How to Estimate Short-Term Rental Income (Worked Example)

The only formula you need to start

Gross short-term rental income is straightforward:

Everything difficult about estimating STR income is in getting honest values for those three inputs, and then knowing what comes off afterwards. Most projections fail because they use the peak-season rate and a wishful occupancy figure.

Finding a realistic ADR and occupancy

• Pick five true comparables — same suburb, same bedroom count, similar quality and amenities. Not the best listing in town
• Read their calendars, not their rates. Open each listing and count blocked nights over the next 60 days. That gives you real occupancy far better than any estimate
• Average across a full year, not a season. A beach property at $420 in January may be $160 in June
• Assume 60–70% annual occupancy for a well-run property in a normal market. Above 80% usually means the property is underpriced
• Subtract your own blocked nights — personal stays, maintenance, and the gap nights a two-night minimum creates

What comes off the top

Gross booking revenue is not income. Expect to lose 35–50% of it. The usual deductions:

• Platform service fee — commonly 15.5% under Airbnb's host-only model
• Cleaning cost not covered by the cleaning fee you charge
• Consumables, linen and small replacements
• Utilities, internet, insurance, rates and any strata or HOA levy
• Software and subscriptions
• Maintenance and a furniture refresh sinking fund
• Income tax on the profit, and in some places a tourism or occupancy levy

A full worked example

A two-bedroom apartment, $220 average nightly rate, 65% occupancy across 350 available nights. Figures are illustrative — yours will differ by market.

That is roughly 54% of gross — a normal, healthy result. If your own numbers land much above 60% of gross, check that you have not missed a cost. If they land below 45%, there is usually either a pricing problem or a cost that has quietly grown.

Want the same maths done on your own figures? Use our Airbnb income calculator guide.

How to analyse a property you already own

Estimating is for properties you are considering. Analysing is for the one you have, and it is a different exercise — you have real data, so use it.

• Revenue per available night (RevPAN) — total revenue divided by every night the property was listed. This single number catches both weak pricing and weak occupancy
• Revenue per booking — if this is flat month after month, you have no upsell layer
• Gap nights — count orphan one- and two-night gaps. Each one is revenue your minimum-stay rule threw away
• Season-over-season comparison — compare this June to last June, not to last month
• Repeat guest rate — near zero for most hosts, and the cheapest number to improve

The income the formula misses

ADR × occupancy only measures the calendar. A property also earns from upsells, guidebook commissions, local referrals, direct rebookings and renting idle space — and none of that appears in a market estimate.

For a typical small host these add somewhere between a few hundred and a few thousand dollars a year, at no extra capital cost. The full breakdown is in how to make money from your property, and whether an STR is worth owning in the first place is covered in short-term rental investment.