Where holiday investors are making astonishing returns
Australia’s short-term rental market is sizzling hot.
‘‘Australia’s short-term rental markets are absolutely exploding,’’ AirDNA chief economist Jamie Lane said.
‘‘While other investors squabble over traditional long-term rentals with their predictable but uninspiring 3 per cent to 4 per cent yields, STR investors are quietly pocketing returns that would make stock market enthusiasts green with envy.’’
According to AirDNA’s latest report on the most profitable Airbnb markets for 2025, the biggest earners for holiday investors aren’t the usual urban suspects like Sydney or Melbourne.
Short-term rentals in the Whitsundays have an annual revenue potential of $141,372 according to new research. Photo: AAP
Regions steal the show
Instead, regional hotspots are stealing the show, thanks to strong domestic demand, low competition, and smart pricing strategies.
Using annual revenue potential as the ranking metric, the study included any market with 100 or more listings for a comprehensive view of the STR market in Australia.
Whitsundays tops the list
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Taking out the top spot in this year’s rankings is the Whitsundays, boasting an impressive annual revenue potential of $141,372.
While its average daily rate (ADR) of $602 is among the highest nationally, it’s the RevPAR (revenue per available rental) of $414 – the top figure in Australia – that really seals the deal.
‘‘This archipelago of 74 islands within the Great Barrier Reef Marine Park attracts diverse tourists year-round. Airlie Beach serves as the gateway to attractions like world-famous Whitehaven Beach,’’ said Lane.
A combination of aspirational appeal and consistent bookings has cemented its place as a premier short-term rental investment.
High nightly rate and high profits
While high ADR might seem like a clear path to big profits, the data tells a more nuanced story.
Take Singleton in the Hunter Valley, for instance, which reports a staggering ADR of $862 – the highest in the country – but ranks second overall in profitability with $116,033 in potential revenue.
Similarly, Cessnock, also in the Hunter, has the third-highest ADR of $676, but comes in fourth place on the list, generating nearly $96,621 annually.
These are still excellent returns, but ultra-high pricing means properties must maintain top-tier appeal and service to justify the cost.
It’s also true that the higher the nightly rate, the smaller your potential renter pool and therefore yearly occupancy – and consistent occupancy can have greater impact than peak pricing when it comes to overall returns.
‘‘While ADR might seem like the star of the show, it’s actually more of a supporting character. Yes, charging $500/night sounds impressive, but if your property sits vacant half the year, you’re leaving money on the table,’’ said Lane.
The top 10 most profitable cities for short-term rentals are spread across Australia. Source: Airdna
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‘Finding the sweet spot’
‘‘The real magic happens at the intersection of price and demand – finding that sweet spot where your calendar stays full without unnecessarily discounting your property’s value.’’
Exmouth in Western Australia claims the third spot, with revenue potential of $101,976 – a figure driven by strong seasonal demand and limited rental supply.
This dynamic allows owners to command high rates during peak periods while avoiding oversaturation.
‘‘This remote coastal town serves as the gateway to Ningaloo Reef, one of the world’s largest fringing reefs and a UNESCO World Heritage site. Exmouth’s primary appeal comes from seasonal attractions like whale shark swimming (March-July) and humpback whale watching (August-October),’’ said Lane.
‘‘The destination’s limited accommodation supply and strong demand contribute to its solid RevPAR performance.’’
Meanwhile, Byron Bay, a consistent Airbnb performer, rounds out the top five with $95,004 in annual earnings.
Despite the STR market here being heavily saturated, what keeps Byron competitive is its strong domestic appeal, high pricing power and a steady flow of visitors year-round.
‘‘Iconic Byron Bay ranks fifth with $95K annual revenue potential and Australia’s third-highest RevPAR at $324,’’ said Lane.
‘‘Byron’s appeal stems from its stunning beaches, laid-back atmosphere, thriving food scene, and retreats and spas.’’
Domestic demand is the driver
A key trend across all the top markets is the role of domestic travellers. With many Australians continuing to explore regional destinations post-pandemic, coastal towns and wine regions are enjoying sustained occupancy.
International travellers – led by New Zealand, the US, and the UK – are returning, but it’s the local market that’s keeping these regional destinations profitable.
The bottom line for investors
For those eyeing a slice of the short-term rental market, the message is clear: A high nightly rate doesn’t always equal the best investment.
Instead, look to regions with steady demand, low competition, and strong RevPAR.
From the beaches of Queensland to the vineyards of the Hunter, regional Australia continues to offer some of the country’s most compelling investment opportunities.
This article first appeared on View.com.au. Read the original here.
