Calculating the profitability of a tourist property based only on the income and commissions from Airbnb or Booking usually presents an overly optimistic picture.
A tourist property has visible expenses, recurring expenses, and other costs that appear only occasionally. If any of these are left out of the calculation, the profit we believe we are making can be very different from the actual profit.
The short answer
To correctly calculate the profitability of a tourist rental, all necessary expenses to operate, maintain, and market the property during the analyzed period must be included.
This includes, among others:
- platform commissions;
- cleaning and laundry;
- utilities;
- maintenance and repairs;
- insurance;
- community fees;
- software and tools;
- professional services;
- consumables;
- advertising;
- management;
- taxes and fees associated with the activity when applicable;
- and other necessary costs to keep the property available for rent.
The key is not to account only for the expenses that arise when there is a booking.
1. Commissions from Airbnb, Booking, and other platforms
This is one of the easiest expenses to identify, but also one that can distort the results the most.
The platforms may charge commissions to the accommodation, the guest, or split them between both parties, depending on the model used.
To know the real result of a booking, one must work with the net amount that the owner or manager ultimately receives, not just with the price paid by the guest.
If a booking appears for €1,000 but the accommodation receives €850, that €150 difference is part of the commercial cost of securing that booking.
2. Payment method commissions
Direct bookings are not necessarily free either.
Stripe, PayPal, banks, payment gateways, or other solutions may charge a fee for each transaction.
These are small amounts when viewed individually, but they can add up to hundreds or thousands of euros a year.
3. Cleaning
Cleaning is one of the main variable costs of a tourist property.
But it should not be limited to the amount paid to a company or professional. It can include cleaning between stays, extraordinary cleanings, cleaning products, time spent by the owner, travel, post-check reviews, and replenishment of small items.
Even if the guest pays a specific cleaning fee, it is worth checking if that fee truly covers its cost.
4. Laundry and household linens
Sheets, towels, and textiles generate a constant cost.
One must consider laundry, water, and electricity if washed in the property, detergents, replacement of sheets and towels, wear and tear of textiles, and time spent managing them.
It is common to consider only the washing and forget about the replenishment.
5. Electricity, water, and gas
Utilities are one of the most important expenses and also one that can vary the most between bookings.
It is not enough to look at the total bill for a month. If we want to analyze the business well, it is advisable to differentiate, when possible, what part of the consumption corresponds to periods with guests and what part remains even when the property is empty.
This allows understanding both the operational cost of bookings and the structural cost of keeping the property available.
6. Internet, television, and digital services
Internet, television platforms, home automation systems, alarms, or smart locks usually have monthly fees.
Even if there are no bookings during that month, the cost continues. Therefore, they are part of the real cost of keeping the tourist property operational.
7. Insurance
The property insurance and specific coverage related to tourist rentals should be part of the analysis.
It is an annual expense, but it can be distributed over twelve months to better understand the monthly result.
For example, an insurance policy of €720 a year represents an economic cost of €60 per month.
8. Homeowners' association
The ordinary community fees are also part of the cost of maintaining the property.
If there are extraordinary assessments, it is advisable to analyze them separately to avoid distorting the usual operating result.
9. Maintenance and repairs
A property used by numerous guests needs maintenance.
Costs related to plumbing, electricity, air conditioning, pool, garden, appliances, painting, furniture, locks, and minor damages may arise.
Some months may not incur any expenses, while others may require significant repairs. Therefore, it is useful to analyze sufficiently long periods.
10. Replacement of furniture and equipment
A coffee maker, a mattress, or a television do not last forever.
Even if they are not replaced every year, they economically form part of the cost of using the property to generate income.
For a more advanced analysis, it may be useful to distribute these investments over their useful life.
11. Consumables and guest products
Toilet paper, soap, coffee capsules, water, welcome products, trash bags, kitchen products, and other small items often go unnoticed.
But when multiplied by dozens or hundreds of bookings, they cease to be insignificant amounts.
12. Management software and tools
A professional accommodation may use PMS, channel managers, pricing tools, check-in systems, smart locks, accounting, management applications, communication tools, and financial software.
These are necessary expenses to operate and should be part of the results.
13. Professional services
There may also be expenses for management, tax advisory, lawyer, photographer, web maintenance, social media management, consulting, or administration.
Some are recurring, while others appear only at certain times.
14. Advertising and acquisition
If money is invested in securing bookings, that cost should also be included.
This can include Google Ads, Meta Ads, ads on portals, collaborations, promotions, discounts, or visibility programs.
Direct bookings avoid some platform commissions, but they may have their own acquisition cost.
15. Accommodation management
When a professional manager administers the property, their commission should be considered a cost for the owner.
When the owner manages it themselves, the economic analysis can show two different perspectives: the pure financial result, without valuing their time; and the complete economic result, also assigning a cost to the work done.
This allows answering an important question: Is the property profitable because it operates well or because the owner does many hours of work for free?
16. Costs during the period when the property is empty
One of the most common mistakes is to assign expenses only to occupied days.
But a property continues to generate costs when it is empty. It may still be paying for Internet, insurance, community fees, alarms, maintenance, certain utilities, and management tools.
If we want to know the real annual profitability, those expenses must also be accounted for.
17. Taxes and fees
Here it is advisable to separate two issues.
One is the expenses necessary to calculate the economic result of the operation. Another is the fiscal result that must be declared according to the regulations applicable to each owner, company, territory, and type of activity.
They do not always coincide.
That is why it is important not to automatically mix economic profit with fiscal profit.
And the mortgage?
The mortgage deserves separate treatment.
To assess whether the accommodation works as a business, it is useful to first calculate the operating result without financing.
Then the financial cost can be added to know how much money ultimately remains for the owner.
Operating result: income minus expenses necessary to operate the property.
Owner's cash flow: operating result adjusted for financing and other cash movements.
This separation allows for a cleaner comparison of properties.
Practical example
Let’s assume a property that invoices €40,000 a year.
- Commissions: €4,800
- Cleaning and laundry: €4,200
- Utilities: €3,000
- Insurance: €650
- Community: €1,000
- Internet and digital services: €600
- Maintenance: €1,500
- Consumables: €700
- Software: €500
- Professional services: €750
- Other expenses: €300
Total expenses: €18,000
Operating result: €40,000 - €18,000 = €22,000
If we had only deducted commissions and cleaning, we would have estimated a profit of €31,000. The difference is enormous.
The problem is not spending, but not knowing how much
A property can have high expenses and still be very profitable. Another may seem cheap to maintain and yet produce little profit.
That is why the goal should not simply be to reduce expenses.
One must know how much each property truly costs, which expenses are growing, which are necessary, which can be optimized, what percentage of income each category consumes, and how each decision affects the final result.
When managing multiple properties
For a professional manager, this information is even more important.
It is not enough to know the total expense of the entire portfolio. One must know how much each property generates and consumes.
Two properties with the same income can have very different results if one requires more maintenance, consumes more utilities, or pays higher commissions.
The manager needs to be able to answer:
- How much does each property earn?
- How much does it cost to maintain it?
- What margin does it leave?
- Which owner is achieving better results?
- Which accommodation needs a decision?
Profitability starts with organizing expenses
Controlling expenses does not simply mean keeping invoices.
It means turning them into useful information.
Gatavia organizes income, bookings, and expenses so that owners and managers can understand what is happening economically in each property and not just check how much money has entered the account.
Because invoicing a lot does not guarantee earning a lot.
The difference lies in knowing the real result and using it to make better decisions.
More clarity. More time. More life.