In the fast-paced world of short-term rentals and Airbnb businesses, measuring success is crucial for making informed decisions and maximizing profitability. Here are the 11 Airbnb success metrics that you should be measuring and tracking. While hosting with a wholehearted approach is essential, assessing your financial performance objectively through key metrics is equally important. By tracking these success metrics, you can optimize your business, enhance guest satisfaction, and drive higher conversions. So put on your CEO hat, grab a coffee, and let’s dive in. I will explain the how and the why for your Airbnb business.
I have talked about this before but this post is way more in-depth. So if you want a baseline, you should read here first.
Success metrics for your Airbnb business
- Occupancy Rate: This measures the percentage of time your property is booked and occupied. A higher occupancy rate indicates higher demand.
You can manually calculate your average occupancy rate if you divide the number of booked nights by the number of available nights and multiply it by 100.
(Booked nights/available nights) x 100
For example, if your rental was booked for 20 nights out of a 30-day month, then your occupancy rate for that month was 67%.
However, if your rental was closed for say maintenance for 5 days, there were only 25 available nights. That brings your occupancy rate to 83%.
The easiest way to track this is to have a calculation in your monthly P&L spreadsheet that automates just how many nights a month you are booked.
- Average Daily Rate (ADR): ADR calculates the average price per night for your property.
Monitoring ADR helps you assess pricing strategies and ensure you’re maximizing revenue.
ADR = revenue / nights booked
If the ADR is low compared to similar listings, you may need to adjust your prices.
The ADR should be fluctuating seasonally and for special events. This will help you plan out your year for budgeting and allocating resources.
- RevPAR (Revenue Per Available Room): You can calculate RevPAR by multiplying your ADR by your occupancy rate.
RevPAR (Or RevPAN – night rather than room) helps you assess the revenue-generating efficiency of your business, regardless of the number of rooms or the duration of stay. You can compare the performance to your competitors or even when you manage multiple properties to see how they compare with each other.
- Return on Investment (ROI): ROI helps you determine the profitability of your investment in the property.
It’s calculated by dividing the net profit generated by the property by the total investment cost.
These costs could be anything that you spent to get the listing operational. It does not matter if you own the property, you manage the property, cohost or you use rental arbitrage, you will still have some set up costs. There is furniture, utilities, insurance etc. You could even factor in your time. It is all up to you as to what you want to measure. Just be consistent so you can compare the ROI across different deals or opportunities if you haven’t yet started.
- Net Operating Income (NOI): refers to the profitability of the rental property after deducting all operating expenses from the rental revenue.
To calculate, you subtract operating expenses from the rental revenue. Operating expenses typically include property management fees, utilities, maintenance costs, cleaning fees, insurance, property taxes, marketing expenses, and any other costs directly related to operating the short-term rental property.
The formula for calculating Net Operating Income (NOI) is as follows:
NOI = Rental Revenue – Operating Expenses
Net Operating Income is an essential metric in determining the financial performance and profitability of a short-term rental property. It helps you evaluate the potential return on investment, assess cash flow, and make informed decisions regarding pricing, expenses, and overall business strategy.
- Revenue per channel: This is your total revenue from all your bookings broken down into different channels – Airbnb, VRBO, Booking.com and (hopefully) your direct booking website.
Whether you look at a pie chart or a percentage, this is a really interesting way to see which channels are performing best for you. This will show you where you should spend most of your time optimising your listing and nurturing the guests. Not all OTA’s perform the same for different demographics.
Plus if you are wanting to reduce your reliance on any one channel, you can see where you can be spending your time. Then you can track the success of your efforts as you track the changing percentages. Pie charts are fun for this.
For example, my business is about 40% direct and then the remaining 60% is mostly Airbnb. But when I first started, I was 100% Airbnb. After a few (ahem) challenges, I was nervous having all of my business under the power of just one channel, so I actively nurtured my direct bookings and now I have some great diversity.
Or if you are completely nerdy like me, you could be testing different markets by having different strategies for different ideal guest avatars. Test out different copywriting or photos or even pricing strategies to compare what is working best for you.
- Guest Reviews and Ratings: Positive guest reviews and high ratings are vital for attracting more bookings and maintaining a positive reputation.
Monitor the average rating and read guest reviews to identify areas for improvement.
This metric is often calculated automatically by the OTA’s. But it is a simple average of all your reviews. A note here – it will be IMPOSSIBLE to keep a 5.0 average so don’t sweat the odd 4 star. If you want to read more about how Superhosts deal with reviews, read this post.
- Booking Lead Time: This measures the average time between when a guest makes a reservation and the actual check-in date.
A shorter lead time can indicate higher demand and last-minute bookings. This will help you get an idea of how your guests plan out their travel. It will help you decide on your pricing policy.
For example, in my business I have a super long lead time as most of my guests are coming from abroad and so they plan ahead. I rarely get last minute bookings. So I have my highest prices way out into the future and they drop down closer to the dates to try to fill the calendar.
But if you get mostly last minute bookings, you might like to have a higher price for these spontaneous guests.
- Conversion Rate: Overall conversion rate is the average daily number of distinct visitors who viewed your listing in search and then booked and a definite success metric to moniter
If you look at Airbnb insights, Conversion has 3 stages:
1. A guest views your listing in search. Some guests will view it on the first page of search results. (First-page search impressions)
2. The guest then clicks through to your listing page after they see it in search results. (Search-to-listing conversion)
3. The guest books your listing after viewing it. (Listing-to-booking conversion)
Conversion may indicate how appealing and relevant your listings are for the market. Successful conversions depend on many factors, including pricing, policies, ratings, booking settings, and listing content.
These success metrics will really help you understand if your listing is converting those “Lookers into bookers”. It will also give you a few variables to tweak to see how this affects your performance.
- Repeat Guests: Tracking the percentage of guests who return for another stay indicates guest loyalty and the overall quality of your listing and service.
To calculate the average, divide the total number of returning guests by the total number of all guests for each listing and average that number based on how many listings you have.
It will also show you how successful your retargeting efforts have been. Lots of repeat customers means that you are crushing it. It is always easier to sell to a guest who already knows, likes and trusts you.
- Competitor Analysis: Monitoring the performance of similar listings in your area, such as their occupancy rate, ADR, and guest reviews, can help you benchmark your business and identify areas for improvement – or show you where you are crushing it.
There are a number of tools out there that will help you in this. Airbnb are launching some new tools in their updated Hosting Dashboard for the Summer Release but there are some well established platforms that will help you plan, grow and optimise.
Some examples are:
Some of these have fees associated with them so make sure you assess your specific needs and goals BEFORE choosing a tracking tool. Or you could go super old school like me and have some good old excel spreadsheets with the calculations built in already.
Automate, Automate, Automate
If the thought of crunching these numbers each month makes you want to take a nap, don’t despair. I have magical spreadsheets that do ALL of this for you. Just plug in your own numbers and voila – data! Book in for a audit to find out more.
Final Thoughts on success metrics
Remember to regularly analyze these success metrics, make data-driven decisions, and adapt your strategies to optimize the performance of your business. Put aside some time to be the CEO of your business – this is working ON your business and not just IN your business.
My advice for getting started is to pick one metric that is going to help YOU in your business and set up a system to automate the reports. Go for the easiest one that you understand. Then set up a system for another metric and so on. Look at the data once a month and you will build up a picture of your business over time.
But don’t get too bogged down in the details as this can lead to “Analysis Paralysis” – especially if you are deciding whether to add another listing or property to your portfolio. Or perhaps you haven’t just pulled the trigger on your first one yet. Some leaps of faith will be needed. But with the right metrics to make the smart decisions, you can be fairly sure that you will not crash and burn.
Remember – the best time to start collecting data was 10 years ago – the next best time is TODAY!
Leave a Reply