# Vacation Rental Model

Model a vacation-rental business from leased units and booked nights through to profit, cash flow, and valuation.

- Canonical: https://finamodel.com/templates/vacation-rental
- Excel download: https://finamodel.com/templates/vacation-rental.xlsx
- Category: Hospitality
- Model type: Operating model
- Difficulty: Intermediate
- Audiences: Investors & analysts, Founders & operators, PE & buy-side, Search-fund and PE buyers, Short-term rental operators, Hospitality investors, Lenders, Short-term rental operators and roll-up founders, Search-fund buyers underwriting arbitrage operators, PE associates analysing STR platform acquisitions, CFOs managing a multi-unit rental portfolio
- Tags: vacation-rental, short-term-rental, airbnb, occupancy, dcf, vacation rental, rental arbitrage, short-term rental, DCF

## Overview

This vacation-rental model is designed for operators building a portfolio of short-term rental homes or apartments. It links the number of units, occupancy, nightly rates, cleaning costs, platform fees, and leases to the business's financial results.

Use it to plan growth, assess a rental arbitrage portfolio, or evaluate an acquisition. The model makes it easy to test whether a higher occupancy rate, better pricing, or new units will create lasting value.

## What's included

- Portfolio inputs: Year-1 units, new units per year, days available per unit
- Occupancy: Year-1 occupancy with an annual ramp and a practical ceiling
- Demand and pricing: ADR, length of stay, cleaning fee, other guest fees, channel commission, price escalation
- Capital and working capital: maintenance capex, furnishing per new unit, NWC, base-year revenue
- Valuation: WACC, terminal growth, net debt, shares outstanding
- Dashboard with KPI cards, a seven-year operating summary, trend charts, a net-revenue-to-net-income waterfall, and key unit, occupancy, ADR, margin, valuation, and revenue-mix metrics
- Portfolio roll-forward with opening units, annual new leases, closing units, available nights, occupancy ramp with ceiling, booked nights, bookings, and nights per unit
- Revenue build with accommodation (booked nights x ADR x escalation), per-stay cleaning fees, ancillary guest fees, gross booking revenue, channel commission deduction, and net revenue
- P&L from net revenue through master-lease rent and utilities per unit, cleaning and turnover per booking, repairs, supplies, marketing and software, corporate SG&A, EBITDA, depreciation, EBIT, tax, and net income
- Unlevered FCF bridge: NOPAT plus depreciation, less maintenance capex and furnishing capex for new units, less change in working capital, discounted to present value
- Valuation sheet with sum of explicit UFCF, Gordon-growth terminal value, enterprise value, net debt bridge, equity value, value per share, and implied EV/EBITDA
- Cost structure: lease and rent and utilities per unit with cost inflation; cleaning cost per booking; repairs, supplies, marketing and software, SG&A, depreciation (% of revenue); tax
- Capital and working capital: maintenance capex %, furnishing per new unit, NWC % of revenue growth, base-year revenue
- Portfolio sheet: unit roll-forward, available nights, occupancy ramp, booked nights, bookings, nights per unit
- Revenue sheet: accommodation, cleaning fees, other guest fees, gross booking revenue, channel commissions, net revenue
- P&L sheet: net revenue to net income with per-unit and per-booking costs and depreciation, margins, identity check
- FCF sheet: NOPAT, depreciation add-back, capex, change in NWC, unlevered FCF, discount factor, PV
- Valuation sheet: sum of PV, terminal value, enterprise value, equity value, value per share, implied EV/EBITDA
- Dashboard with units, occupancy, ADR, revenue per unit, EBITDA margin, EV, per share, and revenue mix
- Dashboard with KPI card strip, seven-year operating summary, trend-chart grid, and a net revenue to net income waterfall

## Operating Drivers and Financial Flow of a Vacation Rental Model

This vacation rental financial model maps a seven-year operating plan for an operator who leases homes under master leases and re-lists them on platforms. It links unit growth, availability, occupancy, pricing, and channel costs to financial statements and an unlevered DCF, helping you see how occupancy and ADR interact with fixed rent.

### Operating Drivers: Units, Availability, and Occupancy

The model builds a unit roll-forward where new leases each year are tapered by a pipeline factor that falls as the estate approaches a leasing-pipeline ceiling, reflecting a thinning addressable submarket. Closing units times days available (365 less owner blocks, turnover, and maintenance) gives available nights.

- Occupancy starts at a first-year input, ramps by a fixed number of percentage points annually, and is capped at a practical ceiling. The resulting booked nights drive bookings (booked nights divided by average length of stay) and nights per unit.

- This structure ties physical capacity to leasing constraints and realistic filling of new units.

### From Booked Nights to Net Revenue

Accommodation revenue equals booked nights times ADR, escalated annually. A per-stay cleaning fee is charged to guests based on bookings, and ancillary guest fees add a percentage of accommodation, forming gross booking revenue.

- A direct-booking share ramps up over time, splitting gross between OTA channels (paying full OTA commission) and direct bookings (paying only a payment-processing fee). Both are deducted to reach net revenue.

- This flow captures the channel take as a real cost that never appears in the operating cost stack, and the direct-share ramp acts as a lever to trade OTA dependency for owned-channel bookings.

### Cost Structure and Profitability

Net revenue flows into a P&L where master-lease rent and utilities are per-unit fixed costs, escalating at cost inflation. Cleaning and turnover costs are per booking, while repairs, supplies, marketing and software, and corporate SG&A are percentages of net revenue.

- The model computes EBITDA, then subtracts depreciation of furnishings to get EBIT, applies tax on positive EBIT, and arrives at net income. Because rent is fixed per unit and runs regardless of occupancy, the business is a wager that occupancy and ADR cover the lease.

- As occupancy ramps and ADR escalates, EBITDA margin expands modestly because fixed per-unit costs are spread over more booked nights.

### Cash Flow, Valuation, and Practical Use

Unlevered free cash flow is NOPAT plus depreciation, less maintenance capex and growth capex (furnishing new units), less the change in working capital, which is favourable because guests prepay. The DCF discounts explicit-period UFCF and a Gordon-growth terminal value at WACC to enterprise value, then subtracts net debt for equity value and value per share.

- The implied EV/EBITDA is growth- and margin-driven. The model includes a dashboard with key metrics such as units, occupancy, ADR, revenue per unit, EBITDA margin, and value per share.

- It is useful for planning growth, evaluating rental arbitrage, or assessing an acquisition, allowing you to test changes in leasing pipeline, occupancy, ADR, or costs and see the impact on value and margins.

## Occupancy and ADR drive the night build

Revenue is the product of a leased unit estate, the nights it has available, the share of those nights that book, and the nightly rate. The model makes unit count, days available, an occupancy ramp, and ADR explicit, so booked nights and revenue per unit are transparent operating metrics an analyst can flex against the cost stack rather than a top-down growth rate.

## Designed for one-edit responsiveness

Every input, the leasing pipeline, days available, the occupancy ramp, ADR, the full pricing and cost stack, capex, working capital, and the WACC, is a named-range cell. Edit one and the portfolio build, revenue, P&L, free-cash-flow bridge, valuation, and dashboard all recompute. No formula rewrites are needed to test a pricing, occupancy, or expansion scenario.

## An unlevered DCF, not an EBITDA shortcut

A vacation-rental operator furnishes each unit and carries favourable working capital because guests prepay at booking, so the model bridges to unlevered free cash flow and discounts it at a WACC with a Gordon-growth terminal value. Enterprise value bridges through net debt to equity value and a per-share figure, and the implied EV/EBITDA falls out as a sanity check against the asset-light lodging range.

## Built around the lease-spread trade

The economics of rental arbitrage turn on one question: do booked nights at the going ADR cover a fixed monthly master lease with enough margin left for platform commissions, cleaning, and overhead? This model makes that spread explicit and shows how it widens as the occupancy ramp fills available nights.

## Channel commission as a first-class cost

Airbnb, Vrbo, and Booking.com deduct a blended commission at source before any cash reaches the operator. The model nets this between gross booking revenue and net revenue so the P&L runs on economically accurate revenue and no platform cost hides inside the operating expense stack.

## Fully integrated unlevered DCF

The FCF sheet bridges from EBIT through NOPAT, adds depreciation, subtracts maintenance and furnishing capex, and nets a favourable working-capital movement because guests prepay. The Valuation sheet discounts explicit UFCF and a Gordon-growth terminal value to enterprise value, then converts to equity value and value per share.

## Workbook structure

### Cover

Workbook overview, sheet legend, units, and tab-colour key.

- Title and scope framing
- Sheet-by-sheet purpose summary
- Units and tab-colour legend

### Assumptions

Every driver in one sheet: units, occupancy, pricing, costs, capital, valuation.

- Year-1 units, new units per year, days available per unit
- Occupancy with an annual ramp and a practical ceiling
- ADR, length of stay, cleaning fee, other guest fees, channel commission, price escalation
- Lease and rent and utilities per unit, cleaning cost per booking, and the percent-of-revenue cost lines, tax
- Maintenance capex, furnishing per new unit, NWC, base-year revenue
- WACC, terminal growth, net debt, shares

### Portfolio

Units, nights, occupancy, and bookings.

- Opening plus new units equals closing units
- Available nights equal closing units times days available
- Occupancy ramps from a Year-1 input, capped at a ceiling
- Booked nights equal available nights times occupancy
- Bookings equal booked nights divided by length of stay
- Nights per unit equal booked nights divided by closing units

### Revenue

Revenue by stream, net of channel.

- Accommodation equals booked nights times ADR times escalation
- Cleaning fees equal bookings times fee times escalation
- Other guest fees as a percent of accommodation
- Gross booking revenue
- Less channel commissions as a percent of gross
- Net revenue

### P&L

Net revenue to net income.

- Net revenue from the Revenue sheet
- Lease and rent and utilities per unit escalated at cost inflation
- Cleaning and turnover per booking
- Repairs, supplies, marketing and software, and SG&A as a percent of revenue
- EBITDA, depreciation, EBIT, tax on positive EBIT, net income, margins, identity check

### FCF

Unlevered free cash flow bridge.

- EBIT and unlevered tax from the P&L
- NOPAT equals EBIT less unlevered tax
- Add back depreciation
- Maintenance capex on revenue and growth capex on new units
- Change in net working capital on revenue growth
- Unlevered free cash flow
- Discount factor and PV of UFCF

### Valuation

Discounted cash flow.

- Sum of PV of explicit UFCF
- Gordon-growth terminal value and its PV
- Enterprise value
- Less net debt to equity value
- Shares outstanding and value per share
- Implied EV/EBITDA

### Dashboard

Headline metrics and revenue mix.

- Units, occupancy, ADR, revenue per unit
- Net revenue and EBITDA
- EBITDA margin
- Enterprise value and value per share
- Revenue mix across accommodation, cleaning, and other fees

### Cover

Workbook overview, sheet legend, tab-colour key, and units conventions.

- Title and scope framing
- Sheet-by-sheet purpose summary
- Tab-colour legend
- Monetary and count unit conventions

### Assumptions

Every driver in one sheet: portfolio build, occupancy ramp, demand and pricing, cost structure, capital, working capital, and valuation inputs.

- Portfolio inputs: Y1 units, new units per year, days available per unit
- Occupancy: Y1 rate, annual ramp step, practical ceiling
- Demand and pricing: ADR, length of stay, cleaning fee, ancillary fee percent, channel commission, escalation
- Cost structure: rent and utilities per unit, cleaning cost per booking, variable cost percentages, tax; capital: maintenance capex, furnishing per new unit, NWC percent, WACC, terminal growth, net debt, shares

### Portfolio

Unit roll-forward and booked-night build from the leasing pipeline and occupancy ramp.

- Opening plus new equals closing units each year
- Available nights = closing units x days available per unit
- Occupancy ramp from Y1 input, capped at practical ceiling
- Booked nights = available nights x occupancy; bookings = booked nights / length of stay

### Revenue

Gross booking revenue built from accommodation, cleaning, and ancillary lines, netted of channel commissions to reach net revenue.

- Accommodation = booked nights x ADR x price escalation index
- Cleaning fees = bookings x per-stay fee x escalation
- Ancillary guest fees as percent of accommodation
- Gross booking revenue less blended channel commission equals net revenue

### P&L

Net revenue through the full cost stack to EBITDA, EBIT, tax, and net income, with an identity check.

- Lease rent and utilities per unit escalated at cost inflation
- Cleaning and turnover cost per booking escalated at cost inflation
- Repairs, supplies, marketing and software, and corporate SG&A as percent of net revenue
- EBITDA, depreciation, EBIT, tax on positive EBIT, net income, EBITDA and net margins, identity check

### FCF

Unlevered free-cash-flow bridge from EBIT to discounted UFCF.

- EBIT less unlevered tax equals NOPAT; add depreciation
- Less maintenance capex (percent of revenue) and growth capex (new units x furnishing cost)
- Less change in working capital (favourable: guests prepay at booking)
- Unlevered FCF, discount factor, and PV of UFCF per year

### Valuation

Sum of discounted UFCF and terminal value to enterprise value, equity value, and value per share.

- Sum of explicit PV of UFCF for Years 1 through 7
- Gordon-growth terminal value and its present value at WACC
- Enterprise value less net debt equals equity value; divide by shares for value per share
- Implied EV/EBITDA cross-check

### Dashboard

One-page summary with KPI cards, operating summary table, trend charts, and a revenue waterfall.

- KPI card strip: units, occupancy, ADR, revenue per unit, booked nights, net revenue, EBITDA, margin, EV, value per share
- Seven-year operating summary table
- Trend-chart grid across the forecast horizon
- Net revenue to net income waterfall

## Features

- **Occupancy and ADR drive the night build:** Revenue is the product of a leased unit estate, the nights it has available, the share of those nights that book, and the nightly rate. The model makes unit count, days available, an occupancy ramp, and ADR explicit, so booked nights and revenue per unit are transparent operating metrics rather than a top-down growth rate.
- **The lease burden and channel take are modelled, not buried:** The arbitrage signature is a fixed master-lease rent set against occupancy-driven revenue, plus a blended channel commission the booking platforms deduct at source. Rent and utilities are per-unit costs that escalate at cost inflation, cleaning is per booking, and the channel take is netted out of revenue, so the EBITDA margin responds the way a real operator would expect as occupancy fills the lease.
- **An unlevered DCF, not an EBITDA shortcut:** A vacation-rental operator furnishes each unit and carries favourable working capital because guests prepay at booking, so the model bridges EBITDA to cash through NOPAT, depreciation, maintenance and furnishing capex, and the change in working capital, then discounts the unlevered free-cash-flow stream at a WACC with a Gordon-growth terminal value to a defensible enterprise and equity value.
- **Lease-spread margin mechanics:** Master-lease rent is fixed per unit and runs whether the unit is booked or empty. As the occupancy ramp fills available nights and ADR escalates, the fixed lease is spread over more booked nights, causing the EBITDA margin to expand modestly across the horizon -- making the profitability trajectory driven by a single, auditable occupancy assumption.
- **Channel commission as a first-class cost:** The booking platforms (Airbnb, Vrbo, Booking.com) retain a blended commission on gross booking revenue before any cash reaches the operator. The model nets this out between gross booking revenue and net revenue so the P&L runs on economically accurate revenue and no channel cost hides inside the operating expense stack.
- **Fully integrated unlevered DCF:** The FCF sheet bridges from EBIT through NOPAT, adds back depreciation, subtracts both maintenance capex and per-unit furnishing capex for new leases, and nets a favourable working-capital movement (guests prepay). The Valuation sheet sums the discounted explicit UFCF and a Gordon-growth terminal value to enterprise value, then converts to equity value and value per share.

## Use cases

- **Intrinsic valuation:** Set the leasing pipeline, occupancy ramp, ADR, the cost stack, and a WACC, and read the enterprise value, equity value, value per share, and implied EV/EBITDA. Sense-check the multiple against where asset-light lodging operators change hands.
- **Roll-up and pipeline planning:** Flex new units per year and the furnishing cost per unit to see how the leasing pipeline consumes cash and lifts booked nights, and watch revenue per unit and the EBITDA margin respond as the estate scales.
- **Occupancy and lease stress test:** Cut the occupancy ceiling or push the rent and channel-commission lines higher to model a soft-demand year or a platform fee hike, and read the EBITDA-margin and valuation impact as the fixed lease bites against occupancy.
- **Rental arbitrage underwriting:** Enter the leasing pipeline, target occupancy, ADR, channel commission rate, and per-unit lease cost to stress-test whether the spread between nightly revenue and fixed rent supports the required EBITDA margin before signing master leases.
- **Portfolio acquisition diligence:** Drop a target operator's unit count, occupancy history, ADR, and cost structure into the Assumptions sheet and validate implied enterprise value and EV/EBITDA against the asking price, flexing occupancy and ADR sensitivities.
- **Leasing pipeline and growth planning:** Adjust the annual new-unit intake to see how the pace of portfolio expansion affects the occupancy ramp, net revenue growth, EBITDA margin, and terminal value -- balancing growth ambition against the fixed-cost burden of carrying underoccupied new leases.

## Frequently asked questions

### What is a vacation rental model?

A vacation rental model captures the seven-year operating economics and intrinsic value of a short-term rental operator that leases a portfolio of homes and apartments and re-lists them nightly across Airbnb, Vrbo and Booking.com. It rolls a unit count forward, converts available nights and an occupancy ramp into booked nights, prices accommodation at a nightly ADR plus cleaning and guest fees net of channel commissions, runs the lease-heavy cost stack to EBITDA, and discounts an unlevered free-cash-flow stream to enterprise value, equity value, and value per share.

### How is vacation-rental revenue built?

Revenue is driven by the unit estate and its occupancy: available nights equal closing units times days available per unit, booked nights equal available nights times an occupancy factor that ramps to a ceiling, and accommodation revenue is booked nights times a nightly ADR. A per-stay cleaning fee scales with bookings, ancillary guest fees layer on as a percent of accommodation, and the booking platforms retain a blended channel commission that is netted out to reach net revenue.

### Why is the master lease so important?

In the rental-arbitrage format the operator does not own the property; it pays a fixed monthly lease and keeps the spread above it. Rent is the single largest cost and runs whether or not a unit is booked, so the whole model is a wager that occupancy and ADR cover a fixed lease. The model carries rent and utilities per unit so an analyst can stress the lease or a soft-demand year and watch the EBITDA margin move.

### Why an unlevered DCF instead of an EBITDA multiple?

An asset-light operator still furnishes each unit and carries real depreciation and capex, so EBITDA overstates cash. The model bridges to unlevered free cash flow, NOPAT plus depreciation, less maintenance and furnishing capex, less the change in working capital, which is favourable because guests prepay at booking, and discounts it at a WACC, then adds a Gordon-growth terminal value. The implied EV/EBITDA falls out as a sanity check rather than as the valuation input.

### Can I model owned units or a single property?

The template is a leased-portfolio unlevered DCF. For an owned-property view, replace the master-lease rent line with property depreciation and a financing schedule and bridge to levered free cash flow; for a single property, set the estate to one unit and size the ADR, occupancy, and cleaning volume to that listing. The net-debt line already bridges enterprise value to equity value, so a financing layer slots in cleanly.

### What is vacation rental arbitrage and how does this model represent it?

Rental arbitrage means signing a fixed monthly master lease on a property and re-listing it nightly on platforms like Airbnb and Vrbo at a per-night rate that exceeds the per-night cost of the lease. The operator does not own the property. The model makes that spread explicit: master-lease rent is a fixed per-unit cost on the P&L while accommodation revenue scales with booked nights and ADR, so EBITDA margin is driven entirely by how many nights the portfolio books and at what rate.

### How does the occupancy ramp work?

Occupancy starts at the Y1 input on the Assumptions sheet and increases by a fixed number of percentage points each year, capped at a practical ceiling. The cap reflects that newly leased units accumulate reviews and search ranking slowly, and even a mature portfolio does not reach 100%. Booked nights are available nights multiplied by that year's occupancy factor, and bookings are booked nights divided by the average length of stay.

### Why is the channel commission netted before the P&L rather than shown as an expense?

Booking platforms deduct their commission from the gross payout before remitting to the operator, so the revenue never arrives. Netting it between gross booking revenue and net revenue means the P&L runs on the cash the operator actually receives and no phantom revenue inflates margins. It also separates a platform cost from internal operating costs, keeping the two distinct and auditable.

### How is enterprise value calculated?

The FCF sheet discounts each year's unlevered free cash flow at WACC to a present value. The Valuation sheet sums those seven present values and adds the present value of a Gordon-growth terminal value (Year-7 UFCF x (1 + terminal growth rate) divided by (WACC minus terminal growth rate), discounted at WACC). That sum is enterprise value. Net debt is subtracted to reach equity value, which is divided by share count for value per share and cross-checked against implied EV/EBITDA.

### What do the model defaults produce?

At the default assumptions, Y1 net revenue is approximately $4.1M growing to approximately $10.1M by Y7. EBITDA margin ramps from approximately 18.8% to approximately 25.6% as the fixed lease is spread over more booked nights. Enterprise value is approximately $11.2M, value per share approximately $9.17, and the implied EV/EBITDA approximately 14.4x. All outputs move directly when the leasing pipeline, occupancy, ADR, or cost assumptions are changed.

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