Vacation Rental Glossary
Regularly updated list of commonly used short term rental terms.
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Our growing list of commonly used vacation rental terms to explain confusing acronyms or jargon you might encounter in your hosting journey.
The number of nights a property has been booked by guests divided by the total nights the property is available to be rented.
A variable pricing strategy where a host makes frequent adjustments in the price of their property in response to market factors, such as demand or competition.
An electronic payment service for transferring funds by wire between two parties.
A pricing condition with specific rates for weekend visits, usually higher due to increased demand.
The fee charged by vacation rental management companies to the owner of the rental. This is usually a percentage of the total rental revenue.
The final price offered to a guest, including all fees associated with the booking.
A refundable amount of money that a property owner collects from their guests in addition to the total rental amount at the time of booking. The deposit is to cover any guest damages to the property. The deposit is returned at the completion of a visit if the property in the same condition they found it. Also referred to as a damage or breakage deposit.
Revenue management involves the use of analytics to optimize the financial results of a vacation rental. As each property has a set amount of fixed costs and a perishable inventory (a night without a booking cannot be resold at a later date) a certain number of nights must be sold at an appropriate rate to break cover costs.
Also known as “income” It’s the total amount of money generated by a vacation rental.
Revenue per available room (RevPAR) is a metric used to measure the performance of a vacation rental. It is calculated by multiplying a property’s average daily room rate (ADR) by its occupancy rate.
Return On Revenue (ROR)
A performance measure used that compares the net income of a vacation rental to its revenue. It compares the amount of net income generated for each dollar of revenue generated.
Return On Investment (ROI)
A performance measure that evaluates the profitability of an investment. To calculate the ROI of a vacation rental, the profit of the property is divided by the cost of the property.
The published rate for a night’s stay without any discounts or premiums included.
A special rate that a guest must meet certain conditions in order to book. Examples include working for a specific corporation, membership club, or promotional package rate with specific booking conditions.
Price per guest
Setting rates for a property based on the number of guests.
Pool heating fee
An additional fee on top of the property rate charged to guests who wish to heat a pool or hot tub. This is usually to cover the costs associated with fuel or electricity.
An additional charge on top of the rental rate if a guest chooses to bring a pet during their stay. This is usually charged to cover additional cleaning or wear and tear to a property.
A refundable sum of money that a property owner collects from a guest to cover the risk of damage from a pet. At the end of a stay if there is no damage the deposit is refunded.
Per Person Sharing
The amount each person pays when sharing a room, therefore the rate increases, as the number of guests staying in the room increases.
The amount that a property owner receives from a platform after any commissions have been deducted.
Length of Stay pricing
A pricing policy that offers guests a lower rate for longer duration stays, for example offering a lower nightly rate for 7 days vs 3 days.
Key Performance Indicators (KPIs)
A set of quantifiable metrics that an owner or company uses to measure the performance of its investment over time. Examples can include occupancy rate, average daily rate or percentage of returning guests.
Splitting up the payment of a purchase into equal payments.
Fee charged for additional guests beyond an initial amount.
Gross Booking Revenue
The total value of all transactions recorded at the time of booking. Transactions include the total price including taxes, cleaning fees, and other charges, and are generally deducted for cancellations and refunds.
A mortgage with an interest rate that stays constant for an agreed period of time.
Fair Market Value (FMV)
An estimate of the market value of a property based on what a knowledgeable and willing buyer would likely pay without undue pressure.
An account controlled by an independent third party that holds payments between two or more parties during a transaction.
The difference between the current market value of a property and the amount owed on its mortgage.
Adjusting the price for a property to reflect differences in demand for a rental. Dynamic pricing would charge a higher nightly rate during peak tourist season, and less during periods where demand is lower.
A partial payment made by a renter at the time of booking in order to secure a reservation. This can be a fixed amount or a percentage of the total rental fee.
The standard base rental rate for a property. This rate would be adjusted for variations in demand such as tourist seasons or weekend stays.
Damage waiver fee
A damage waiver fee is a prepaid, non-refundable fee included in the rental price covering accidental damages to the property during a guests stay.
A refundable amount of money that a property owner collects from their guests in addition to the total rental amount at the time of booking. The deposit is to cover any guest damages to the property. The deposit is returned at the completion of a visit if the property is in the same condition they found it. Also referred to as a breakage or security deposit.
Additional fees charged to a guest that is unique to a property. These could be due to special amenities such as fire pits or hot tubs that require additional cleaning or supplies.
The rate comparing the total number of travelers viewing or making an inquiry for a property vs the total number of bookings.
A list of rental properties that can be seen as competitors to a property because they are similar in size, amenities, and price, and attract a common demographic. Comparing against their competitive set can help property owners make their own offering more competitive.
Comparative Market Analysis
A report created to view comparable homes in an area that is used to estimate a fair value for a property.
A fee charged by hosts for the cost of cleaning their property after guest departure.
A fee charged by third-party distributors to a hosts for listing their property.
An amount of money that a guest must pay if they cancel a reservation. The amount can change as a renter gets closer to the date of the reservation.
A refundable amount of money that a property owner collects from their guests in addition to the total rental amount at the time of booking. The deposit is to cover any guest damages to the property. The deposit is returned at the completion of a visit if the property in the same condition they found it. Also referred to as a damage or security deposit.
When monthly rental income is able to cover all operating expenses for a property. Any additional revenue would be profit, and lower revenue would be a loss.
A fee that agencies or websites charge for booking through them. Depending on the platform booking fees could be charged to rental property owners or guests.
A visualization of how bookings historically occur over a time period. This can aid property owners to adjust rates.
Best Available Rate (BAR)
Lowest, non-restricted rate available to all guests.
Average Room Rate
see Average Daily Rate (ADR)
Average Rate Index (ARI)
Measure the performance of a property’s average daily rate over a time period in comparison to others. For similar properties (size, amenities, etc), a property’s ARI is expected to be 100. The index can be helpful in determining whether to raise, lower or hold rates.
Average Daily Rate (ADR)
The average rental revenue earned for an occupied rental property per day. Owners can use this metric to evaluate the operating performance of a property.
Annual Percentage Rate (APR)
Annual percentage rate (APR) refers to the yearly interest generated by a sum that’s charged to borrowers or paid to investors.
Glossary terms are provided by the community to provide a quick reference for short term rental owners.
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