Quick answer
To estimate a short-term rental's revenue before you buy, multiply the average daily rate by the nights you expect to book, one month at a time, using comparable homes nearby. Add the twelve months together for the year.
That is the whole formula. The work is in choosing honest inputs: the right comparable homes, a real seasonal curve and a test of what happens when the year goes worse than planned. This guide walks through each step, with a worked example you can copy into our vacation rental income calculator.
This is general information, not tax, legal or investment advice.
Key takeaways
- Revenue is average daily rate times booked nights. AirDNA defines ADR as total revenue divided by booked nights, cleaning fees included and Airbnb service fees left out.
- Build the estimate month by month from comparable homes, because one busy month multiplied by twelve can overstate a year by 50% or more.
- Use comps with the same bedroom count, sleeping capacity, location type and key amenities, and read their calendars across a full year.
- Gross revenue is not income: take out platform fees, cleaning, management and running costs before you compare it to the mortgage.
- Test the estimate with fewer nights and lower rates. If the deal only works at the best case, it does not work.
In this guide
The formula: rate times booked nights
Revenue equals average daily rate (ADR) times booked nights. Everything else in a revenue estimate is a way of getting those two numbers right.
AirDNA's help center defines ADR as "the average revenue earned per booked night over the past 12 months," calculated "by dividing the total revenue by the total number of booked nights." Its figures "include the cleaning fee set by the host but do not include Airbnb service fees." AirDNA describes revenue the same way from the other side: it "can be calculated by multiplying the number of booked days by the average daily rate."
The terms you will meet in data reports and pro formas:
| Term | What it means | How to work it out |
|---|---|---|
| Nightly price | What the listing asks for a night | Read it off the listing for a given date |
| ADR | What guests actually paid per booked night | Revenue ÷ booked nights |
| Booked nights | Nights sold to paying guests | Count from calendars or booking records |
| Occupancy | Share of available nights that booked | Booked nights ÷ available nights |
| Revenue | What the stays brought in | ADR × booked nights |
| RevPAR | Revenue per available night | Revenue ÷ available nights |
Two cautions before you use any figure. First, ADR is not the price on the listing. Discounts, weekly rates and last-minute cuts pull the price guests paid below the asking price, so an estimate built on asking prices runs high. Second, sources define revenue differently. AirDNA's revenue is "the sum of nightly rates and cleaning fees minus host discounts and OTA service fees." Another report may leave cleaning fees out. Compare like with like.
Occupancy is the other half of the formula, and measuring it fairly has its own traps. Our guide to what a good occupancy rate is covers the definitions, so this guide works in booked nights, which avoid most of that confusion.
Pick comparable homes that really compare
Your estimate is only as good as the homes you compare against. A comp should be a home a guest would weigh against yours for the same trip.
Match on these, in roughly this order:
- Bedrooms and sleeping capacity. A six-bedroom home that sleeps 16 earns on a different scale from a three-bedroom that sleeps 8. Do not mix them.
- Location type. Lakefront against a few streets back, near the theme parks against across town. Guests pay for the location, and so do rates.
- Key amenities. A pool, hot tub, game room or dock can move rates and booked nights more than an extra bathroom.
- Rules and setup. Pet policy, minimum stays and maximum guests change who can book.
- Track record. A listing with a long history of reviews earns differently from one that opened last month. Prefer homes with at least a year of history.
Where to find the numbers: paid data services, the listings themselves and, best of all, the seller's own records. AirDNA notes on its occupancy page that a blocked night and a booked night look the same on a public calendar, so it uses its own signals to tell them apart. Any third-party figure for a single home is an estimate. Ask the seller for twelve or more months of booking statements from the platform itself, not a summary sheet.
Build the year month by month
Seasonality is the biggest reason revenue estimates go wrong. Build twelve monthly lines, not one yearly line.
For each month, set an ADR and a number of booked nights from what comparable homes did in that month. Weekends, school holidays, local events and weather all show up here. A drive-to lake market may earn a large share of its year between Memorial Day and Labor Day; a city near a medical center may book more evenly. Our guide to pricing a vacation rental by season covers how rates move through the year once you own the home.
| Month | Example ADR | Example booked nights | Example rent |
|---|---|---|---|
| January | $380 | 11 | $4,180 |
| February | $380 | 11 | $4,180 |
| March | $420 | 16 | $6,720 |
| April | $450 | 17 | $7,650 |
| May | $500 | 19 | $9,500 |
| June | $600 | 23 | $13,800 |
| July | $650 | 25 | $16,250 |
| August | $600 | 22 | $13,200 |
| September | $480 | 15 | $7,200 |
| October | $450 | 16 | $7,200 |
| November | $450 | 14 | $6,300 |
| December | $550 | 16 | $8,800 |
| Year | About $512 | 205 | $104,980 |
Now see why the monthly build matters. Take July alone, $650 a night with 25 of 31 nights booked, and stretch it across the year: that is about 294 nights and roughly $191,000. The month-by-month version comes to about $105,000. The busy-month shortcut overstates the year by more than 80%.
The same trap hides in a seller's listing. A home photographed and described in its peak season, with a summer screenshot of a full calendar, tells you little about February.
Turn revenue into income
Revenue is what guests pay; income is what is left after running the home. Lenders, cap rates and your own cash flow all depend on the second number.
The lines to take out:
| Cost | What to use |
|---|---|
| Platform fees | Your booking platform's current fee schedule |
| Cleaning | A real quote per turnover for a home this size |
| Management | 0% if you self-manage, or the manager's written fee |
| Utilities and internet | The seller's bills, or local averages for the home's size |
| Supplies and repairs | A monthly allowance, higher for large homes |
| Insurance | A short-term rental quote, not a standard homeowner policy |
| Software and licensing | Pricing tools, permits, registration and lodging tax filing |
Our income calculator runs these same lines. Enter your blended ADR and occupancy from the monthly build, then your costs. For a full deal, the deal analyzer adds the seasons, the loan and a stress test in one place.
Stress-test the estimate
A sound estimate still works when the year goes worse than planned. Run the numbers again with weaker inputs before you make an offer.
Three tests worth running:
- Fewer nights. Cut every month's booked nights by 20%. New supply, a weak season or a slow start with no reviews can all do this.
- Lower rates. Cut ADR by 10% on top of that. In the example, those two changes together take rent from about $105,000 to about $75,600.
- A slow first year. A new listing often needs months to collect reviews. Model the first year below the comps, then let it climb.
Then ask the questions that matter: does the home still cover the mortgage, insurance and reserves? How many months of the year run at a loss, and do you have cash to carry them? The DSCR calculator shows how a lender might see the weaker version, since many lenders discount projected short-term rental income.
| Check | Base case | Stress case |
|---|---|---|
| Booked nights | From comps | 20% fewer |
| ADR | From comps, by month | 10% lower |
| First-year ramp | Not applied | First months below comps |
| Covers debt and reserves? | Should, comfortably | Should, at least narrowly |
Mistakes that inflate an estimate
Most bad estimates fail in the same few ways. Check yours against this list.
- Asking prices instead of paid rates. Listings rarely book every night at their posted price.
- A best-case comp. The top-performing home in the market has years of reviews, strong photos and active pricing. Yours may not on day one.
- Peak months stretched across the year. See the example above.
- Ignoring local rules. A permit cap, minimum stay or occupancy limit can cut nights or end the plan. Read our guide on how to check short-term rental rules before you buy.
- Mixed definitions. Revenue with cleaning fees from one source next to revenue without them from another.
- Trusting the seller's pro forma. It is a sales document. Our guide to reading a short-term rental pro forma shows how to rebuild it line by line.
For market-level context on seasons and demand in the six markets we know, see our market reports. Browse all of our free investor tools, and if you want to learn about investing with JekkyStay, start at our investors page.
The bottom line
Short-term rental revenue is ADR times booked nights, built one month at a time from homes that truly compare. Use paid rates, not asking prices, and real calendars, not peak-season snapshots. Then subtract every cost to get income, and test the result with fewer nights and lower rates. If the deal still holds up in the weaker version, you have an estimate worth acting on.
Frequently asked questions
How do you estimate revenue for a short-term rental?
Multiply the average daily rate by the number of nights you expect to book. Do it month by month, using rates and booked nights from comparable homes nearby, then add the months together for a yearly figure.
What is ADR in short-term rentals?
Average daily rate. AirDNA's help center defines it as the average revenue earned per booked night over the past 12 months, calculated by dividing total revenue by booked nights. AirDNA includes the host's cleaning fee and leaves out Airbnb service fees.
How many comparable listings do I need?
There is no fixed number. Aim for enough homes that one outlier does not move the result, all with the same bedroom count, similar sleeping capacity and a similar location. Fewer close matches beat many loose ones.
Are revenue figures from data sites accurate?
They are estimates. AirDNA, for example, builds its figures from listing data and its own methods for telling bookings from blocked nights. Use them as one input next to real calendars and, where you can get them, the seller's booking records.
Does revenue include cleaning fees?
It depends on the source. AirDNA's revenue figures are the sum of nightly rates and cleaning fees minus host discounts and platform service fees. Check how each source defines revenue before you compare numbers.
What is the difference between revenue and income?
Revenue is what guests pay for the stays. Income is what is left after platform fees, cleaning, management, utilities, supplies, repairs, insurance and other running costs. Lenders and investors care about the second number.
