Updated: August 29, 2024
Last year, over 4,000 cities and towns around the world celebrated their inaugural Airbnb stays, with nearly 80% of these new destinations located in rural areas. In 2023, the top ten most popular Airbnb destinations accounted for about 7% of total nights booked, a decrease from 10% in 2019.
What were the most booked cities on Airbnb in 2023?
- Porto Alegre, Brazil
- Dijon, France
- Monterrey, Mexico
- Malacca, Malaysia
- Thessaloniki, Greece
- Agadir, Morocco
- Winnipeg, Canada
Why Invest in an Airbnb Property?
Great source of passive income
Investing in an Airbnb property can generate substantial passive income, often proving to be more profitable than traditional long-term real estate investments. With the help of various property and channel managers, vacation rental owners have numerous opportunities for growth. Although it may take time to see profits, implementing the right pricing strategy can optimize your Airbnb for financial success. The model is straightforward and effective, and you don’t necessarily need to own a property to profit from Airbnb; options like co-hosting or becoming a vacation rental consultant can also yield significant earnings, with some owners making up to $100,000 annually.
Save money while you earn
Strangely enough, running an Airbnb business allows you to deduct certain taxes, including federal, state, local, income, and real estate taxes. If you operate from home or stay at your rented property, you may also be eligible to write off home business expenses. Deductible expenses can include mortgage interest, insurance, utilities, repairs, and depreciation. Additionally, costs related to marketing, accounting, and maintenance can be tax-deductible, helping you maximize profit margins. However, since tax laws vary by location, consulting a local tax professional before investing is advisable.
You are protected!
Owning real estate comes with inherent risks, such as potential property damage by guests, wear and tear, natural disasters, and fluctuations in market value. While many risks are beyond your control, you are often protected by the policies of the property management systems you use. Should any damage occur, simply provide photographic evidence to be compensated.
You can use the property in more than one way!
One of the standout advantages of investing in an Airbnb property is its versatility. You can utilize the property for personal use while also renting it out. For instance, I once stayed in a charming apartment in Goa, where the owner lived on-site. This arrangement not only reduced their personal expenses but also enhanced our guest experience with local insights and home-cooked meals. If you want to use your short-term rental for your own vacations, just block those dates on Airbnb. Most owners list on multiple platforms, so ensure dates are synced across all listings to avoid double bookings.
Best Cities for Airbnb Investment
While making an investment, it is important to do your own research. We have put together a list of the best cities for Airbnb investment.
United States
Large Cities
- Nashville, Tennessee
6,123 – Active short-term rental listings revenue potential of $126,331
$126,331 – Revenue Potential
- Lahaina, Hawaii
5,053 – Active short-term rental listings
$78,273 – Revenue potential
- Koloa, Hawaii
1,674 – Active short-term rental listings
$66,518 – Revenue potential
Medium Cities
- Yosemite National Park, California
391 – Active short-term rental listings
$130,346 – Revenue potential
- St. John, U.S. Virgin Islands
811 – Active short-term rental listings
$95,030 – Revenue potential
- Saco, Maine
124 – Active short-term rental listings
$71,131 – Revenue potential
Small Cities
- Hana, Hawaii
93 – Active short-term rental listings
$88,869 – Revenue potential
- Indian Hills, Colorado
14 – Active short-term rental listings
$85,418 – Revenue potential
- Elizaville, New York
16 – Active short-term rental listings
$83,126 – Revenue potential
Europe
Ballstad, Norway
- 5959 Active short-term rental listings
- $38,268 – Revenue potential
Shanklin, England
- 3736 – Active short-term rental listings
- $36,492 – Revenue potential
Crete, Greece
- 3070 – Active short term rental listings
- $33,156 – Revenue potential
Marseille, Washington
- 12374 – Active short-term rental listings
- $18,672 – Revenue potential
Funchal, Portugal
- 3603 – Active short-term rental listings
- $16,020 – Revenue potential
Top Strategies to Get Bookings in Top Cities for Airbnb
Your prices are the most critical aspect of your Airbnb strategy to ensure that you capitalize on a thriving market.
A few things you should keep in mind when deciding on your average Airbnb prices are:
- Researching your market and guests: Examine how your market performs and understand your guests’ booking patterns.
- Compare similar properties: Look at how similar properties have priced their property, what other amenities they have added, and how they attract their guests. This will help you craft a holistic pricing strategy.
- Factor in other fees: You should factor in fees such as service fees, cleaning fees, cancellation fees, extra person fees, taxes, and other local regulations.
- Consider maintenance costs: You should consider cleaning and upkeep costs for your property. This includes cleaning supplies, labor costs, repairs, replacements, and insurance costs, even if Aircover is present.
- Consider Dynamic Pricing: Dynamic pricing helps you stay competitive in the market by automatically adjusting your average Airbnb prices according to supply and demand fluctuations.
Factors to Consider Before Investing in an Airbnb Property
Investing in an Airbnb property can be a lucrative venture, but it requires careful consideration of several key factors to ensure success.
Location
The property’s location is critical; it should be in an area with high demand for short-term rentals, such as tourist hotspots or urban centers. Proximity to local attractions, restaurants, and public transportation can significantly influence occupancy rates. Conducting thorough market research using tools like PriceLabs’s Market Dashboard can help assess potential profitability in your chosen area.
PriceLabs’ Market Dashboard is a fully automated, personalized dashboard designed to help you monitor average airbnb prices and airbnb occupancy rates by city. Its easy-to-digest graphs and insights make it an invaluable resource for understanding market trends and making informed pricing decisions.
Target Guest
Understanding your target demographic is essential. Are you aiming to attract families, business travelers, or couples? Tailoring the property’s amenities and features to meet the needs of your target guests can enhance your appeal and occupancy rates. For instance, properties suited for families might require multiple bedrooms and outdoor space, while business travelers may prioritize high-speed internet and workspaces.
Property Type
Consider the type of property that will best suit your investment goals. Options range from single-family homes to condos and apartments. Larger properties can accommodate more guests, potentially increasing your income, but they also come with higher maintenance costs. Always check the building’s regulations to ensure short-term rentals are permitted.
Upfront Costs
Airbnb investments often entail higher initial costs compared to traditional rentals. These include not only the purchase price but also expenses for furnishing, compliance with safety standards, and necessary renovations. It’s crucial to factor in these costs when planning your investment budget.
Regulations and Legalities
Familiarize yourself with local laws and regulations regarding short-term rentals. Some areas impose restrictions on rental frequency or require specific permits. Understanding these legalities can prevent costly fines and ensure your investment remains compliant.
Insurance and Liability
Investing in Airbnb properties comes with increased liability risks, such as potential property damage or guest injuries. Adequate insurance coverage is essential to protect your investment and mitigate risks. Researching various insurance options tailored for short-term rentals can help safeguard against unforeseen issues.
Management and Maintenance
Managing an Airbnb property requires ongoing effort, including guest communication, cleaning, and maintenance. If you own multiple properties or prefer a hands-off approach, consider hiring a property management company to handle daily operations. This can help maximize your investment while reducing personal workload.
Market Trends
Stay informed about market trends and seasonal fluctuations that can affect occupancy rates. Understanding these dynamics can help you adjust pricing strategies and marketing efforts to optimize revenue throughout the year.
By carefully evaluating these factors, potential Airbnb investors can make informed decisions that align with their financial goals and risk tolerance, ultimately leading to a successful investment experience.
How to Make Your Airbnb Profitable?
Whether you are looking for a full-time investment plan or just a way for some passive income, Airbnb has opportunities galore. Airbnb hosting tips and tricks from peers and industry experts might also help.
Successful hosting experience is only achieved by trial and error. Try out various methods that might work for you. A good place to find and connect with the people in the industry would be the various vacation rental industry events. Talk to the experts, implement the ideas and learnings to grow your business, and slowly discover the best hosting approach.
While there are various things to consider when you host on Airbnb, it is important to also optimize your pricing strategy. It is also important to track the performance of your vacation rental business. Vacation rental property KPIs are measurable aspects of your property. It is essential to track these vacation rental KPIs to help you calculate your return on investment (ROI) to optimize your operations to maximize profit.
PriceLabs Portfolio Analytics can help you have a real-time reporting system that tracks high-level metrics for your property. With this software, you can get a quick snapshot of your property’s financial health. We dive further in and provide insights on listing level performance and metrics. You can use our data to make informed decisions while setting up your revenue management strategy.
Investing in an Airbnb property should not be a decision made lightly. When there are too many factors to consider, you need to take it step by step. You can choose your own steps, however, we have put together steps and points to consider. Include us in your Short-term rental journey right from your investment to day-to-day management.
About PriceLabs
PriceLabs is a revenue management solution for the short-term rental and hospitality industry, founded in 2014 and headquartered in Chicago, IL. Our platform helps individual hosts and hospitality professionals optimize their pricing and revenue management, adapting to changing market trends and occupancy levels.
With dynamic pricing, automation rules, and customizations, we manage pricing and minimum-stay restrictions for any portfolio size, with prices automatically uploaded to preferred channels such as Airbnb, Vrbo, and 110+ property management and channel integrations.
Every day, we price over 400,000+ listings globally across 135+ countries, offering world-class tools like the Base Price Help and Minimum Stay Recommendation Engine. Choose PriceLabs to increase revenue and streamline pricing and revenue management. Sign up for a free trial at pricelabs.co today.
