Field notes on short-term rentals

Six months of data collected across markets that conventional wisdom consistently gets wrong. The conclusions are not always comfortable for operators who have built a thesis on peak-season performance alone.

We tracked listings across several markets over a full season, pulling from AirROI and cross-referencing against PriceLabs dynamic pricing outputs for a subset of properties under active management.

The first observation: markets with the highest peak-season ADR do not reliably produce the highest annual net income. The gap between gross revenue and net income widens considerably in markets where cleaning costs, licensing fees, and guest-damage frequency run above median.

The markets that underperform in July are often the ones that surprise you in February. Seasonality is rarely symmetric.

Asheville, typically cited as a top STR market, produced lower median net margins across four-bedroom properties than its Smoky Mountain competitors despite an ADR advantage. The cost differential almost entirely explains the gap.

The second observation: permit environments matter more than most underwriting models acknowledge. Several of the markets we tracked introduced or significantly tightened STR permit requirements during the period. In each case, supply contraction outpaced demand contraction, and ADR rose for the operators who remained in compliance.

The third observation is the most counterintuitive. Markets with year-round demand - defined here as a narrow spread between peak and trough months - produce more predictable net income than peak-season destinations, even when gross revenue is lower. Predictability has a real option value for operators with debt service.

We will continue tracking these markets. Updated findings will appear in a future edition of the quarterly report.