When you own a property, it’s always a critical consideration how to make it sweat and monetize your investment. The choice is usually between listing on short-term rental platforms like Airbnb or a traditional long-term agreement, the two holding out hugely different operational and financial models. Choosing between potentially higher per-night tariffs and the stability of a long-term tenant is the classic quandary.

Both models can be profitable, but it’s critical to appreciate their typical profiles. Hence, the right strategy would be educated by a number of factors, from financial objectives to risk appetite, and most important, the unique characteristics of the local market.

While Airbnb sure offers higher potential incomes, it comes with the disclaimer of volatile revenues. On the flip side, long-term rentals come with the reassurance of predictability and constancy, even if at a lower gross sum. Which will give you higher returns depends on a bunch of variable factors. Let us look at some of these variables.

In this model, the gross income is determined by average daily rate (ADR) multiplied by occupancy rate. ADR can swing across a broad band depending on characteristics and location of the property, efficiency of management and seasonal variations. Localized data is key to predicting potential Airbnb revenue. Securing consistent bookings depends on collecting such detailed regional reports on a regular basis.

Since the monthly rent is fixed through a signed lease agreement, this income is stable and predictable. The income potential hinges on the local demand-supply dynamics. Despite the safety valve of consistency, the total annual gross income often falls short of maximum potential, more so for larger properties.

Has higher operating costs because of frequent turnover expenses (including cleaning, utilities and restocking). Furnishing and maintenance are other ongoing costs, including repairs and refresh needs.

There are more predictable costs including property taxes and landlord insurance. Then there are maintenance and repair costs, besides factoring in the lost rent in the hiatus between tenants. Sometimes, there is a management fee (typically 6–12% of rent) and potential leasing fees.

• ROI is calculated using the standard formula of net annual income / cost or cash invested.
• Net annual income is gross revenue minus total annual operating expenses.
• The data used in calculating ROI must be very accurate to yield accurate results.

While it has potential for high cash flow during peak season, bookings tend to crash during off-season, resulting in unstable monthly income.

This model yields a predictable monthly cash flow, making budgeting easy.

There is no in-built superiority of one model over another. While Airbnb promises higher profitability, it carries the rider of bigger expenses, more management effort and income uncertainty. Long-term rentals offer a more stable, if relatively moderate income, with less effort involved.

However, according to recent research, short-term rentals hold out strong income opportunities in 2025. Latest reports show that demand started a sharp recovery last year as confidence in the economy improved, while high interest rates regulated supply growth by keeping fresh investors on hold, thus levelling out occupancy after a tricky ride. The outlook for 2025 is robust, with occupancy rate expected to keep climbing, inching closer to pre-pandemic levels of 56% by the yearend.