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How is Market Grade Calculated for Vacation Rentals?
How is Market Grade Calculated for Vacation Rentals?

A description of vacation rental market grades & sections: Rental demand, Revenue growth, Seasonality, Regulation, & Investability

Alejandro Chouza avatar
Written by Alejandro Chouza
Updated over a week ago

The market grades on our vacation rental properties were developed by Airdna, the leading short term rental analytics and data company. You can read more about how market grades are calculated in this Airdna article linked here and also copied below.

Airdna calculates the Market Grade by comparing the performance of a market against the top 2,000 Airbnb markets globally. The grade is determined by which percentile the market sits in for 5 key metrics:

  1. Rental demand

  2. Revenue growth

  3. Seasonality

  4. Regulation

  5. Investability

The Market Grade is their way of ranking the performance of a market against what they have determined to be the top Airbnb cities in the world. These are markets with high numbers of listings and extensive historical data. The percentile the market sits in for each of the 5 metrics determines the overall grade. For example, a market in the 70th percentile would score 70 out of 100. The Market Grade is updated each month, so it can be a good indicator of any change in the market on the whole.


What determines the Airdna Market Grade:

Rental Demand

How often are rentals booked throughout the year? By using a combination of annual occupancy and listing growth rates, this score shows the relative travel demand in a market.

High Score = High Travel Demand

Revenue Growth

Did vacation rental listings in this location earn more this month than they did in the same month last year? This score is calculated by looking at the change in year-over-year RevPAR for properties that received bookings in both time periods.

High Score = Increasing Revenue per Property


How much does travel in this market demand differ between peak season and low season? This score is the percentage difference between the minimum and maximum monthly average revenue in the past year.

High Score = Low Seasonality


Can you run a short-term rental business here without getting into legal trouble? This score looks at host and property behavior to identify signs of regulation and regulation enforcement.

While some cities have levied heavy restrictions or outright banned certain types of short-term rentals, others have introduced permitting processes or have capped the total number of units allowed. Although some might shy away from purchasing in areas with complicated or heavy regulation, savvy investors often know how to navigate the various requirements within markets that represent great investment opportunities.

High Score = Low or Unenforced Regulation

Investability (US Markets Only)

Are homes in this market a good investment? This score compares the cost of homes in the area to the average short-term rental income of full-time rental properties.

High Score = Good Investment Opportunity

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