14 Locust Valley, NY||$540||48%||$6,703||$1,245,556||$514|
|#15 Cape Elizabeth, ME||$523||49%||$6,818||$1,192,728||$426|
|#16 Bellport, NY||$518||37%||$5,585||$800,060||$289|
|#17 Salem, CT||$517||50%||$4,679||$401,725||$194|
|#18 Kapolei, HI||$515||61%||$11,063||$1,467,019||$893|
|#19 Discovery Bay, CA||$512||34%||$4,936||$1,059,747||$401|
|#20 Stevensville, MD||$508||39%||$5,995||$595,729||$277|
|#21 East Norwich, NY||$508||47%||$5,652||$1,031,400||$548|
|#22 Brick, NJ||$507||38%||$3,631||$535,006||$314|
|#23 Point Pleasant Beach, NJ||$507||44%||$5,394||$1,145,388||$597|
|#24 Center Moriches, NY||$502||30%||$3,839||$790,994||$397|
|#25 Forest City, PA||$498||35%||$3,578||$370,980||$148|
|#26 Greensboro, GA||$498||40%||$5,774||$888,594||$303|
|#27 Sonoma, CA||$498||57%||$9,585||$2,019,338||$855|
|#28 Tilghman, MD||$496||43%||$5,957||$714,424||$305|
|#29 Sparta Township, NJ||$495||37%||$5,362||$557,895||$296|
|#30 Glen Cove, NY||$492||48%||$5,103||$827,810||$1,053|
|#31 Swanton, MD||$490||45%||$4,468||$842,407||$402|
|#32 Point Pleasant, NJ||$479||42%||$4,541||$732,537||$426|
|#33 Yorktown Heights, NY||$477||49%||$5,702||$606,067||$516|
|#34 Milford, PA||$464||46%||$4,465||$457,451||$180|
|#35 Cornwall, NY||$464||45%||$4,179||$443,192||$261|
Start analyzing and finding properties with a high average Airbnb daily rate in your city of choice now!
How to Determine Airbnb Price?
Listing a property on Airbnb can be confusing for first-time hosts. Property owners may struggle to set the perfect Airbnb pricing in order to maximize their Airbnb profit margin. Just because the average daily rate in your city is $300, for example, doesn’t mean that’s the price you should set for your rental.
Besides the ADR for Airbnb in your city, there are several factors that should be taken into account to determine how much is an Airbnb property worth per night.
Here’s a quick rundown on what you need to study before setting a rent price for your Airbnb listing:
1) Airbnb Laws and Regulations
Assuming you already confirmed that you’re in a city with no Airbnb legal issues (whatever as a non-owner occupied or owner-occupied property), you still need to dig a little deeper into the laws and regulations governing short term rentals. Such laws typically don’t dictate how much you can charge for your Airbnb. However, they may outline certain regulations that will affect the average Airbnb daily rate you need to charge to actually make money from an Airbnb investment property. These could include:
- How many days per year you can rent out your Airbnb
- How many guests you can have for each stay
- What you have to pay for taxes
- Permits and licenses fees
Having information on all these issues will help you determine how much Airbnbs should cost in your particular market.
2) Average Airbnb Occupancy Rate
To calculate the average daily rate for Airbnb investments, take the total revenue generated and divide it by the number of nights booked for a period of time. So to set the ADR, it’s important to understand how often your Airbnb property will be occupied. Some Airbnb locations are just more attractive to tourists, meaning they have a higher Airbnb occupancy rate than others. These can be the best cities for Airbnb because higher occupancy allows you to charge higher rent without risking a drop in your bookings.
Using Mashvisor, you can get access to Airbnb occupancy rates data by city in our investment blog. You can also find the average Airbnb occupancy rate by neighborhood when using Mashvisor’s Real Estate Heatmap! By selecting the Airbnb occupancy rate filter, this tool will highlight areas in the city with the highest figures in dark blue and areas with the lowest figures in white.
3) Airbnb Fees and Expenses
As with long term rentals, you’ll want to generate positive cash flow with your Airbnb. However, for a short term rental, you’ll have extra expenses to consider when determining how much to charge for rent. Before setting an Airbnb price, calculate how expenses like maintenance and extra features compared to the income the rental will provide. There are also one-time fees and recurring fees that come with getting a permit and license for running an Airbnb that you have to factor in. Airbnb also takes a 3% service fee for each booked listing. Moreover, if a listing becomes popular on Airbnb, additional cleaning fees should be considered in the price.
Other expenses that may be included in the overall price comprise:
- Central heating
- A pool/jacuzzi/sauna
- An entertainment system
- Parking space
In other words, amenities greatly affect what Airbnb prices per night are fitted for a specific property.
4) Airbnb Comps
The next step is to research similar Airbnb investment properties in the location, i.e., your competitors. For example, if you’re renting out a 4-bedroom, 2-bath beach house, you should look to compare the average Airbnb daily rate with properties of the same size and location.
Instead of googling “rent prices near me”, a simple search of your city or neighborhood on Airbnb will show you a range of properties and what they’re currently charging. Alternatively, you can also use Mashvisor’s Airbnb Profit Calculator to get this data. When you add your listing on the platform, you’ll get a readily available list of Airbnb comps along with property data for each comp including their average Airbnb price, occupancy rate, rental income, ratings, and reviews.
5) Seasonality Trends
The short term rental market is constantly fluctuating based on seasonality trends. Being updated on current trends and having a dynamic Airbnb pricing strategy will maximize your bookings and earnings. For example, vacation rentals in some locations enjoy only one season with high Airbnb occupancy rates, during which you can charge more for your rental. During the rest of the year, though, you’ll have to lower Airbnb prices to fill vacancies and attract guests. In other words, how much an Airbnb costs changes over time.
Special big events occurring also affect your ADR for Airbnb. If there’s a huge concert, festival, or a major football game happening in your area, you can increase your rental rate, and guests would still be willing to pay because of the occasion. A real-life example is during this year’s Super Blow, Airbnb rentals in Miami Gardens were listed for $1,000 to $4,500 a night! So be sure to stay up to date on local market trends so that you can adjust your Airbnb pricing as necessary.
How to Optimize Your Airbnb Pricing Strategy: Use Dynamic Pricing
One of the most important steps when learning how to list on Airbnb is to set up the right price. If your Airbnb average price is too high, you will push guests away, which will negatively impact occupancy and rental income. If, on the other hand, your rates are too low, you will miss on boosting revenue.
So, how do you answer the question: How much should I charge for Airbnb?
The answer is: With the help of the Mashvisor Airbnb Dynamic Pricing Tool!
Our tool benefits from access to nationwide Airbnb rental data and uses AI-based algorithms to provide you with an accurate estimate of the optimal Airbnb daily rates for your short term rental property. This is based on the rates that comparable vacation rental listings in your market charge, while taking into account any differences between your property and comps to adjust the average Airbnb cost accordingly.
The best part is what with the Mashvisor Dynamic Airbnb Pricing you don’t get just an estimated average. You know how much to charge for Airbnb properties every day of the week, every week of the month, every month of the year.
Moreover, you can switch on the automated pricing option so that our tool applies the recommended daily rates right to your listing on the Airbnb platform. This will not only increase your Airbnb revenue but also turn investing in short term rentals into a significantly more passive strategy.
Airbnb Pricing: The Bottom Line
Knowing how much to charge for rent is crucial in achieving a high Airbnb return on investment. While having data on the average Airbnb daily rate by city will help you set your price, there are other variables that you should take into consideration as well when deciding how much Airbnbs are worth per night.
You need to study the local market you’re investing in, your Airbnb rental expenses, and how other vacation rentals are performing. You might own a property in the best cities for an Airbnb investment but, without dynamic pricing, this alone isn’t enough to attract potential guests to your rental. Doing your research and utilizing real estate investment tools provided by Mashvisor is the best way to determine the right amount to charge based on reliable and up-to-date Airbnb data.
To start your 7-day free trial with Mashvisor to optimize your Airbnb pricing strategy, click here.