A Quick Dictionary of Vacation Rental Industry Terms
Breaking Down STR Jargon and Lingo
Whether you’re a newbie to the short-term rental industry or just brushing up on your research, it’s useful to be familiar with the jargon of the industry, especially if you’re interested in diving into market analysis reports like those from AirDNA or KeyData. With knowledge comes power, and understanding the definitions of common industry terms is a great way to enhance your business acumen.
Today, we’ll go over a few common terms you might run into when researching the short-term rental industry.
The A-Z of the Short Term Rental Industry
A
Airbnb - Airbnb is the leading short-term rental website in the industry, founded in 2007. This brand revolutionized the travel industry and is now synonymous with short-term rentals in general. In different contexts, Airbnb can refer to the brand itself, the website or app, or even be used on its own as a noun–people now often refer to any vacation rental as an “Airbnb”.
ADR - ADR stands for Average Daily Rate, and it refers to the average rate your rental goes for during a specific time period. ADR is an important metric not just on its own for analyzing the financial health of your rental, but it is also part of the formula for measuring RevPAR as well.
Availability/Available Nights - Availability refers to the number of nights open on your calendar during a particular time period, but typically on an annual basis. Available nights is a metric that allows you to calculate your occupancy–just divide the number of available nights by the total nights booked.
B
Booking - A booking is merely a guest reservation at your vacation rental.
Booking Curve - Booking curves are demonstrated on graphs that show your booking pace in visual form over a specific period of time, typically annually. These graphs are great for helping you to compare changes and evolutions in the industry that happen year over year.
Booking Lead Time / Booking Window - These terms refer to how far in advance a guest reserved your rental. For instance, if your guest booked 3 months out, your booking lead time for that particular reservation is 3 months in advance. Longer lead times are seen as healthier for your short-term rental business because you’re guaranteeing revenue months in advance rather than weeks or days.
Booking Pace - Booking pace refers to how quickly (or slowly) bookings happen over time, usually in reference to booking lead times.
C
Cancellation Policy - Cancellation policies are the policies that will be put into place when a guest cancels their reservation. Many hosts charge a fee for cancellations, especially those that occur within 24 hours of the reserved date.
Channel - Also known as “OTA”, a channel is a website or app where short-term rental owners can list their rental for guests to reserve. Airbnb and Vrbo are popular vacation rental channels.
Channel Manager - A third-party application that allows hosts or property managers to manage short-term rental listings over a variety of channels.
D
STR Demand - Demand in the STR industry refers to how many nights guests will book at a given price over a specific period of time. You’re probably already familiar with demand in the economic sense, where it is often paired with supply, and the same is true in the vacation rental world.
Direct Booking - A guest reservation made directly with the host (or property manager), rather than over an OTA or distribution channel. Hosts and property managers can set up their own direct booking websites to cut down on fees and costs associated with using OTAs.
Dynamic Pricing - A pricing model that seeks to match nightly pricing to demand rather than staying static or responding to seasonality. LocalVR uses dynamic pricing to get our short-term rental owners the best price for every night in every season of the year.
L
Listing - A listing refers to the landing page on distribution channels and direct booking sites that showcases your short-term rental for guests to book, featuring a property description, high-quality photos, and any information a potential guest might need to know.
Long-Term Rental - A rental that offers stays of longer than 30 days. Allowing longer-term stays can be a helpful tactic during the low season or off-season to ensure occupancy, though typically long-term rentals go for a lower per-night rate than short-term rentals.
Low Season - The season of the year when bookings are at their lowest, also known as the “off-season”. For example, fall is typically the lowest season for rentals located in ski towns.
M
Minimum Stay - Minimum stay is the minimum number of nights that a guest can book with your short-term rental listing. This will usually be anywhere from 3 nights all the way up to a full 30 days.
O
Occupancy Rate - Occupancy rate is a measurement that allows you to determine how often your short-term rental is occupied throughout the year, and it is found by dividing the number of available nights on your calendar by the number of nights guests booked with you.
Owner Stay - Owner stays are the times of the year that are blocked out on the calendar for property owners to utilize their vacation homes.
Owner’s Closet - The owner’s closet is a small space where owners can store all of their personal belongings along with their security systems. Guests cannot access the owner's closets, so they are secure storage for anything and everything an owner might want to keep safe.
OTA - An acronym for Online Travel Agency, also known as a channel. OTAs are the places where you can book short-term rentals and list your short-term rental property for guests, such as Airbnb, Booking.com, or Vrbo.
R
RevPAR - RevPAR is one of the most important metrics in the short-term rental industry, and it is often a good indicator of the health of your business as well as the industry overall. The formula for finding RevPAR is to multiply your average daily rate by your occupancy rate.
S
Seasonality - Seasonality refers to how short-term rental demand evolves over the seasons. Typically, there is a high season and a low season for travel in specific regions, and seasonality allows you to measure these.
STR - An acronym for the term Short-Term Rental.
STR Supply - Supply is another economic term, and it denotes the amount of available short-term rental listings during a given time period. Often used in conjunction with STR demand to measure the health of the STR industry.
Superhost - A name created by Airbnb to denote hosts with high levels of guest satisfaction. Getting a Superhost badge is a coveted aspect to becoming successful on Airbnb.
V
Vrbo - Another popular short-term rental site, Vrbo is one of the leading competitors for Airbnb. Instead of offering rooms, Vrbo offers whole-home rentals.