Typical real estate methodology for analyzing short-term vacation rentals produces inaccurate metrics. Unlike traditional long-term real estate, you cannot put a list of properties into a lot and calculate “occupancy” or “vacancy”. Each property is an independent entity. Short-term rentals, especially vacation rentals, are forward-priced while long-term real estate is priced based on backward-looking metrics. Short-term vacation rental hosts sell a perishable asset that left unsold will become an absolute total capital loss. This causes unpredictable speculative pricing.
Short-term vacation rental rates are the result of purchasing and selling, not supply and demand. Nightly rates move based on pressures on both sides of the transaction where time-decay is a significant variable, creating volatile price movements which are also affected by inflation and seasonality, which further impact the value created.
Short-term vacation rentals are a business asset where every stay has an expiration date, the value of the stays move with a single change in time, weather, inflation, or seasonality.
Christopher Woodward Research 