Is Short-Term Renting Worth It? A Real ROI Comparison of Airbnb vs Long-term rentals

For property owners and investors, one of the biggest questions is whether short-term rentals—like Airbnb and other vacation rental platforms—actually deliver better returns than traditional long-term leases. With rising demand for flexible accommodation and professional management options becoming more accessible, short-term rentals have become an increasingly attractive investment strategy.

But is the upside truly worth it? Below, we break down the real numbers, the hidden costs, and how to determine whether short-term renting is the smarter move for your property.

1. Short-Term Rental ROI vs. Long-Term Rental: The Basics

At its core, short-term rental return on investment (ROI) is driven by three things:

1. Nightly rate

2. Occupancy rate

3. Operating expenses

Compared to long-term rentals, Short Term Rentals typically command a higher per-night price, which can lead to substantially higher gross revenue. However, they also come with more variable costs and require consistent guest turnover.

Long-term rentals offer predictable income with minimal operational demands—but typically lower profit potential, due to the income amount being fixed.

2. Revenue Potential: A Side-by-Side Look

Let’s compare two properties in the same market.

Scenario A: Long-Term Rental

• Monthly rent: £1,200

• Annual income: £14,400

• Expenses (insurance, general maintenance): low

• Vacancy: minimal

Scenario B: Short-Term Rental

• Average nightly rate: £120

• Average occupancy: 65%

• Monthly income: £120 × 19.5 nights = £2,340

• Annual income: £28,080

Short-term rental revenue: nearly double.

This is why so many investors are gravitating toward Airbnb-style hosting. Even with fluctuating occupancy, the upside often outweighs what long-term leasing can provide.

3. But Don’t Forget: STRs Have Higher Operating Costs

Short-term rentals generate more income, but they also come with higher costs, including:

• Cleaning and turnovers

• Consumables (toiletries, coffee, linens, etc.)

• Utilities (usually included for STRs, can be billed to tenants for LTRs)

• Repairs, restocking, and wear-and-tear

• Platform fees (Airbnb, Vrbo)

• Property management fees (if using a professional service)

A typical rule of thumb: Expect STR expenses to range from 30%–50% of gross revenue, compared to 10%–15% for long-term rentals.

Even after these deductions, STRs often retain a stronger profit margin.

4. Profitability Example: After Expenses

Following the earlier revenue example:

Long-Term Rental

• Annual revenue: £14,400

• Estimated expenses: £1,800

• Net profit: £12,600

Short-Term Rental

• Annual revenue: £28,080

• Estimated expenses (at 40%): £11,232

• Net profit: £16,848

Result: Short-term rental earns ~34% more net profit.

This is a simplified example—actual numbers will vary by property type, seasonality, location, and management efficiency. But overall, vacation rentals continue to outperform long-term rentals in most travel-demand markets.

5. When Short-Term Rentals Outperform Most

Short-term renting tends to win in markets that have:

• Strong tourism or business travel

• Seasonal peaks (coastal, mountain, city-center)

• High hotel rates

• Limited short-term accommodation supply - Minimal competition

• Major events (sports, concerts, festivals)

If your property is in an area that attracts consistent visitors, your short-term rental ROI is likely to be significantly higher.

6. When Long-Term Rentals Might Be the Better Choice

Long-term renting may be a smarter option if:

• Local short-term rental regulations are strict

• The area has low demand for tourism or business stays

• You prefer low involvement

• You’re risk-averse

• The property is in a suburban or non-central location

Not every market supports strong STR profitability—so understanding local demand is critical.

7. Final Verdict: Is Short-Term Renting Worth It?

For many property owners, yes—short-term renting is absolutely worth it from a profitability standpoint. With the right pricing strategy, marketing, turnover process, and guest experience, STRs can outperform long-term rentals significantly in both revenue and net profit.

However, for owners who want the financial upside without the operational burden, working with a professional short-term rental property management company often delivers the best outcomes:

• Higher occupancy

• Better nightly rates

• Fewer headaches

• More consistent returns

If you’re evaluating your property’s potential or wondering whether making the switch is right for you, we can help you run a personalized ROI analysis based on your home and your market.

Get in touch with Stay for Less Ltd for more information on our property management services to optimise and make your short-term rental property the most successful it can be.