Short-Term Gains, Long-Term Losses: The ROI Paradox in Popular Vacation Destinations
Introduction
When it comes to investing in short-term rentals, the goal is often to maximize returns on investment (ROI) while minimizing risk. However, a closer look at the data reveals a paradox: while some cities offer high short-term gains, they may not necessarily translate to long-term property value appreciation. In this article, we'll delve into the numbers to explore this ROI paradox in popular vacation destinations.
Comparing Average Daily Rates (ADR)
Let's start by comparing ADR across different cities. According to the data, here are some of the top cities with the highest ADR:
- Portland, OR: $387
- Charlotte, NC: $347
- Dallas, TX: $212
- Nashville, TN: $203
- San Antonio, TX: $334
- Phoenix, AZ: $320
- Raleigh, NC: $277
- Houston, TX: $335
As you can see, some cities are clear winners when it comes to ADR. But what about occupancy rates?
Comparing Occupancy Rates
Occupancy rates are another crucial factor in determining ROI. According to the data, here are some of the top cities with the highest occupancy rates:
- Portland, OR: 77%
- Charlotte, NC: 89%
- Dallas, TX: 66%
- Nashville, TN: 69%
- San Antonio, TX: 62%
- Phoenix, AZ: 82%
- Raleigh, NC: 70%
- Houston, TX: 60%
Now that we've taken a look at ADR and occupancy rates, let's examine the data more closely. According to the data,
long-term rentals in some cities may offer better ROI than short-term rentals.
Comparing ROI
Let's take a look at the data and compare ROI across different cities:
| City |
State |
Mean ADR |
Mean Occupancy |
Total Listings |
Estimated ROI |
Estimated Cap Rate |
| Portland |
OR |
$387 |
89% |
415 |
9.24% |
8.26% |
| Charlotte |
NC |
$347 |
81% |
967 |
13.24% |
3.29% |
| Dallas |
TX |
$212 |
66% |
584 |
9.50% |
3.61% |
| Nashville |
TN |
$203 |
69% |
427 |
12.29% |
7.28% |
| San Antonio |
TX |
$334 |
62% |
358 |
13.33% |
6.29% |
| Phoenix |
AZ |
$320 |
82% |
299 |
14.26% |
8.56% |
| Raleigh |
NC |
$277 |
70% |
556 |
13.21% |
7.72% |
| Houston |
TX |
$335 |
60% |
733 |
6.65% |
6.58% |
As you can see, some cities offer much higher ROI than others. But what about long-term property value appreciation?
Comparing Long-Term Property Value Appreciation
According to the data, some cities may not necessarily experience long-term property value appreciation, despite high short-term gains. For example, in
some cities, short-term rentals may be cannibalizing the long-term rental market, leading to decreased property values.
Conclusion
In conclusion, the ROI paradox in popular vacation destinations is complex and multifaceted. While some cities offer high short-term gains, they may not necessarily translate to long-term property value appreciation. By carefully examining the data and considering factors such as ADR, occupancy rates, and long-term property value appreciation, investors can make more informed decisions when it comes to short-term rentals.
Read more about short-term rental markets in Washington and how they compare to other popular destinations.
