Whether you’re new to vacation rentals or a seasoned property owner, understanding industry terminology is essential for making informed decisions about your investment. This glossary covers the most important terms you’ll encounter in short-term rental management.
Revenue & Pricing Terms
ADR (Average Daily Rate)
Definition: The average rental income earned per paid occupied night.
Formula: Total Room Revenue ÷ Number of Rooms Sold = ADR
Example: If your property earned $3,000 from 20 booked nights, your ADR is $150.
Why it matters: ADR helps you understand your pricing performance independent of occupancy. A high ADR with low occupancy might indicate overpricing, while a low ADR with high occupancy could mean you’re leaving money on the table.
RevPAR (Revenue Per Available Room/Night)
Definition: Total revenue divided by total available nights, regardless of whether they were booked.
Formula: Total Revenue ÷ Total Available Nights = RevPAR
Alternative Formula: ADR × Occupancy Rate = RevPAR
Example: If your property has 30 available nights and earns $3,000, your RevPAR is $100.
Why it matters: RevPAR is considered the most important metric in hospitality because it accounts for both pricing AND occupancy. It’s the truest measure of your property’s revenue performance.
Occupancy Rate
Definition: The percentage of available nights that were booked during a specific period.
Formula: Booked Nights ÷ Available Nights × 100 = Occupancy Rate
Example: If your property was booked 24 out of 30 available nights, your occupancy rate is 80%.
Industry benchmark: Successful vacation rentals typically achieve 60-80% annual occupancy, with seasonal variations.
Dynamic Pricing
Definition: A pricing strategy that automatically adjusts nightly rates based on demand, seasonality, local events, competitor pricing, and other market factors.
How it works: Software algorithms analyze thousands of data points to recommend or automatically set optimal prices for each night.
Benefits: Maximizes revenue by capturing premium rates during high-demand periods while maintaining competitive rates during slower times.
Gross Booking Revenue
Definition: The total amount charged to guests before any fees, commissions, or expenses are deducted.
Includes: Nightly rate × nights stayed + cleaning fee + any additional guest fees
Why it matters: Management fees are typically calculated as a percentage of gross booking revenue.
Net Operating Income (NOI)
Definition: Gross revenue minus all operating expenses, but before mortgage payments and income taxes.
Formula: Gross Revenue - Operating Expenses = NOI
Operating expenses include: Management fees, cleaning, maintenance, utilities, insurance, supplies, platform fees
Cap Rate (Capitalization Rate)
Definition: A measure of a property’s potential return on investment, expressed as a percentage.
Formula: Net Operating Income ÷ Property Value × 100 = Cap Rate
Example: A property worth $300,000 with $24,000 NOI has an 8% cap rate.
Booking & Platform Terms
OTA (Online Travel Agency)
Definition: Third-party platforms that allow travelers to book accommodations online.
Examples: Airbnb, VRBO, Booking.com, Expedia
How they work: OTAs list your property to millions of travelers in exchange for a commission (typically 3-15% per booking).
Direct Booking
Definition: A reservation made directly with the property owner or manager, bypassing OTAs.
Benefits: No OTA commission fees, direct guest relationship, more control over policies
Challenges: Requires marketing investment to drive traffic
Channel Manager
Definition: Software that synchronizes your property’s availability, rates, and bookings across multiple listing platforms.
Purpose: Prevents double bookings and eliminates the need to manually update each platform.
Instant Book
Definition: A feature on booking platforms that allows guests to book immediately without host approval.
Pros: Higher search ranking, more bookings, appeals to spontaneous travelers
Cons: Less control over who books, reliance on platform screening
Minimum Stay
Definition: The shortest booking length you’ll accept.
Common settings:
- 1-2 nights (maximizes bookings but increases turnover costs)
- 3-4 nights (balances bookings with operational efficiency)
- 7+ nights (reduces turnover, common for peak seasons)
Orphan Night / Gap Night
Definition: An unbooked night between two reservations that’s too short to attract a new booking.
Example: A single open Wednesday between a Monday checkout and Friday check-in.
Solutions: Reduce minimum stay, offer discounts, use gap-night pricing tools
Lead Time
Definition: The number of days between when a booking is made and when the guest arrives.
Why it matters: Longer lead times allow better planning; last-minute bookings may need different pricing strategies.
Booking Window
Definition: How far in advance guests can book your property.
Typical setting: 6-12 months in advance
Guest Management Terms
Guest Screening
Definition: The process of evaluating potential guests before accepting their booking.
Methods: ID verification, review history, direct communication, booking platform verification
House Rules
Definition: Property-specific rules that guests must agree to before booking.
Common rules: No smoking, no parties, no pets, quiet hours, maximum occupancy, parking instructions
Check-in / Check-out Time
Definition: The designated times when guests can arrive and must depart.
Standard times: Check-in 3-4 PM, Check-out 10-11 AM
Purpose: Allows adequate time for cleaning and turnover between guests.
Turnover
Definition: The process of preparing a property for the next guest after one departs.
Includes: Cleaning, linen change, restocking supplies, inspection
Turnover time: Typically 4-6 hours for professional cleaning
Guest Communication
Definition: All interactions with guests before, during, and after their stay.
Key touchpoints: Booking confirmation, pre-arrival information, check-in instructions, mid-stay check-in, checkout reminder, review request
Property Management Terms
Property Management Agreement
Definition: A legal contract between a property owner and management company outlining services, fees, responsibilities, and terms.
Key elements: Fee structure, services included, contract length, termination clauses, owner responsibilities
Full-Service Management
Definition: A comprehensive management approach where the company handles all aspects of vacation rental operations.
Typically includes: Listing, pricing, guest communication, cleaning coordination, maintenance, financial reporting
Co-Hosting
Definition: A partnership where someone helps manage your property without being the owner.
Common arrangement: Co-host handles day-to-day operations in exchange for a percentage of revenue.
Owner Block / Owner Hold
Definition: Dates blocked on the calendar for the owner’s personal use.
Best practice: Block dates in advance to avoid fragmenting booking availability.
PMS (Property Management System/Software)
Definition: Software used to manage vacation rental operations, including reservations, guest communication, and reporting.
Examples: Guesty, Hostaway, Lodgify, OwnerRez
Financial Terms
Security Deposit
Definition: A refundable amount collected from guests to cover potential damages.
Alternatives: Damage protection insurance, damage waivers
Cleaning Fee
Definition: A separate charge added to bookings to cover professional cleaning costs.
Who pays: The guest (added to their total)
Typical range: $75-$300+ depending on property size
Service Fee / Platform Fee
Definition: Fees charged by booking platforms (OTAs) for using their service.
Airbnb: 3% host fee (or 14-16% host-only fee) + guest service fee
VRBO: 5% of booking subtotal or 8% if using their payment processing
Payout
Definition: The transfer of rental income from the booking platform or property manager to the property owner.
Timing varies: 24 hours after check-in (Airbnb), weekly, or monthly depending on manager
Legal & Compliance Terms
STR (Short-Term Rental)
Definition: A furnished property rented for short periods, typically less than 30 days.
Also called: Vacation rental, holiday let, transient rental
Transient Occupancy Tax (TOT)
Definition: A tax levied on short-term lodging, similar to hotel taxes.
Also called: Lodging tax, bed tax, hotel tax, occupancy tax
Who collects: Many platforms collect and remit automatically; some jurisdictions require host filing.
STR Permit / License
Definition: A government-issued permit allowing a property to operate as a short-term rental.
Requirements vary: By city, county, and state. May require inspection, insurance proof, neighbor notification.
HOA (Homeowners Association)
Definition: An organization that manages a community and enforces rules for properties within it.
STR relevance: Many HOAs restrict or prohibit short-term rentals. Always verify HOA rules before purchasing or listing a property.
Zoning
Definition: Local regulations that determine how properties in specific areas can be used.
STR impact: Some zones prohibit commercial use, which may include vacation rentals.
Performance & Analytics Terms
Conversion Rate
Definition: The percentage of listing views that result in bookings.
Formula: Bookings ÷ Listing Views × 100 = Conversion Rate
Improve by: Better photos, competitive pricing, compelling descriptions, positive reviews
Response Rate
Definition: The percentage of guest inquiries you respond to within 24 hours.
Why it matters: Platforms reward fast responders with better search placement.
Target: 100% within 1 hour
Response Time
Definition: The average time it takes to respond to guest messages.
Best practice: Under 1 hour during business hours
Superhost / Premier Host
Definition: Status designations awarded by platforms to top-performing hosts.
Airbnb Superhost requirements: 4.8+ rating, <1% cancellation rate, 10+ stays/year, 90%+ response rate
VRBO Premier Host requirements: Similar metrics around reviews, response time, and bookings
Review Score / Rating
Definition: The average star rating from guest reviews, typically on a 1-5 scale.
Target: 4.8+ stars for premium positioning
Impact: Affects search ranking, guest trust, and ability to charge premium rates
Additional Terms
Amenities
Definition: Features and items provided at a property for guest use.
Categories:
- Essential (WiFi, kitchen, heating/AC)
- Popular (pool, hot tub, washer/dryer)
- Unique (game room, home theater, lake access)
Listing Optimization
Definition: The process of improving your property listing to increase visibility and bookings.
Elements: Title, description, photos, amenity list, pricing, availability settings
Seasonality
Definition: Predictable fluctuations in demand throughout the year.
Examples: Summer peak for beach properties, winter peak for ski destinations, event-driven spikes
Comp Set (Competitive Set)
Definition: A group of similar properties used for pricing and performance comparison.
Criteria: Similar location, size, amenities, and target guest profile
Summary
Understanding these terms will help you communicate effectively with property managers, analyze your rental’s performance, and make better business decisions. Whether you’re evaluating management companies or optimizing your own operations, this vocabulary is essential knowledge for vacation rental success.
Have questions about vacation rental management? Contact Weekender Management or get a free income projection for your property.
