Some of Australia's top short-term rental (STR) markets vary widely in how they earn revenue. In certain regions, high occupancy drives steady income. In others, a higher nightly rate brings in more revenue even with fewer bookings. Knowing how each factor works can help you build a stronger STR pricing strategy.
Occupancy rate vs nightly rate: Which one is more important?
When choosing an STR pricing strategy in Australia, two factors are at play: occupancy and nightly rates. Both contribute to your overall income; however, their impact varies depending on the location and type of listing.
Nightly rate is better for premium markets where guests are willing to pay more for luxury or exclusivity. Occupancy rate, on the other hand, is ideal for budget-friendly regions or cities with steady year-round tourism.
What is occupancy rate?
This metric tells you how many nights your property is booked, compared to available nights.
Formula:
Occupancy rates = (Total nights booked / Total available nights) × 100
A high occupancy rate means your place is booked often, which creates more predictable cash flow. This matters in markets where tourists visit year-round, even if prices are not particularly high. It also helps reduce the effects of seasonal slowdowns.
When your listing is regularly booked, you have a better sense of monthly revenue and cash stability. For example, Perth maintains 65% occupancy, making it a reliable STR market. Despite an average nightly rate of $240, listings here generate strong income through consistency.
Short-term rental revenue optimisation starts with knowing how your occupancy rate impacts performance metrics. This is especially important in mid-range or value-driven markets. High occupancy can support solid profitability, particularly with good guest reviews and efficient turnover practices.
What is a nightly rate?
As the name suggests, this refers to how much you charge per night. It directly impacts your earnings per booking. A higher nightly rate doesn't require full occupancy to drive strong revenue. For many hosts, this is the best approach when operating in regional STR markets with exclusive stays.
Guests pay more for amenities, ambience, and location in luxury areas or locations tied to high-value events. This makes the rate per night a more flexible and potentially lucrative income lever.
Take the Southern Highlands, for instance, with a nightly rate of $555 and 51% occupancy. Listings in this region often outperform those in Perth regarding total income. This is possible because guests pay a premium for a short, curated stay. As an investment strategy, a higher nightly rate lets you focus on fewer but higher-paying guests. This is a proven method for maximising rental income, especially when guest experience is a priority.
The impact of both on revenue
Having discussed how occupancy and nightly rate work, below is what happens when you bring them together. Using real market data from Beyond's database, we've calculated average annual income for five Australian STR regions.
Each figure is based on the formula:
Annual income = Occupancy Rate × Nightly Rate × 365 days
The above data reveals how pricing comparison gives deeper insight into short-term rental revenue optimisation. Some areas favour steady volume while others win on pricing power.
Success often means knowing which strategy is more efficient in your area. The more informed your pricing decisions, the more competitive your listing becomes. These performance metrics will help you identify opportunities to improve your property's performance against local averages.
Occupancy rate vs. nightly rate: Which is more effective for revenue?
When weighing your STR pricing strategy in Australia, there's no one-size-fits-all answer. Some hosts thrive by keeping their calendars full. Others succeed by charging more per night to fewer guests. The right path depends on your investment goals and your local market conditions. Below is how both models work when backed by data and adjusted to fit guest demand.
Occupancy-driven markets
High occupancy rate can outperform pricing power in areas with steady demand. That's especially true in markets such as Perth and Bunbury, where bookings stay strong year-round even with lower average rates.
In these regional STR hubs, short stays and consistent demand add up. This model provides predictable income for hosts targeting affordability and steady cash flow. Despite rates under $350 per night, many listings bring healthy annual returns.
The benefit lies in volume. Frequent bookings minimise downtime and ensure revenue keeps flowing. With the right hosting tips, high occupancy becomes a reliable route to profitability. This is especially so in suburbs and cities where price sensitivity drives guest choice.
Nightly rate-driven markets
A strong nightly rate can increase revenue, though total bookings may be lower. Southern Highlands and Byron Bay are a perfect example of how premium pricing creates value through guest experience.
These markets attract travellers who book for convenience and comfort. Many listings in such areas average over $500 per night, with just over 50% occupancy.
This model suits hosts seeking to maximise rental income without relying on full calendars. It's a strong option in competitive areas where demand peaks during festivals, holidays, or wedding seasons. For investors and hosts, premium pricing offers flexibility. Fewer stays mean maintenance costs may drop, while the high nightly rates ensure overall profitability.
How to best leverage your rate for maximum revenue
Underpricing your short-term rental leaves money on the table while overpricing can empty your calendar. That's why serious hosts rely on data-backed tools to strike the right balance. Beyond automatically adjusts your nightly rate based on real-time market signals, guest demand, and seasonal trends. What you get is less guesswork, better bookings, and stronger returns.
Take the next step today. Run your property through Beyond's STR free tool and discover real insights completely for free!
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