You’re Getting Bookings, But Where’s the Profit?

High booking rates don’t always translate into strong profit margins. While the industry benchmark for STR profitability hovers around 50%, many hosts find themselves far below that—despite a packed calendar.
In fact, recent analysis shows a significant portion of STR owners earned under $25,000 in profit last year, with rising cleaning and operating costs eroding margins. The issue isn’t just filling your calendar – it’s maximizing the profit per booking.

5 Hidden Profit Killers Destroying Your STR Returns

1. Pricing Strategy Blind Spots

Using dynamic pricing tools isn’t enough if you’re not actively adjusting rates based on real-time demand and competitor moves. Common gaps:

• Weekend pricing doesn’t reflect local events
• Shoulder season rates remain unchanged year to year
• Market or competitor analysis done only during initial setup

2. Cleaning Costs That Quietly Erode Margins

Flat cleaning fees – whether it be the inhouse, hot tub or the pool – may simplify operations, but they rarely reflect the true cost of turnover—especially when applied the same way across stay lengths and seasons. Warning signs:

• Turnover cost is the same for a 2-night vs. 7-night stay
• Cleaning fees haven’t been reviewed in over 6 months
• Rates don’t reflect rising local labor costs

3. Platform Fee Miscalculations

Airbnb charges ~3% per booking, VRBO around 5%, plus additional processing or subscription fees. These may seem small individually, but they add up quickly and often go unaccounted for in pricing models.  Hidden drains:

• Fees not factored into your base rate
• 3%+ payment processing charges
• Currency conversion fees for international guests

4. Underestimated Expense Creep

Operating costs should stay under 50% of gross rental income, but many hosts experience gradual cost creep over time—without adjusting revenue targets. Red flags:

• Utility bills rising faster than booking volume
• No bulk purchasing strategies for supplies
• Unused tech subscriptions piling up

5. Financial Visibility Gaps

Many hosts rely on payout summaries from platforms instead of running detailed P&Ls. This leads to false profitability assumptions—and missed optimization opportunities. Symptoms:

• No STR-specific profit and loss tracking
• Personal and business expenses mixed
• Annual (vs. monthly) financial reviews

Signature Partners Pro Tips

✔   Adopt a Margin-First Mindset. Don’t just chase occupancy—optimize for profit per available night. Know your breakeven point and track key performance indicators (KPIs) like average margin per booking and cost per occupied night. If you can’t measure it, you can’t optimize it.

✔   Use STR-Specific Accounting Tools. Move beyond platform payouts. Monitor net profit per night, not just gross revenue. Track critical ratios like utility cost per booking and supply cost as a percentage of income. Review vendor contracts quarterly and renegotiate based on usage and performance.

✔   Build Platform & Processing Fees Into Your Pricing. Factor Airbnb, VRBO, and payment processing fees into your minimum nightly rate. For high-volume listings, compare VRBO’s flat-rate subscription to per-booking models to identify long-term savings.

✔   Conduct Bi-Weekly Competitor Audits. Analyze your top 5 local competitors every two weeks. Adjust your pricing based on real-time demand signals, event-driven surges, and last-minute booking behavior.

Next Steps – Identify Your Profit Leaks

At Signature Partners, we specialize in helping STR owners and co-hosts uncover hidden revenue drains and unlock maximum profitability through our Soar tier of services. Schedule a Discovery Call today to see where your STR may be leaking profit—and how to fix it with expert strategies built for today’s market.