STR Glossary

A

ADR Average Daily Rate

The average rental income earned per paid occupied night. Calculated by dividing total room revenue by the number of rooms sold. ADR is a key metric for measuring pricing strategy effectiveness.

Example: If you earned $3,000 from 12 booked nights, your ADR is $250 ($3,000 ÷ 12 nights).

Airbnb Arbitrage

A strategy where an investor leases a property long-term and then sublets it as a short-term rental on platforms like Airbnb. This allows entry into STR without purchasing property, though it requires landlord approval and carries unique risks.

Amenities

Features and services provided at a rental property that enhance guest experience. Common STR amenities include WiFi, parking, pool access, hot tub, kitchen appliances, and entertainment systems. Premium amenities can justify higher nightly rates.

Average Length of Stay (ALOS)

The mean number of nights guests stay at your property per booking. Longer stays typically mean fewer turnovers and lower cleaning costs, but may command lower nightly rates.

Example: If you had 20 bookings totaling 60 nights, your ALOS is 3 nights.

B

Booking Window

The amount of time between when a guest makes a reservation and their check-in date. Understanding your typical booking window helps optimize pricing strategy and minimum stay requirements.

Break-Even Occupancy

The minimum occupancy rate needed to cover all operating expenses and debt service. Properties with lower break-even points are considered less risky investments.

Example: If monthly expenses are $3,000 and you charge $200/night, you need 15 nights (50% occupancy) to break even.

C

Cap Rate Capitalization Rate

A real estate valuation metric calculated by dividing Net Operating Income (NOI) by property value. Used to compare investment potential across properties, with higher cap rates indicating potentially higher returns (and often higher risk).

Example: A property generating $40,000 NOI valued at $400,000 has a 10% cap rate.

Cash Flow

The net amount of money moving in and out of your STR investment after all income is collected and all expenses (including mortgage) are paid. Positive cash flow means the property generates profit; negative means it operates at a loss.

Cash-on-Cash Return (CoC)

The annual pre-tax cash flow divided by total cash invested. This metric shows the actual return on the money you've put into the deal, making it essential for comparing leveraged investments.

Example: $20,000 annual cash flow on $100,000 invested = 20% cash-on-cash return.

Channel Manager

Software that synchronizes your property listings across multiple booking platforms (Airbnb, VRBO, Booking.com, etc.) to prevent double bookings and manage availability from a single dashboard.

Cleaning Fee

A one-time fee charged to guests per stay to cover cleaning and turnover costs. Can be passed entirely to guests or split between host and guest. Higher cleaning fees may deter short stays but protect margins.

Co-Hosting

An arrangement where a secondary host helps manage a property for a percentage of revenue (typically 10-25%). Co-hosts may handle guest communication, cleaning coordination, and problem resolution.

D

Direct Booking

Reservations made directly with the host/property owner rather than through third-party platforms. Direct bookings avoid platform fees (typically 3-15%) and allow hosts to build direct guest relationships.

Dynamic Pricing

Automated pricing strategy that adjusts nightly rates based on demand, seasonality, local events, competitor pricing, and booking patterns. Tools like PriceLabs, Beyond, and Wheelhouse provide dynamic pricing services.

G

Gross Rental Yield

Annual gross rental income divided by property purchase price, expressed as a percentage. A quick screening metric, though it doesn't account for expenses or vacancy.

Example: $60,000 annual revenue on a $500,000 property = 12% gross yield.

Guest Screening

The process of evaluating potential guests before accepting bookings. May include reviewing guest profiles, ratings, verification status, and using third-party screening services to reduce risk of property damage or parties.

H

Host Guarantee

Protection programs offered by platforms like Airbnb that cover property damage caused by guests. Coverage limits and claim processes vary by platform, and many hosts supplement with additional STR insurance.

Hot Tub Premium

The additional nightly rate a property can command by offering a hot tub. In mountain and cold-weather markets, hot tubs can increase rates by $25-75/night and significantly boost occupancy.

L

Length of Stay (LOS)

The number of nights a guest books. Managing minimum LOS requirements helps balance revenue per booking against turnover costs and cleaning frequency.

Listing Optimization

The practice of improving your property listing to increase visibility and bookings. Includes professional photography, compelling descriptions, strategic pricing, and keyword optimization for platform search algorithms.

Lodging Tax

Taxes imposed on short-term accommodations, also called occupancy tax, TOT (Transient Occupancy Tax), or HOT (Hotel Occupancy Tax). Rates vary by location (typically 6-15%) and may be collected automatically by platforms.

M

Mid-Term Rental (MTR)

Furnished rentals typically lasting 30 days to 12 months. MTRs serve traveling professionals, relocating families, and insurance housing needs. Often face fewer regulations than short-term rentals.

Minimum Stay

The shortest booking length allowed at your property. Longer minimums reduce turnover costs but may decrease overall bookings. Many hosts use variable minimums based on season and demand.

N

NOI Net Operating Income

Total revenue minus all operating expenses (excluding mortgage payments and income taxes). NOI represents the property's earning power before financing costs and is used to calculate cap rate.

Example: $70,000 revenue - $25,000 expenses = $45,000 NOI.

Nightly Rate

The price charged per night for your rental property. Nightly rates vary based on season, day of week, local events, and market demand. Setting optimal nightly rates is crucial for maximizing RevPAR.

O

Occupancy Rate

The percentage of available nights that are booked. Calculated by dividing booked nights by total available nights. A key performance indicator, though high occupancy at low rates may indicate underpricing.

Example: 20 booked nights in a 30-day month = 66.7% occupancy rate.

OPM (Other People's Money)

Using financing (mortgages, investor capital, partnerships) rather than all personal funds to acquire investment property. Leverage can amplify returns but also increases risk.

Owner Block

Dates reserved by the property owner for personal use. While owner blocks provide vacation benefits, they represent opportunity cost in lost rental income during blocked periods.

P

PMS Property Management System

Software for managing vacation rental operations including reservations, guest communication, cleaning schedules, and financial tracking. Popular options include Hostaway, Guesty, Lodgify, and OwnerRez.

Platform Fees

Fees charged by booking platforms for listing and booking services. Airbnb typically charges hosts 3% (split-fee model) or 14-16% (host-only model). VRBO charges approximately 5% of booking total.

Primary Residence Requirement

A regulation requiring STR operators to live in the property as their primary home. Common in cities with strict STR laws, this limits investor-owned vacation rentals to protect housing supply.

R

RevPAR Revenue Per Available Room

A comprehensive metric combining occupancy and ADR. Calculated by multiplying ADR by occupancy rate, or dividing total revenue by available nights. RevPAR provides the best single measure of rental performance.

Example: $250 ADR × 65% occupancy = $162.50 RevPAR.

Review Velocity

The rate at which a listing accumulates new reviews. Higher review velocity improves search ranking on most platforms. New listings need consistent bookings and reviews to build credibility.

S

Seasonality

Predictable fluctuations in demand based on time of year. Understanding your market's peak, shoulder, and off-seasons is crucial for pricing strategy, expense planning, and revenue forecasting.

STR Short Term Rental

A furnished rental property leased for short periods, typically less than 30 days. STRs include vacation rentals, Airbnbs, and similar accommodations that compete with traditional hotels.

Superhost

Airbnb's recognition program for hosts meeting specific criteria: 4.8+ rating, 90%+ response rate, <1% cancellation rate, and 10+ stays per year. Superhosts receive increased visibility and a badge on listings.

T

Turnover

The process of preparing a property between guests, including cleaning, laundry, restocking supplies, and inspection. Higher turnover frequency increases operational costs but often indicates strong booking demand.

Total Cash Invested

The sum of all cash put into an investment, including down payment, closing costs, renovation/furnishing costs, and initial reserves. Used as the denominator in cash-on-cash return calculations.

V

Vacancy Rate

The percentage of available nights that go unbooked. The inverse of occupancy rate. High vacancy may indicate pricing issues, poor listing quality, or unfavorable market conditions.

VRBO

Vacation Rental By Owner, a booking platform owned by Expedia Group. VRBO focuses on entire-home rentals (no shared spaces) and typically attracts family travelers seeking larger properties.