How Lucrative is Airbnb?
Here's What You Need to Know in 2024
📝 Key Takeaways
- Interest Rates: Shop around for the best rates. A small difference can save you a lot of money in the long run.
- Average Income: The average income for a 2-bedroom property is $X. See below for the average income per continent and country.
- Higher Earnings: Short-term rental hosts can make up to 3.5 times more than long-term rental landlords in profitable markets.
- Growth: Airbnb’s Q1 2024 report shows a 15% year-over-year increase in supply, indicating ongoing profitability for hosts.
- Starting Without Capital: You can start an Airbnb business without money through rental arbitrage.
I‘m an Airbnb host since 2015. I’ve interviewed over 100 Airbnb hosts as the host of “Into the Airbnb” podcast. I’ve talked to various type of hosts who made money from Airbnb.
✍️ Here are a few types
- Youthful Entrepreneurs: Many have scaled their rental arbitrage businesses rapidly, especially during the pandemic, achieving high six-figure incomes annually.
- Seasoned Superhosts: Older hosts with a passion for hospitality often receive stellar reviews and repeat guests, resulting in consistent high earnings.
- Pro Property Managers: These hosts run their businesses professionally, forming LLCs and leveraging systems for efficiency, often outperforming larger companies.
🎯 How They Make Money
- Case 1: Pandemic Entrepreneurs: One entrepreneur scaled his business quickly during the pandemic, capitalizing on the surge in short-term rental demand. He achieved high six-figure annual incomes by renting multiple properties and subletting them on Airbnb.
- Case 2: Passionate Superhosts: Hosts who genuinely enjoy hosting tend to receive numerous 5-star reviews. Their attention to detail and local knowledge ensure guests have memorable experiences, driving high occupancy rates and profits.
- Case 3: Business-Savvy Property Managers: These hosts use automation tools and virtual assistants to streamline operations, from guest communications to cleaning. They maintain high standards and guest satisfaction. They have great local connections and hands-on, often yielding higher profits than larger property management firms.
Guests systematically, and improve based on that. It’s hard for big companies like Vacassa to do better than them because these property managers are more hands-on. When bad problems happen to guests, they are there.
These are the anomalies. How about the average hosts? How much are they making in each countries? Let’s find out!
Average Annual Airbnb Revenue in US: $36,678 (USD)
Profitable Markets for Airbnb in US
Average Annual Airbnb Revenue in UK: $30,970 (USD)
Profitable Markets for Airbnb in UK
Average Annual Airbnb Revenue in Europe: $32,590 (USD)
Profitable Markets for Airbnb in Europe
Average Annual Airbnb Revenue in Australia: $40,575 (USD)
Profitable Markets for Airbnb in Australia
Average Annual Airbnb Revenue in Latin America: $10,850 (USD)
Profitable Markets for Airbnb in Latin America
Average Annual Airbnb Revenue in Canada: $26,000 (USD)
Profitable Markets for Airbnb in Canada
Case study: Long-term rental vs Short-term rental in Chicago
Chicago is one city that’s not particularly known as a vacation destination. That’s why we chose this area as an example: to show you more objective comparison of long-term rental vs short-term rental.
In the past five years, Chicago’s average property price has increased by 5.7% annually. The population grew by 0.2% only between 2017 and 2022, which is quite slow. However, average income increased more than the national average.
There are 1,932 active Airbnb listings, and an average 2-bedroom in Chicago makes $38,700 per year. That is $3,225 per month. After considering expenses, a host income will be around $2,700 per month. According to Apartments.com an average 2-bedroom long-term rental makes $2,323 per month, which gives roughly $2,000 per month to the home owner. The difference is about 35%. Not so impressive! But, with the short-term rentals, you can do better. So, I checked the listings with more than 30 reviews and above 4.5 stars. Those hosts earn $3,596 per month, and about $3,000 per month in profit. That is 50% more income than long-term rentals.
Airbnb Market Trends
Airbnb as a platform is doing well. According to the letter to the shareholder in 2024 Q1 – There are 11% more listings in Airbnb in 2024 compared to 2023. Still, their gross booking value (GBV) has increased 12% year over year (2023 vs 2024). This means that a typical listing made similar amount (or slightly more) this year than less year.
In our own analysis, there are mixed signals. There are some markets that are getting overly saturated but there are emerging markets where demand is growing. Take a visit on our platform to see if your market is getting too saturated or not. You can see this by checking the occupancy rate trends.
Conclusion
Airbnb can be highly lucrative, but success depends on the market, hosting style, and timing. Whether you’re considering rental arbitrage, becoming a superhost, or managing properties professionally, understanding these dynamics is key.
