If you are like many new hosts, you are probably asking, "Is short-term rental business profitable?" In Australia, the answer can still be "yes," but many factors are at play. Profitability in 2025 depends on adapting to new trends and rules while providing great guest experiences. This guide will walk you through what is changing in the short-term rental market, how to evaluate your potential earnings, and whether renting out a property is worth it.
The state of short-term rental business in 2025: What is changing?
Here are some major shifts impacting whether a short-term rental is profitable for Aussie hosts in 2025:
Stricter regulations for hosts
Governments have introduced tougher short-term rental rules. New South Wales has a 180-night annual cap for unhosted rentals in Sydney and nearby regions. In Victoria, a 7.5% levy on short-stay bookings is already in place. For hosts, these rules mean paying close attention to how often you can rent out your place and what extra costs or approvals might apply in your state.
Growing preferences for sustainable travel
A majority of Aussie holidaymakers want to travel more sustainably and seek out greener accommodation options. Over half of Australians say they feel like the best version of themselves when they travel sustainably. This trend means eco-friendly or carbon-neutral holiday rental properties can have an edge.
Sleepcation
In 2024 and going into 2025, we are seeing the rise of "sleep tourism," where travellers prioritise restful, wellness-focused holidays over jam-packed itineraries. The idea is to slow down, catch up on quality sleep & recharge in a calming environment. For hosts, this means there is a demand for peaceful and comfortable spaces. Properties that market themselves as quiet retreats or wellness getaways can tap into this restfulness trend.
AI-powered getaways
AI-powered getaways are here to stay. In 2025, artificial intelligence is fundamentally changing how travellers discover and book short-term stays. With tools like ChatGPT, Google’s AI search, and travel-specific assistants like TripPlanner.ai, guests are increasingly asking AI to recommend tailored getaways based on mood, location, or travel goals. Most short-term rental companies are leaning into AI with its “Listings Tab” overhaul and smarter pricing tools. For Australian hosts, this means keyword-rich, human-friendly descriptions are now not only guest-facing but also AI-facing.
Factors that determine if your short-term rental is profitable
Rather than asking, is the short-term rental business profitable in Australia? It's more about how you can set yourself up for success! Here are a number of factors to consider:
Market saturation & competition
If you are in a popular destination, you will likely get bookings, but you may need to stand out with great hospitality, unique features or lower rates. The goal here is to research your local short-term rental market. How many hosts are you up against, and what are they charging? Being aware of saturation will help set realistic income expectations.
Local regulations & council restrictions
As noted earlier, rules can make or break your earning potential. Some councils limit how many nights you can rent, and certain apartment buildings even ban short-term rentals in their by-laws. Always check your local council and state rules. Do you need to register your property as a holiday rental? Are there fines for non-compliance? Remember, regulations can add fees (registration costs, extra insurance) or limit your earning days, directly impacting profitability.
Operational costs
Fixed and variable costs can eat into your short-term rental business. It is crucial to calculate your break-even point: How many nights at what rate do you need to cover expenses? Successful hosts keep a close eye on their expenses to ensure their rental yield (return after costs) stays attractive.
Dynamic pricing, peak seasons & local events
Pricing strategy hugely influences your bottom line. If you set one flat rate year-round, you might miss out on windfalls during high season or major events. Or conversely, overprice during slow times. When you use dynamic pricing, you can automatically raise prices when demand surges (to maximise revenue) and lower them when it is quiet.
Is the short-term rental business still worth it? Pros and cons for Hosts in 2025
Here is a quick look at the pros and cons in Australia:
How much more could you earn from your holiday rental?
Ready to see your property's earning potential? With the right strategies, you might be able to boost your income significantly. A great way to forecast this is by using data-driven tools. A perfect example is Beyond Pricing, which offers a free rate analysis that can show you how much you could be charging and when.
All you need to do is plug your listing into Beyond's Listing Analysis tool to find out how much more you could earn. It provides dynamic pricing recommendations and market insights tailored to your address. This lets you optimise your rates for peak periods, improve your occupancy rate, and ultimately maximise profits. In short, a little analytics help can turn a modest return into a truly profitable one.
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