Los Angeles Short Term Rental (STR) Market Analysis

The Los Angeles short-term rental (STR) market, extensively monitored via Airbnb and Vrbo platforms, presents intriguing dynamics marked by moderate performance with clear seasonal patterns and steady rental demand. In-depth analytics provide critical insights into occupancy rates, revenue generation, average daily rates (ADR), guest preferences, and booking behaviors.

Market Performance Overview

The overall market performance score for Los Angeles is relatively low at 22, influenced by factors such as limited investability (10) and modest revenue growth (7). However, strong rental demand (70) and pronounced seasonality (86) partially offset these weaker metrics. Annual revenue per listing currently averages around $53.3K, marking a modest year-over-year increase of 4%.

Occupancy and Seasonal Trends

Los Angeles records an average occupancy rate of 61%, stable compared to the previous period. Occupancy demonstrates notable seasonal fluctuation, peaking at 70% in July, the height of summer tourism, and reaching its lowest point at 51% in January. This distinct seasonality aligns with broader travel trends, likely driven by vacationers and business travelers adjusting their schedules around peak periods and holiday seasons.

Average Daily Rate and Revenue Insights

The average daily rate (ADR) in Los Angeles stands at $294.24, an increase of 5% year-over-year. Revenue per available room (RevPAR) follows suit, currently at $178.15, marking a 4% improvement. Professionally managed properties outperform others, commanding an average ADR of $437.21, a notable 12% increase. Luxury listings, while stable, lead the market with a nightly average of $542.73.

The ADR follows clear seasonal arcs, climbing from $267 in May to a peak of $334 in August before dipping again in the winter months. Weekend RevPAR averages at $218, with the strongest performance occurring in July.

On a daily basis, ADR volatility is high, showing sharp peaks and troughs correlating with weekends and holidays. The highest willingness to pay is forecast between late May and early September, where ADRs consistently exceed $270, peaking above $300 during specific weekends and holidays.

Booking Lead Time and Length of Stay

The average length of guest stays is approximately 4.0 days, fluctuating from 3.8 days in October to a high of 4.5 days in January. The typical booking lead time averages around 35 days but shows significant variance between shorter, spontaneous bookings in January (24 days) and longer advanced bookings in July (44 days).

Detailed lead time analysis reveals that a substantial share of bookings (over 30K monthly) occur within 0-6 days of arrival. However, longer booking windows (91+ days) account for a significant portion of summer traffic, especially during peak periods like July, indicating a dual-profile of spontaneous bookers and long-range planners.

Inventory and Market Preferences

The Los Angeles STR market comprises approximately 24,406 active listings, marking a slight decline of 2% year-over-year. Airbnb dominates market share with 75% of listings, significantly ahead of Vrbo at 8% and dual listings at 17%.

One-bedroom units constitute the majority of listings (52%), reflecting traveler preferences for smaller, cost-effective accommodations. Entire homes overwhelmingly dominate the market, making up 82% of listings, indicating a strong preference among visitors for privacy and autonomy over shared accommodation options.

Key Amenities and Policies

Amenities significantly influence market competitiveness. Nearly all listings offer wired internet (99%) and wireless internet (98%), along with kitchens (90%), air conditioning (89%), and heating (86%). Such amenities have become baseline expectations, enhancing listing appeal and supporting competitive positioning.

Regarding cancellation policies, flexible and moderate policies are relatively uncommon, accounting for only 14.8% and 14.4% of listings, respectively. "Strict" policies hold the largest share among clear-cut categories, covering approximately 20.8% of listings. Notably, nearly half the listings (49.2%) adopt "other" unique cancellation policies, suggesting customized approaches designed to attract a diverse range of traveler needs and preferences.

Demand Dynamics and Booking Patterns

Booking patterns in Los Angeles are notably variable, with peak demand months being July and August, where both booking days and listing numbers surge substantially. A noticeable dip occurs around February, aligning with the low seasonal demand. The 30-day future booking trends suggest a pronounced pattern of bookings being secured primarily between one week and one month prior, emphasizing the significance of short-to-medium-term traveler planning behaviors.

Rate analysis for the next 180 days reflects solid guest willingness to pay for premium experiences during high-demand periods. July and August continue to exhibit the highest future ADR projections, while booking activity sharply drops for dates beyond October, highlighting a typical planning horizon of 3-4 months.

Revenue Insights by Property Type

Revenue analysis highlights that entire homes achieve the highest annual earnings, averaging approximately $60.5K per year. Houses closely follow at $59.4K, while apartments generate around $44.4K annually. This underscores the premium placed on larger, more private properties in the Los Angeles market, appealing significantly to higher-spending leisure and family travelers.

Strategic Recommendations

To capitalize effectively on Los Angeles's STR market dynamics, property managers and hosts should consider:

• Implementing dynamic pricing models around peak periods (July-August) to optimize revenues.

• Leveraging daily rate patterns to maximize weekend pricing and capitalize on high-demand dates.

• Ensuring listings prominently feature highly-demanded amenities such as robust internet, kitchen facilities, and air conditioning to enhance competitive advantage.

• Tailoring cancellation policies strategically, potentially offering greater flexibility to capture increased booking volumes, especially closer to peak travel periods.

In summary, Los Angeles presents a nuanced but promising STR market, driven by seasonal peaks, strong preference for private accommodations, and clear amenities expectations. Hosts and property managers who adapt strategically to these market specifics, leveraging the comprehensive data from Airbnb and Vrbo systems, will position themselves optimally to achieve sustained growth and profitability.

May 14, 2025, by Michal Mohelsky, J.D., principal of MMCG, short-term rental (STR) feasibility study consultant

Sources: API of arbnb.com and vrbo.com