Short Term Rental Seasonality

Summary

Airbnb has grown leaps and bounds - no secret there! What can surprise you, though, is that seasonality isn't the same from city to city. We're here to explain why some areas spike in seasonal demand more than others, making them coveted locations for short-term rental owners or people looking into rental arbitrage portfolios. It's entirely possible that renting a property out for three weeks over the summer could be even more profitable than leasing it 6 months throughout the year -- so understanding your local area's seasonality might just open new doors of opportunity for you!

This is why understanding seasonality when choosing a location for your Short Term Rental home purchase or Rental Arbitrage Portfolio.

Research from Major Metropolitan Cities.

Studies done by researchers who analyzed data from Homeaway and Airdna found that seasonality is one of the biggest factors in how profitable your short-term rental investment can be. Portland stands out among the big metro cities analyzed, the difference between peak and off-season demand. For example, in Portland in April, average nightly prices are $156 while they're $87 in December. Portland also has the lowest average price per night of any city they analyzed at $104 per night on average across all months of the year.

Portland also has the lowest average price per night of any city they analyzed at $104 per night on average across all months of the year. Additionally, Portland had the most variation in average price per night across different months—a range of over 400%.

New York City however had the least seasonality with just a 1.3% difference between peak and off-season demand. This is unsurprising because it’s a very popular city that people visit year-round. Also should be mentioned that due to the high regulation in NYC, supply of Airbnb listings are not as high as areas with less STR regulation. The average price per night in NYC is 40% lower than San Francisco, but it still remains the most expensive city in the study.

Weekends are your Money Makers

Research has shown that even in low season, Weekends are more likely to be booked than any other day of the week. The reasons for this are obvious, as people are more likely to travel during these times due to time off from work or school.

For this reason it is best to make use of dynamic pricing engines to make sure you aren't losing potential extra revenues that come from a weekend price hike.

Develop Pricing Strategy specific to your market

Seasonality, while being a massive factor in your short term rental’s revenue, shouldn't be something to deter you from starting your STR business. The reason being is that seasonality is predictable and could be used to your benefit.

Make the most of fluctuating demand by implementing dynamic pricing strategies. Be sure to take note of not only seasonal attractions in your area, but also concerts, conferences and other events that drive demand to your area. Capitalize on these lucrative opportunities to maximize your rates - the increase in nightly rate during these high-demand times can help offset lower prices throughout the rest of year, keeping the overall profits steady and consistent.

Conclusion

The lesson here is that not all locations are created equal when it comes to seasonality. If you're looking for a more stable year-round income, then you'll want to avoid places with large seasonal fluctuations. But if you don't mind dealing with the ups and downs, then there can be a lot of money to be made in seasonal rentals. Regardless of where you decide to invest, always remember to do your research and understand the market before making any decisions.