Are Long-Term Rentals Better for Business?

Hosts often ask whether renting their property short-term is the most profitable way to run on platforms like Airbnb. Is it a better idea for your bottom line to focus on long-term rentals?

The conversation is a lot more complex than you might think. It goes much further than a simple discussion about how much money you can earn in x number of days. Instead, the general discussion must include other aspects like costs, effort, management, and pricing strategies. 

Let’s start with the basic considerations of long-term rentals…

Think About Earnings

Most hosts agree that they won’t rent their property long-term over their peak booking season. It’s because there’s no way it would be as financially beneficial as numerous short-term bookings.

Your earnings as a host will likely be lower if you opt for a long-term rental for one extended stay. This is opposed to renting for shorter periods, especially over peak season. However, longer bookings, like weekly and monthly stays, might avoid having an empty property over the off-peak season.

Strategizing for Off-Peak Seasons

When choosing which approach, you have to analyze your past booking patterns. It’ll help you understand where your greatest business vulnerability sits. For hosts that have consistent bookings all year round, there probably isn’t a need to change anything. For hosts that only get bookings during peak season, a perfect alternative is a more balanced approach to long-term renting vs short-term.

Long-term Airbnbs offer many benefits, such as monthly discounts, which can increase your Airbnb income. Moreover, they allow guests to live comfortably, akin to a vacation rental, but with the convenience of an extended stay. However, be mindful of the long-term cancellation policy, as it differs from the nightly rate bookings.

You can access greater market data for free with Markets by DPGO. Simply enter a postal code or an area name and we’ll show you a range of insights for free! You can use these insights to see whether your market enjoys balanced annual bookings. If not, you can identify which months are the most popular for your competitors. Longer stays during these less popular months could be the key to maintaining steady income throughout the year.

Think About Efforts

If you’re a hobby host, and time is in abundance for you, then opting for a shorter-term rental goal is more easily manageable. Hosts that have busy careers and host as a side project may not be able to deal with the guest turnover of a short-term rental strategy.

Longer-term bookings, like Airbnb monthly rentals, are easier to manage and the guests usually demand far less attention during their stay than short-term rentals. Monthly stay options, catering to those on far-from-home missions, can attract guests seeking a more home-like environment. This segment often requires minimal guest communication, making it ideal for hosts with less time on their hands.

Maintaining Property Quality with Long-Term Rentals

On the other side of the coin, longer-term bookings can usually cause more damage, and because you can’t get into the rental during the rental period, you may not be able to catch this damage before it worsens. However, offering long-term rental options, like monthly Airbnb rentals, can be mitigated by including popular amenities such as dedicated working spaces. This not only appeals to a specific tenant profile but also encourages care and respect for the property.

Considering the specifics of a monthly rental agreement can also help manage expectations and responsibilities. Clear communication about the condition of the property and regular check-ins, albeit virtual, can go a long way in maintaining a healthy, long-term renting relationship. This way, you can balance the ease of managing a long-term rental with the assurance of preserving your property’s condition.

Think About Management

Have you ever considered management costs for a rental property? This point ties into the last one because it speaks directly to host management and the costs it might incur if the host is not able to manage their property directly.

By hiring a property management company, or even a co-host, you’re giving yourself the freedom to explore other projects or just continue with your normal working life. If, however, hosting is your full-time occupation, then management costs don’t apply unless your property portfolio becomes too large to manage alone.

Strategic Planning for Long-Term Rentals

When comparing monthly rentals to shorter stays, the management effort varies significantly. Long-term stays, such as a monthly stay, typically require less frequent attention compared to nightly rate bookings. This difference can make long-term stays less time-consuming for hosts, allowing for better focus on each guest’s needs and travel plans.

For those managing multiple properties, aligning the availability of each property to cater to various guests’ travel plans becomes a complex, yet essential task. While the income from long stays is generally more predictable and stable, the dedication to maintaining high-quality, readily available properties can be demanding.

Think About Pricing Strategies

Pricing is arguably one of the most critical aspects of any successful vacation rental property. Without optimized pricing, you’re stumbling around in the dark. By using data-driven pricing methods, you give yourself – and your listing – the best chance at securing a booking in any market environment. 

By adopting different pricing strategies according to the season, you’re going to take your business success from the ground floor to the penthouse. Learning how to price according to the time of the year means you’re going to make your listing as attractive as possible to the booking public during that period, and without overstating this, that is the meaning of success. 

What Would We Recommend?

Honestly, it’s hard to make generalizations about business success, but there is one thing we can say that’s general and important: use different pricing strategies for different times of the year. Without seasonally adjusted prices, you’re almost stunting your business’ chances of success. 

We don’t just do dynamic pricing and revenue management, but we also offer advice and guidance on how to take your business from strength to strength. Learn more by clicking on the DPGO banner above!