Vacation Rental Market Research: Strategy + Process


When it comes to vacation rental market research, Airbnb data is one of the most important and useful tools that an Airbnb Host can use to maximize their profits and minimize their risk.

Very few industries have the ability to review how much revenue their competition is making. However, thanks to Airbnb hosting the majority of short term rentals and companies like Airdna.co and Alltherooms.com, we have this ability. However, these sites don’t teach you how to use their information for your business. 

This blog will walk you through the process that an Airbnb Host named John Bianchi used to build his business to over a million dollars of revenue in only a couple of years and with very few homes. 

Why Is Airbnb Data So important?

The first step of being an Airbnb Host is to find a home that you can turn into a full-time Airbnb listing. However, how do you decide which home you should buy, manage, or rent? How do you know how much a place will make annually? What are you doing to quantify your decision? How do you know if you are under or overpaying? How can you be sure that the money and time you invest will actually provide a return?

Too many people have signed contracts with landlords to rent their homes only to realize after a year that the home could never make them more than their expenses. Too many landlords have let STR management companies host their homes without making more than they would from an annual tenant. 

Knowing the expected potential annual revenue for a home can save you thousands of dollars, hundreds of wasted hours, and make you significantly more money. Although, as I type this, I realize this sounds fake, but just think about it, would you sign a contract committing yourself to $48,000 of annual expenses if you knew you would only make $40,000? NEVER! 

#1 rule in real estate is, KNOW YOUR NUMBERS. Let Airbnb Data do just that. 

[bctt tweet=”#1 rule in real estate is, KNOW YOUR NUMBERS. Let Airbnb Data do just that. ” username=”OptimizeMyBnb”]

What You Will Get From The Airbnb Data Process

There has been a saying for decades about Burger King and McDonald’s. It’s called ‘The Burger King Logic’. The saying goes, that McDonald’s would spend millions of dollars on research to find the absolute best corner to be on, and Burger King would open up across the street. Burger King knew that if it was good enough for McDonald’s, it was good enough for them.

Using ‘The Burger King Logic’ we can find very profitable potential Airbnbs. 

The Airbnb Data Process will be a manual process that extracts the raw data from Airdna.co and moves it into a spreadsheet. In this spreadsheet we will organize the data based on location and unit size. A unit size being, the number of bedrooms and bathrooms in a home. We then remove the bad data, average the annual revenues, and work our expenses backward to find the most profitable locations in a given city. 

It may sound complicated, however, it’s fairly simple. The following steps will guide you through The Airbnb Data Process. 

Step 1 – Before The Numbers Is Regulation

There are plenty of posts that talk about regulation in the Airbnb industry and so I won’t spend lots of time here. Perform the following search “Airbnb regulation [city]” or visit the Airbnb help center. Another option is to go to the city hall and ask.

It is pointless to know the data for a location that you can’t legally manage. Therefore, learn your cities’ regulations and play within their rules. 

Step 2 – Create A Spreadsheet (free download)

Create a spreadsheet with the following column titles or download my free template

    1. Title/Link
    2. Revenue 
    3. Occupancy 
    4. Nightly Rate 
    5. Number of Guests 
    6. Bedrooms
    7. Beds
    8. Bathrooms
    9. Host
    10. Notes


Step 3 – Extract The Data 

Use AirDNA Market Minder product for your selected city. This product will show you an interactive map covered by dots. Each dot is an Airbnb listing. When you select a dot, it shows the Airbnb listing and additional information. You are also able to open the Airbnb listing on Airbnb from the pop-up. This is where you will gather all of the information for the spreadsheet you just created or downloaded. 

Here are some best practice tips:

  1. Only record ‘Entire Place’ listings
  2. Record each neighborhood individually in a new tab
  3. To best organize your information, AirDNA allows you to show only one bedroom size at a time. Use this feature, and record the listings in order of bedroom size. 
  4. Only record Airbnbs that have been available for over 300 days*
  5. Do not record any Airbnb listing that does not open
  6. If the listing has less than 20 reviews and has been operating for a year, it’s most likely an error
  7. If the listing is making significantly more revenue than it’s competition, it’s most likely an error. 

*AirDNA uses an algorithm to predict annual revenue for listings that have been listed for less than 300 days. I’ve consistently found that the prediction is not accurate. For example, if you listed your home during the peak season, the algorithm will assume you will continue doing as well during the rest of the year and doesn’t account for the Airbnb slow season, resulting in a significantly higher prediction than how the home would have actually done.

Step 4 – Use The Formula ‘AVERAGE’ 

The Formula, ‘AVERAGE’, will be used to figure out the average annual revenue for each unit size and in each area. 

PRO TIP: Separate listings with the same number of bedrooms but different bathrooms. Example: A four-bedroom, three-bath listing should be in a different category than a four-bedroom, two-bath listing. 

If you’re not familiar with how to use the ‘AVERAGE’ formula, watch this video.

Step 5 – Expenses & Max Rent/Mortgage

At this point in the process, you should have all of the Airbnb Data extracted from AirDNA and added to your spreadsheet, in neat rows, and with the average annual revenue for each unit size in each area. 

This information alone is not all that helpful. You may get really excited, like I did, when you see the average annual revenue in some areas over $100,000! However, what if the expenses for that area are over $100,000? If that were the case, then it wouldn’t be a profitable area. 

You want to find the area and unit size with the biggest gap between annual revenue and expenses. Therefore, we need to figure out our expenses. 

To do this, I like to work backward. It’s best to start off by knowing how much you want to keep in your pocket by the end of the year. For myself, I prefer to find homes that can make a minimum of $20,000 in profit. By knowing this, I can add it to my formula as a MUST MAKE by considering it as an expense. 

Click here to download the free vacation rental market research expense template.

Then you need to figure out what all of your actual expenses add up to. Here are some of the main expenses you could incur as an Airbnb host:

  • Cleaning fees (NOTE: The average annual revenue that we calculated from Airdna.co includes the cleaning fee that hosts charge.)
  • Utilities
  • Internet 
  • Cable
  • Maintenance (pool, hot tub, yard)
  • Amenities
  • Damage & repairs provision

Rent/Mortgage has been left out of expenses for a reason. It’s easier to locate a home if you know the max rent/mortgage you can spend monthly and still be profitable. 

So, let’s say that all of our actual expenses total $15,000 annually. We can then create a formula for our ‘Max Monthly Rent/Mortgage’. 

  • Expenses are $15,000
  • The profit we want to make is $20,000
  • The average annual revenue for the area we are looking at is $100,000 
    • The formula would then be, Expenses + Profit – Average Annual Revenue = Max Annual Rent. 
      • $15,000 + $20,000 – $100,000 = $65,000
  • Then, divide the Max Annual Rent by 12 months to see the Max Monthly Rent because most homes advertise monthly rent. 
    • $65,000 / 12 = $5,417
  • This means that I can rent or manage a home that has a monthly rent of $5,417 and still potentially make $20,000
    • BONUS: If I find a home with a lower rent in the same area and of the same quality, I can make more than $20,000. 

Once you’ve understood this formula, you will need to use it for every ‘Average Annual Revenue’ section in your city. 

This will easily show you the max amount of rent/mortgage that you can afford to pay and still be profitable. Use these numbers to then go online and see if you can find any available homes in the specific area for rent at or below the max. If you do, then that available home has the potential to be as profitable as you set your profit number to be. In our example, that was $20,000. 

Step 6 – Review Comparables

This part of the process will take some practice. I’ve turned down far more homes from landlords that wanted to give them to me than I took. It’s like playing blackjack and knowing what the dealer is holding!

Once you have found a location with homes for rent at or below your max monthly rent, you then need to start comparing the available rentals with the existing Airbnbs in that area that you have tracked. You have to make sure that the available homes are comparable and not vastly different.

If the average successful Airbnb is a luxury home and you’re looking at an average home, then that is not comparable and would not make you the profit that you are expecting. However, if some homes have a rooftop patio and another has a large backyard, then they are comparable. If one has a pool and the others don’t, then they are not comparable 

Get to know the common features found in a lot of successful Airbnbs and locate a home that has those features. 

  1. Examples: 
    1. Pool with a heater is not just a pool 
    2. On-site parking spot
    3. Large indoor space – I’ve turned down homes because they didn’t have a dining room, which is a key feature for success in Chicago. 

When you feel you have found a home that is available, at or below your max monthly rent and comparable to the other successful Airbnbs, then you are ready to approach the landlord, knowing just how profitable his/her home is to you. 

Other Considerations For Vacation Rental Market Research

We’re playing in the big leagues now and your success is fully dependent on your mental processing power. However, below I’ve listed some general rules you should be thinking about.

  • All revenue numbers in AirDNA are based on the previous year
  • Last years winners could be this year’s losers
  • When signing a lease or contract, YOU are always taking on a risk
  • You can use the data to sell the landlord on a property management contract
  • You need to do extensive research in the area you plan to work in (this is not a get-rich-quick scheme)
    • Examples:
      • What is your city planning in that area?
        • Closing schools, hospitals, tourist spots, etc. 
        • Opening a new tourist spot, park, etc. 
      • How close is public transit?
        • Will your typical guest be using public transit?
        •  If so, the closer the better for tourists
      • Where is the restaurant hub?
        • How close is your potential home
      • What type of people come to that part of the city?
        • Families, partiers, elderly, etc. 

Getting a comparable home does not guarantee you success, it just increases the likelihood of it. You still need to operate like your competition and in all reality, better than your competition.

[bctt tweet=”When doing vacation rental market research based on historical data, remember last year’s winners could be next year’s losers.” username=”OptimizeMyBnb”]

AllTheRooms has a neat section on their website dedicated to data and finding the best place to invest in an Airbnb.


Let me be very clear and state that this is not an easy process, however, it will make you more profitable over the long-term.

It took me over 6 months to feel extremely confident with my ability to sort the data and make sense of it. I didn’t have an instructions manual and didn’t go to school for computer science, data mining, or anything along those lines. Truthfully, I wasn’t even that great of a math student in high school. This is a process that anyone can do. 

If you’d like to hire me for this process, please review my Vacation Rental Market Analysis product.

Look for the patterns, find the things that are happening over and over again, and realize that these are clues for what you should also be doing. If every profitable home has a pool, make sure you get a home with a pool. 

The process takes time but it will save you significantly more in the long run. It’s is not perfect and there is still room for error. The process will help you close more contracts than you thought possible. 

Please be smart about using the process and let me know if you have any questions or how well it has worked out for you. 

About Danny Rusteen

Starting in 2012, Danny has been an Airbnb employee, Superhost, and Airbnb property manager. Danny lives in Airbnbs (2,000 nights). As a guest, Danny has traveled to 36 countries and sifted through thousands of Airbnb listings, so he knows what makes a listing stand out and how to offer a world-class experience to your guest. Follow his journey.


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