The occupancy rate of a home is one of the metrics most followed by investors, landlords and rental management agencies. Indeed, it is a determining criterion for determining the profitability of a seasonal rental. This is of course not the only data monitored and a rental investment must be studied on many aspects. However, the study of the occupancy rate at the local level makes it possible to determine in which cities to invest in order to secure your project.
Reminder on the definition of the occupancy rate:
The definition of the occupancy rate can be guessed immediately. This is the number of days when a property (room or entire accommodation) is actually rented compared to its period of availability. It is therefore a percentage: the closer it is to 100, the more the accommodation is rented. Conversely, the more it tends towards 0, the less the accommodation is rented.
Example: Xavier has rented out his studio on Airbnb from June 25 to September 4, 2022, i.e. a total of 72 days in Bordeaux. The accommodation was occupied by 14 different tenants during the summer for a total of 56 rental days (nights). To obtain the occupancy rate, we just need to apply the following calculation:
(days rented / days available)x100
In our case, we get:
(56/72)x100 = 78
The occupancy rate of Xavier's accommodation in 2022 was therefore 78%.
What is the interest of the occupancy rate for the profitability of the property?
Knowing the Airbnb occupancy rate of a property generally allows you to pinpoint the strengths and weaknesses of the property concerned. All you have to do is compare it to the average rate in your geographical area and for similar Airbnb rentals. If the calculated rate is higher than the average, good news, your rental is performing better than the others in terms of reservations. If the rate is lower, you will have to ask yourself the right questions: are the rates charged appropriate? Is my online advertisement sufficiently optimized and attractive? What distinguishes my home from those that perform the most? Etc.
In addition, it will be observed that the occupancy rate compared to the rental rate makes it possible to see the shortfalls, even with small variations. Let's take the case of Xavier again, specifying the price per night that he charges:
Xavier has rented out his studio on Airbnb for the summer of 2022 at a rate of €60 per night, regardless of the rental period and the day of the week. The comparative table below allows you to better identify the shortfalls with an improvement of 5 or 10% in the occupancy rate of your studio, which are realistic objectives. The last line allows us to see the ideal case where Xavier would have seen his studio permanently rented.
Our example is based on a studio but already allows you to visualize the loss: several hundred euros over a single summer season and even nearly €1000 with the rate observed. The occupancy rate is therefore an essential variable in the calculation of an investment and must be pushed to its maximum to ensure good profitability.
Which cities have the best occupancy rate?
Then comes the question that all future vacation rental investors ask themselves: Which French cities have the best occupancy rate? Here is below the top 10 cities with a high occupancy rate in France:
- Montpellier - 60%
- Bordeaux - 58%
- Bayonne – 58%
- Lyons – 57%
- Marseilles – 57%
- Toulouse – 56%
- Anglet – 53%
- Biarritz - 50%
- Paris - 48%
- Strasbourg – 48%
It should be noted that this observed average occupancy rate, based in particular on Airbnb statistics, takes into account all rentals in the given cities and varies considerably from one property to another. Moreover, seasonality and rental rates are not taken into account and must also be studied. Each project is different and a tailor-made study is necessary to identify the relevance of a rental investment project.
