How is Market Grade Calculated?

We calculate 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 our way of ranking the performance of a market against what we 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. 

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What determines our 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

Seasonality

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

Regulation

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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Comments

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Date Votes
  • Where can I see a listing of market grade for all markets?

    0
  • Hi Dave, we don't have a breakdown of markets by Market Grade, but if you are looking at markets for investment opportunities, our Best Places to Invest Report shows the best markets based on our AirDNA Score. This metric takes into account Rental Demand, Revenue Growth, and Investability. 

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