How is Market Score calculated?

Source: How is Market Score calculated?

Source

AirDNA (June 2024 update)

What It Says

AirDNA provides a Market Score ranging from 40 to 100 to grade short-term rental (STR) locations. These scores aggregate data from Airbnb, Vrbo, and Booking.com. To ensure statistical significance, a market must contain at least 15 listings to receive a score.

The scoring system corresponds to traditional letter grades:

• 90–100: A
• 75–90: B
• 65–75: C
• 50–65: D
• 40–50: F

AirDNA benchmarks markets only against others within the same country. According to the article, "A Market Score of 90-100 implies an A grade... the 40-50 range is an F."

Why It Matters

For STR operators and investors, these scores serve as a primary filter for geographic expansion. Because the score weights five distinct pillars—Investability, Rental Demand, Revenue Growth, Seasonality, and Regulation—it allows users to see beyond simple occupancy rates. By benchmarking within national borders, it provides a realistic view of how a specific market competes for domestic and international investment capital compared to its immediate neighbors.

Useful Signals

The score is derived from five key metrics:

• Investability (US Only): Compares local home prices to average STR income for full-time listings.
• Rental Demand: Tracks travel demand by looking at occupancy rates and listing growth.
• Revenue Growth: Measures year-over-year RevPAR changes for properties active in both periods.
• Seasonality: Calculates the revenue gap between peak and low months; higher scores indicate more stable, year-round revenue.
• Regulation: Analyzes host and property behavior to detect the presence or enforcement of local STR laws.

STR Tech Report Take

The inclusion of a Regulation score is the most critical technical signal here. Rather than just tracking the text of local ordinances, AirDNA uses behavioral data to infer enforcement levels. For tech vendors, this data is vital for building risk-assessment tools. For operators, the Investability metric remains the "north star" for acquisition, but the Seasonality score is the true indicator of operational difficulty. A high Market Score doesn't just mean "more money," it means a more professionalized and predictable environment.

Original Source

How is Market Score calculated?