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November 1, 2023
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Is Airbnb profitable?

With the turbulence of the last few years, there are important questions surrounding the short-term rental (STR) market. For a while, the world ceased to move. People stopped traveling. An increasingly globalized world lost its balance for a while. Those interested or already in the short-term rental market want to know, is Airbnb still profitable?

In short, yes, Airbnb remains profitable. Despite the pandemic and other global issues, travel, tourism and business trips have picked back up. For some perspective, a 2021 study revealed an estimated 2.58 million rental properties in the U.S. alone are seasonally occupied as STRs. With that, 600,000 Americans use online platforms such as Airbnb to host their properties. Furthermore, another study calculated that the global vacation rental market will expand at a compound annual growth rate (CAGR) of approximately 5.3% between 2022 and 2030.

In this article, we’re going to cover the profitability potentials of short-term rentals using Airbnb. We’ll discuss some of the most significant factors that impact hosts today. This includes the current market, Airbnb's earning potential and how to grow your Airbnb revenue.

Current implications in the short-term rental market and on Airbnb

While short-term rentals continue to be profitable, the market is still adapting. The fact is, the market has been shaken, and it is still reeling from the effects. What’s more, regulatory changes demand more attention from hosts.

Whether you’re new to the short-term rental market or seasoned in short-term lettings, it’s crucial you understand the market’s current implications so you can make the most from hosting your properties.

The pandemic

The COVID-19 pandemic crippled global travel. Many Airbnb hosts watched their reservations plummet. Although travel has resumed in most areas, patterns have shifted. Popular destinations like major cities and areas with high population density are seeing fewer visitors.

However, there’s been a surge in interest in remote and off-the-beaten-path listings. There's a renewed interest in these short-term rentals as people seek more distant and unique experiences.

Market saturation

In the early days, Airbnb was highly profitable for many. Hosts reaped incredible, compounding profits because of limited competition. But with increased awareness of how lucrative it can be, the number of people listing their properties has soared.

Consequently, the market has become saturated in some areas. This has led to stiffer competition. Many hosts are having to lower their prices, offer extras, and more to continue to rent their properties and make a profit.

Local regulations

Many cities around the world have imposed new regulations on short-term rentals. This is a side effect not only of the pandemic but of a global housing crisis.

There have been many different approaches taken. The kinds of regulations imposed depend on the country and city. Some examples of new or reformed regulations include permit requirements, nightly taxes, and limiting the number of days a property can be rented annually.

It's paramount that hosts are up to speed with local laws and regulations. It's important to understand how they may affect your ability to host your properties, potential profit and future growth.

How profitable is hosting on Airbnb?

Despite the current drawbacks, hosting on Airbnb is still a popular business model. This is in spite of increasing numbers of competitors to Airbnb on the market. However, Airbnb still remains the number one most prominent vacation rental platform.

Key Statistics

  • Airbnb boasts over 100 million users, 2.9 million hosts, and 7 million listings worldwide.
  • In May 2023, the average Airbnb property in the US generated a cash-on-cash return of 3.62% compared to 3.41% for long-term rentals.
  • An average STR property brings in $2,548 per month compared to $2,261 per month from long-term rentals.

Factors affecting profitability

  1. Location: Profitability varies by location. Some markets outperform averages due to demand and tourism trends. Research your local market to get a realistic estimate of your potential revenue.
  2. Regulations: Some markets have implemented regulations that will impact profits. In key towns and cities, new regulations on short-term rentals can impede your freedom and flexibility. Research the localities of your properties and ensure you know the rules and regulations.
  3. Property Type and Size: Larger properties or those with unique amenities can command higher rates. Consider adding amenities to maximize earnings.
  4. Hosting Strategy: Your availability, pricing and hosting style impact profitability. Flexibility and responsiveness can lead to more bookings.

The benefits of starting an Airbnb business

Now that we’ve covered the current market implications and answered whether Airbnb is still profitable, we can move on to the benefits of starting an Airbnb business.

Financial freedom

One of the top reasons why people get in on the short-term lets game is to achieve financial freedom. Whether you want more free time or you’re saving for a dream vacation, retirement, or covering a mortgage, hosting your property on Airbnb can earn you the money you need.

Many hosts create a monthly, semi-passive Airbnb income that provides long-term wealth. As we've discussed, the statistics are clear. You can generate more earnings per year with a short-term rental than with a long-term rental. And Airbnb is one of the quickest, easiest and best ways to begin the process.

More time and flexibility

Along with financial freedom, the allure of more time and flexibility is another top benefit STR hosts can claim.

As a STR host, you determine the number of hours you work. Depending on your goals, you can work as much or as little as you want. You can block out periods of the year when you don’t host, and you can use this time to use your property.

Become an entrepreneur

Many people want to become their own boss. As an Airbnb host, you can gain the necessary business acumen.

As a short-term rental host, you’ll learn a lot about running a business - while making an income. Many people have dipped their feet in the short-term rental market and hosted their way to fulfilling their dreams of being their own boss.

When getting started, it's a good idea to get help from a short-term rental management company. They will help with marketing, advertising, maintenance, screening, and a multitude of other factors that go into being a great host.

How to best predict your Airbnb profits

With your curiosity and interest now stirred, it’s time to delve into the specifics. Before unveiling our top 5 ways to grow your Airbnb revenue, we’re going to tell you how to best predict your Airbnb potential profits.

While there’s no doubt you can make great money from Airbnb, it’s no use dreaming of earning unrealistic amounts of money. It’s best to get a realistic picture of your earning potential. You can do this by following the steps below.

Research the local market

Analyze the prices and occupancy rates of similar properties in your area for a glimpse into what you could charge.

Estimate your occupancy rate

Based on your own research on location, seasonality, tourism and other important factors, determine how many nights per month you expect your property to be booked. Multiply a fair average by 12 to get an estimated annual occupancy rate.

Calculate your nightly rate

Multiply your nightly rate by your estimated occupancy rate to estimate your monthly revenue.

Add Airbnb’s fees

Airbnb imposes both a host and guest service fee on its hosts. Firstly, check the current fees on their website. Then, factor these fees into your calculations.

Consider fluctuations

Remember, people travel more during certain times of the year. The winds of change will always play a factor for short-term rental hosts. Know your area and find out the most popular times of year. Consider these factors to avoid overestimation.

Top 5 ways to grow your Airbnb revenue

1. Analyze the market and optimize your prices

By analyzing and taking note of demand in your market, you can optimally adjust your nightly rates. Doing so will help ensure that you maintain a high occupancy rate. This will help you maximize your revenue.

Consider using a quality dynamic pricing tool to adjust your rates and automate this process.

2. Improve your guest experience

Improving your guest experience should be at the front and center of your long-term STR letting strategy. By improving your guest experience, you increase the likelihood of receiving positive reviews.

On top of high-quality maintenance, consider adding homely touches. Welcome mats, baskets, high-quality linens, and personalized recommendations for the area are great.

3. Expand your listing

You can expand your listing potential in several ways. Firstly, consider adding more rooms or amenities. These will increase the number of guests you can accommodate and charge higher rates. Then consider offering additional services like airport pickup, grocery delivery, tour guides and more.

4. Use social media marketing

Leveraging social media platforms can be a huge plus. Post pictures of your listing on Instagram. Tell the world about your business on Facebook. Using high-quality photos, and enticing descriptions can increase traction and increase occupancy rates.

If social media isn’t your strong suit, you can work with a professional short-term rental management company. They'll do all this and more for you.

5. Work with local businesses

Collaborating with local businesses can be a powerful tool in your repertoire. Work with local businesses such as restaurants, event organizers, and tour operators. Offer guests exclusive deals and experiences that enhance their stay at your properties. This cross-promotion allows you to meet people, market your listings, and earn extra revenue.


As we’ve covered, Airbnb is certainly still profitable. New and seasoned short-term rental hosts alike can benefit from Airbnb’s popularity and growth potential. With the ability to market your listings to the world and with the strong data to suggest great returns, partnering with Airbnb can prove lucrative.

While there are many factors that go into making a great host, it’s possible for anyone with property to earn a tidy profit from listing on Airbnb.

With your best interests in mind, a professional short-term rental management company can help you. They will optimize your listings, improve your marketing strategy, and help increase your earning potential. Use a reputable short-term rental company with Airbnb as a partner to enhance your prospects.

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