What Is Vacation Rental Occupancy Rate?

Since Japan’s Private Lodging Business Act (Minpaku Shinpo) took effect in June 2018, the number of vacation rental properties has declined. A major factor behind this is the withdrawal of illegal vacation rental operations that had previously gone unregulated. Alongside this shift, data also shows that occupancy rates dropped following the law’s enforcement.

Under the Private Lodging Business Act, operations are capped at 180 days per year, and in some cases, local municipalities impose even stricter limits. As a result, occupancy rates for vacation rentals tend to be lower compared to other types of accommodation.

That said, occupancy rates vary significantly by region. Japan’s vacation rental market is currently centered around the three major metropolitan areas—Tokyo, Osaka, and Kyoto—while also expanding into regional cities such as Hokkaido, Okinawa, Fukuoka, Aichi, and Saitama. Since business conditions differ from area to area, it’s important to reference occupancy data specific to the region where you operate rather than relying on national averages.

Factors That Influence Vacation Rental Occupancy Rates

Several factors affect the occupancy rate of a vacation rental property. Among the most important is accurately identifying peak tourist demand periods and ensuring your property is properly operational during those times. If your listing isn’t available when travelers are booking in droves, it becomes difficult to boost your occupancy rate.

It’s also essential to create an environment where your property is easy to book. For example, choosing a platform where your listing stands out in search results and offers a smooth booking process is key. By providing guests with a convenient booking experience, you can significantly improve your occupancy rate.

Performance on Booking Platforms Like Airbnb

One of the key factors influencing vacation rental occupancy rates is performance on OTAs (Online Travel Agencies) such as Airbnb. In particular, how well your listing aligns with the OTA’s search algorithm and the quality of the photos used in your listing are both critical to boosting occupancy. Understanding these two factors and applying them effectively to your rental business is essential.

Listing Photos

The quality of photos featured in your listing is an extremely important factor in raising your occupancy rate. Since photos serve as the primary decision-making tool for guests choosing a property, they need to clearly convey the atmosphere and amenities of your space.

For example, be sure to include photos of bathrooms and other water-related facilities that clearly convey cleanliness and comfort. If photo quality is poor, first impressions suffer—regardless of how well-equipped the property actually is—leading to fewer bookings. Consider hiring a professional photographer or shooting with plenty of natural light to elevate the quality of your listing photos.

Listing Search Ranking

Your Airbnb listing’s search ranking also has a major impact on occupancy rates. Appearing prominently in area searches and near the top of search results pages is especially important. Airbnb’s search algorithm takes into account factors such as view counts, booking rates, and the quantity and quality of reviews when determining ranking.

Through the host dashboard, you can check metrics such as search impressions (how often your listing appears in search results) and listing views. Use this data to understand how visible your listing currently is, and make improvements to your photos, description, or pricing as needed.

Additionally, guests arriving via Google or Airbnb area searches tend to click on listings that appear near the top of the results. Optimizing your listing to improve search ranking is therefore a critical strategy that directly contributes to a higher occupancy rate.

Seasonal Factors

Occupancy rates rise during periods of high tourist demand. That’s why accurately understanding regional tourism peaks and timing your property’s availability accordingly is key to maximizing revenue.

During periods of high demand, travelers who couldn’t secure bookings at other accommodations often turn to vacation rentals instead. However, the Private Lodging Business Act limits operations to 180 days per year. This means that strategically concentrating those 180 days around peak demand periods is the key to successful vacation rental management.

Identify high-demand periods, allocate your operating days wisely, and adjust your schedule to make bookings easier to secure. Flexible management that responds to tourism events and peak seasons will contribute directly to increased revenue.

How to Increase Your Vacation Rental Occupancy Rate

To raise your vacation rental occupancy rate, it’s essential to understand how listing systems on booking platforms like Airbnb work and implement strategies tailored to that system. By adopting the right approach, you can efficiently increase bookings and maximize revenue. Here, we’ll introduce specific methods for boosting your occupancy rate, with a focus on Airbnb.

Strategy 1: Improve Your Airbnb Listing Photos

By improving the photos in your listing, you can showcase your property’s appeal to its fullest and drive up your occupancy rate. Keep the following points in mind to create a listing that guests are more likely to choose.

1. Increase Information with Multi-Angle Photos

Capture the room as a whole as well as its finer details by shooting from various angles. Photographing the same space from multiple perspectives makes it easier for guests to grasp the room’s size and unique features.

2. Shoot During Bright Daylight Hours

It’s best to take photos during bright daylight hours on a clear day. Dark photos can create a negative impression of the room, so make the most of natural light when shooting.

3. Use High-Quality Images

Choose photos with high image quality. Low-quality images make it hard to see details, which means the property’s appeal doesn’t fully come across. That said, if the file size is too large, page loading speed may slow down, causing users to leave. The key is to strike a balance between high image quality and a lightweight file size.

Strategy 2: Optimize Your Airbnb Listing

Optimizing your listing can help boost your search ranking and make it easier for guests to find your property. Keep the following points in mind as you optimize.

1. Improve Review Quality

Positive guest reviews build credibility for your listing and also influence your ranking in search results. To gather more reviews, politely request feedback after each stay and consistently deliver a high level of guest satisfaction.

2. Add More Photos

Include plenty of photos to give guests a detailed picture of your property. Providing images that showcase the room’s atmosphere and amenities in detail helps build guest trust.

3. Make the Most of Comments

Communicate with guests not only through reviews but also via the comments section. Responding quickly and courteously helps build trust in you as a host.

4. Update Your Listing Regularly

Regularly updating your listing page’s information is also important. Refreshing photos and text to reflect the season keeps your listing feeling fresh to guests and can also help improve your search ranking.

Strategy 3: Build a System for Direct Bookings Outside of OTAs

Rather than relying entirely on OTAs like Airbnb, build a system for securing direct bookings through your own website and social media channels.

1. Run Your Own Website

Creating your own website with built-in booking functionality allows you to accept reservations directly while reducing commission fees. The key is to boost your visibility through SEO and by maintaining a blog.

2. Leverage Social Media

Use platforms like Instagram and Facebook to showcase what makes your property appealing. Sharing reviews and photos from past guests can help attract new bookings.

3. Offer Discount Plans for Repeat Guests

Offering exclusive discounts for repeat guests is also an effective way to encourage direct bookings. A growing base of repeat guests contributes to stable, ongoing revenue.

Use Airbnb to Boost Your Vacation Rental Occupancy Rate

We’ve covered strategies for using Airbnb to increase your vacation rental occupancy rate.

Once you’ve started a vacation rental business, there’s no reason not to aim for strong revenue. In particular, the majority of guests using vacation rentals in Japan are international travelers. Since Airbnb is widely used by overseas users, optimizing your listing can help you climb the search rankings and improve your occupancy rate.

A higher search ranking leads to more bookings, which ultimately translates into greater revenue. Make smart use of Airbnb and set your vacation rental business up for success.

Here at Stay Buddy Inc., we manage a number of vacation rental properties primarily in Osaka as a licensed residential lodging management business operator. If you’re looking to start a vacation rental business but aren’t sure where to begin, or if you’ve already launched one but are struggling to fill bookings, please feel free to reach out to us anytime.