Over the past half-decade, the vacation rental industry has witnessed a dramatic transformation in traditionally profitable markets. Million-dollar beachside homes are no longer the norm, and we’re now seeing huge returns in urban markets, rural markets, and everything in between. In attempts to pinpoint the best up-and-coming vacation rental markets for hosts and property managers, we’ve teamed up with AllTheRooms Analytics, a worldwide vacation rental search engine and data provider. Here are the best off-the-beaten-path destinations for VR hosts in cities with less than 300,000 residents.
RevPAR — or revenue earned per available room — is among the most important metrics in the vacation rental industry. Hosts analyzing average daily rates and occupancy rates individually are off to a good start, but multiplying these two variables provides a great barometer to measure an accommodation’s performance. Here are the markets with the best revenues per available room.
Like many states along the Canadian border, Wisconsin’s town of Menomonie is a thriving lake town. Both residents and tourists are experts when it comes to summer activities, lakeside cookouts, and outdoor concerts. Menomonie is chock full of outdoor recreation areas, vintage museums, wineries, and a historic downtown district.
Menomonie tops the list of off-the-beaten-path destinations in the vacation rental industry with a RevPAR of $185. While its occupancy rate is fairly low (42%), its average daily rate is extremely high ($434). What’s even more alluring for new hosts is how sparse the supply is. Menomonie only has about 35 active Airbnb properties.
Edwards fits the criteria of a perfect vacation rental destination for savvy hosts. Located within a stone’s throw of the hugely popular (and hugely expensive) Beaver Creek, it’s close enough to see significant demand but far enough away to be reasonably priced. Hosts in Edwards earn over $143 per available night despite a low occupancy rate of 33%.
In recent years, Gatlinburg has taken most of the credit as the vacation rental industry crown jewel of inland Tennessee. Known as the gateway to the Great Smoky Mountain National Park (the United States’ most visited national park), hosts in Gatlinburg have seen impressive returns. However, the data shows that nearby Sevierville is Tennessee’s next up-and-coming vacation rental hotspot. Hosts earn $141 on average per available night, and the occupancy rate is relatively high — nearing 60%.
Located on the Atlantic coast between Jacksonville and Orlando is Palm Coast, one of the states’ most underrated beachside destinations. With an average RevPAR of over $136, it doesn’t quite compete with the heavy hitters of Siesta Key or Sanibel Island, but it’s far more affordable and gets tons of traffic from nearby cities. The occupancy rate of 49% is certainly respectable, but the only thing to watch out for is the surging number of hosts (currently 675 Airbnb hosts). Palm Coast wouldn’t be considered undiscovered, although it’s definitely more off-the-beaten-path for the vacation rental industry than many other Florida destinations.
Easton, Maryland is not a town traditionally associated with the vacation rental industry. There will only be 40,000 residents by 2020, and there are currently only 65 total Airbnb listings. That said, hosts shouldn’t let these statistics deter them from investing in a property or renting out a spare room. Easton is located on the east side of the Chesapeake Bay and stands as a frequent getaway spot for those living in Washington D.C, Baltimore, and Philadelphia. The town’s $136 RevPAR is likely due to its fortunate proximity to wealthy metropolitan hubs. Even though occupancy rates are low (33%), Easton still stands as one of the best up-and-coming small towns in the region.
Close to Atlanta is another idyllic lakeside town climbing the ranks of vacation rental hotspots. Gainesville, a city with just over 200,000 residents, has become a haven for outdoor enthusiasts, antique lovers, golfers, shoppers, and anyone else looking for an escape from the city. It’s located on the shores of Lake Sidney Lanier and at the foothills of the Blue Ridge Mountains. Gainesville’s RevPAR is fairly high ($114), and its gross revenue earned among all hosts ranks 12th on our list.
Silverthorne, much like the aforementioned Edwards, is a ski town located close to Colorado’s famous resorts of Breckenridge and Keystone. Travellers not looking to spend a pretty penny at a ski-in-ski-out resort often opt to stay in Silverthorne. And, despite its strong reputation as a winter destination, Silverthorne is actually great for year-round travel. Many visitors come during the summer as well as the shoulder months of spring and fall. Although Silverthorne’s RevPAR is just slightly over $104, it experiences several weekends per year with soaring demand and higher-than-average daily rates.
For hosts and property managers looking for income that is truly passive, a listing’s occupancy rate is the most important key performance indicators in the vacation rental industry. Rather than trying your luck in highly seasonal markets where pricing fluctuates as dynamically as its demand, picking a market that has consistent visitors and consistent daily rates makes for smooth operations. Here are the cities and towns ranking best in terms of occupancy rate.
Another interesting statistic to consider is the supply of vacation rentals relative to the town’s population. We’ve already filtered for vacation rentals with less than 300,000 people, but which among those have yet to be fully discovered by savvy property managers?
There are two ways to consider the capita-per-property (CPP) metric. First, markets with high CPPs indicate that there are few properties relative to the town’s population — in other words, that it’s yet to be truly discovered. On the other hand, markets with low CPPs indicate the prevalence of established vacation rentals — meaning the market has proven to perform. Depending on your investment preferences (high risk/high returns vs low risk/conservative returns), markets with both high and low CPPs are worth investigating. Besides the cities already mentioned above, here are a few other emerging markets of the vacation rental industry to pay attention to.
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