A vacation rental can have bookings, good ratings, and even high revenue, yet still yield much less profit than expected.
The problem usually doesn't lie solely in the nightly rate. Often, it’s in the expenses that accumulate without the owner recording, analyzing, or checking how much they truly reduce the rental's profitability.
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The expenses that most reduce the profitability of a vacation rental typically include platform commissions, cleaning, supplies, maintenance, replacements, financing, and taxes.
Billing more isn’t very helpful if each new reservation also increases costs and the owner is unaware of the remaining profit at the end.
The income from a booking is usually clear: payment from Airbnb, Booking, or the direct guest arrives and the owner knows how much has been collected.
Expenses, on the other hand, appear gradually. An electricity bill, a cleaning, a commission, a set of towels, a breakdown, an urgent purchase, or an annual receipt.
When not organized, they seem small. But adding them up over the year can consume a significant portion of the revenue.
There isn’t a single valid figure for all accommodations. Expenses depend on location, size, capacity, level of furnishings, occupancy, climate control, included services, and the type of guest.
However, there is one recurring rule:
The More Reservations You Manage, the More Important It Is to Control the Cost of Each Stay
Occupancy can grow while profit margins shrink.
Platform commissions directly reduce the amount left from each booking. Depending on the channel and the model applied, the owner may bear a significant part of the price paid by the guest.
The mistake lies in valuing a booking by its gross amount. To know if it’s truly worthwhile, you need to calculate the net income after deducting the commission.
Example: a booking of 1,000 euros does not necessarily generate 1,000 euros in actual income. If the platform deducts 150 euros, the accommodation starts with a net income of 850 euros before paying for cleaning, supplies, and other costs.
Cleaning is one of the most significant expenses for a vacation rental, especially when short stays dominate.
A two-night booking can require almost the same cleaning as a week-long stay. Therefore, increasing occupancy with many short bookings doesn’t always enhance profit.
This cost should include:
Amount paid to prepare the property after each departure.
Washing, drying, ironing, and transporting sheets and towels.
Detergents, disinfectants, bags, paper, and other consumables.
Hours dedicated by the owner when personally performing tasks.
Attention: charging a cleaning fee to the guest does not necessarily mean that the cost is fully covered. You should compare what you charged with the actual expense for each stay.
Utilities can become one of the most unpredictable expenses of accommodation.
Guests do not always consume as they would at home. They may leave the air conditioning running with the windows open, use heating for many hours, or heavily use pools, Jacuzzis, and other equipment.
The main utilities you should monitor are:
Analyzing the utilities by month and comparing them with occupancy helps to detect excessive consumption and calculate how much each booked night truly costs.
A vacation rental experiences greater wear and tear than a privately used home. Each stay involves entries, exits, intensive use of furniture, appliances, and equipment.
Some expenses are small and frequent. Others appear unexpectedly and can significantly affect the overall result of the month.
Refrigerator, washing machine, dishwasher, oven or small devices.
Boilers, air conditioners, radiators, and heat pumps.
Beds, sofas, tables, chairs, cabinets, and decorative elements.
Pool, garden, terrace, barbecue, closures, and common areas.
Although a repair may not occur every month, it should be included in the annual analysis. Ignoring these costs offers an artificially high picture of profitability.
Small purchases are easy to forget because each represents a small amount of money. The problem arises when they accumulate over the year.
Among the most common expenses are:
A purchase of 20 or 30 euros seems irrelevant. Fifty small purchases throughout the year can already represent a significant amount.
Fixed expenses exist even when the property has no bookings. This is why they are especially important during the low season.
These may include:
To properly analyze financing, it is advisable to distinguish between the money that goes out of the account, the interest paid, and the repayment of the loan principal.
Taxation can significantly reduce the final result of a tourist property. The problem worsens when the owner waits until the end of the quarter or year to organize the documentation.
Lost invoices, unsubstantiated expenses, unclassified transactions, or insufficient forecasting can lead to the available profit being lower than expected.
Important: economic benefit and tax result are not exactly the same. Not all expenses have the same treatment nor are deductible under the same conditions.
Short stays can increase occupancy and revenue, but they also multiply certain costs.
Each new booking may involve:
A stay of six nights may be more profitable than three bookings of two nights each, even if the total revenue is similar.
Recording expenses is not only useful for knowing the result at the end of the year. It also allows for detecting deviations while they can still be corrected.
It is advisable to compare:
Small expenses also reduce profit. If they are not recorded, the result seems better than it really is.
When all transactions come from the same account and are not classified, it becomes difficult to know how much the tourism activity truly costs.
If you manage several properties, you must know which property generates each expense. Otherwise, a profitable property may hide the poor results of another.
When expenses are reviewed too late, it is no longer possible to correct prices, reduce consumption, or modify the booking conditions for that period.
Occupancy is important, but it should be analyzed alongside the average price, commissions, and the cost incurred for each stay.
It is not about eliminating all expenses. Many are necessary to provide a good experience and maintain the property in good condition.
The goal is to know how much they cost, how they evolve, and whether the reservation prices cover them.
Gatavia App helps you record income, expenses, bookings, and documents to understand the profit and actual profitability of each tourist property.
Control expenses for my propertyThe main ones usually include platform commissions, cleaning, laundry, utilities, maintenance, repairs, replacements, insurance, taxes, and professional services.
Usually yes. Each new booking may require another cleaning, more laundry, more consumables, and more management work.
You should allocate to the booking the platform commission, cleaning, laundry, and other directly related costs. It is also advisable to distribute part of the fixed expenses.
Because billing does not subtract expenses. High occupancy can generate many commissions, cleanings, utilities, and repairs that reduce final profit.
Yes. Monthly monitoring allows you to detect cost increases in time, while annual analysis shows the overall result and seasonality.
Yes. When managing multiple accommodations, each income and expense should be assigned to its property to understand which ones are profitable and which need adjustments.
Expenses are not a problem only when they are high. They are also a problem when the owner does not know they exist or cannot measure how much they reduce profit.
Profitability starts with recording each transaction and understanding where the money goes from the tourist property.
