Short-Term Rental Metrics: The Investor's Glossary

Most short-term rental metrics are simple arithmetic. The difficulty isn't calculating them — it's knowing which question each one answers, and where each one quietly misleads.

These eight cover almost every decision you'll make. They fall into three groups: what a listing earns, whether that's a good return, and whether the market context supports it.

If you haven't picked a market yet, How to Analyze a Short-Term Rental Market Before You Buy walks through that first step. This glossary is for once you're looking at real numbers from a market you're already considering.

What a listing earns

Average Daily Rate (ADR)

Total room revenue divided by the number of nights booked. If a listing earns $6,000 across 30 booked nights, its ADR is $200.

ADR only describes nights that sold. It says nothing about how many did. A listing can post an impressive ADR by pricing high and sitting empty, which is why ADR on its own is the least useful number here.

Occupancy rate

The share of nights that were booked — and the metric most often misread, because there are two ways to calculate it.

Available-night occupancy measures booked nights against nights the host offered. Calendar occupancy measures booked nights against all 365. A listing available 90 nights that books 60 of them is at 67% by the first measure and 16% by the second.

Both get published, and both get called "occupancy." Before comparing occupancy across two sources, confirm they're measuring the same thing — otherwise you're comparing numbers that only look alike.

RevPAR (Revenue per Available Rental)

ADR multiplied by occupancy. This is the number that resolves the tension between the two above, because it can't be gamed by pricing high and selling little.

A listing at $200 ADR with 40% occupancy produces $80 RevPAR. One at $120 ADR with 70% occupancy produces $84. The second listing looks cheaper and less impressive, and earns more per available night.

When two listings disagree on ADR and occupancy, RevPAR tells you which is actually performing.

Whether it's a good return

The first three describe a property. These three describe an investment, and they're the ones that decide whether to buy.

Gross yield

Annual revenue divided by property price. A property earning $60,000 on a $600,000 purchase has a 10% gross yield.

Useful for fast comparison across markets, and dangerous beyond that, because it ignores every cost. Gross yield is a filter for what deserves a closer look — never a basis for buying.

Capitalization rate (cap rate)

Net operating income divided by property price. Net operating income is revenue minus operating costs — cleaning, management, utilities, insurance, maintenance — but before mortgage payments.

A property with $30,000 net operating income on a $500,000 purchase has a 6% cap rate.

Because it excludes financing, cap rate compares properties independently of how each is paid for. That's its strength for comparison and its limitation for your actual decision: it doesn't know your mortgage.

Cash-on-cash return

Annual pre-tax cash flow divided by the cash you actually put in. Cash flow here is after everything, mortgage included. Cash invested means deposit, closing costs, and furnishing — not the purchase price.

Put $150,000 in and clear $12,000 a year after all costs and financing, and that's an 8% cash-on-cash return.

This is the number that answers what you're really asking: what does my money earn? It's also the only one on this list that can't be looked up, because it depends on your financing and your costs.

Whether the market supports it

Comparable set (comp set)

The specific group of listings your property should be measured against — similar bedroom count, guest capacity, and location within a market.

This matters more than any single metric, because it determines what all the others describe. A city-wide average blends a studio above a takeaway with a four-bedroom house near the water. The average sits between them and describes neither.

Define the comp set before reading any figure. Analysis without a defined comparison group is just browsing.

Seasonality

How revenue distributes across the year, usually expressed as the gap between peak and trough months.

An annual revenue figure hides twelve monthly ones. Two markets can report identical annual totals while behaving completely differently — one earning steadily year-round, the other earning most of its income in a ten-week window. That difference decides whether you can service a mortgage in February.

How they fit together

Used in sequence rather than isolation, these answer one question each.

• Start with the comp set. Every other number is meaningless until you've defined what you're comparing against.
• Use RevPAR to compare listings. It resolves the ADR-versus-occupancy tension that misleads on either metric alone.
• Confirm which occupancy definition you're reading. Two sources quoting "occupancy" may not be describing the same thing.
• Use gross yield to filter, cap rate to compare, cash-on-cash to decide. They answer progressively more specific questions, and only the last one accounts for your money.
• Check seasonality before you commit. An annual figure can hide a cash flow problem that arrives every winter.

Run the numbers on a property you're considering

Cash-on-cash return is the one metric no market data can give you, because it depends on your financing and your costs. Our revenue calculator is free and takes a couple of minutes — enter the property and your real cost base, and you'll see what your money would actually earn before you spend time on deeper research.