How short-term rental works and whether it is profitable

Short-term rental is one of the most frequently chosen investment models for apartments in tourist and business cities. However, before making a decision, it is worth understanding well how this model works, what its profitability depends on, and in which situations it works best. On a daily basis, we work with apartments of very different scales and characters, which is why we know that the key to success is adapting the strategy to the specific property.

1. Short-term rental – basics worth knowing

Short-term rental involves making an apartment available for stays lasting from one to several nights. This solution is used by tourists, business guests, couples, families, and groups of friends alike. Compared to long-term rental, it offers greater flexibility and the ability to respond to changing demand.

However, this model requires active rental management. It includes handling reservations, guest contact, cleaning, technical service, and ongoing administration of rental apartments. The quality of organizing these elements determines the final financial result.

2. What profitability depends on

The profitability of short-term rental is not accidental. It depends on several key factors, such as location, apartment standard, size, and the management and promotion method. Equally important are the team's experience and the ability to tailor the offer to the real market needs.

From our experience, investments that include a professional rental strategy from the start, rather than random actions, work best.

3. Location, size, and apartment standard

Location remains one of the most important factors influencing interest in an apartment. City centers, historic districts, and well-connected areas attract both tourists and business guests.

From a profitability perspective, size and finishing standard are also key. Large apartments with a premium standard, designed for family and group stays, offer greater price flexibility and higher revenue potential. They allow serving different types of bookings, from short city breaks to longer trips, without the need to compete on price.

Smaller apartments and studios meet specific market needs, but in practice, larger premium-standard units provide greater business stability and better withstand demand fluctuations. In both cases, a well-thought-out interior layout, finishing quality, and a coherent offer concept are decisive.

4. Occupancy, seasonality, and pricing strategy

Short-term rental is subject to seasonality. There are periods of very high demand, but also quieter moments. Therefore, a flexible approach to pricing and availability is so important.

An appropriate pricing strategy allows maximizing occupancy during weaker months and leveraging the potential of the high season. This requires constant market analysis, local events, and guest profiles. Professional rental management is data-driven, not based on rigid rates.

5. Costs you need to know about

When assessing the profitability of short-term rental, all costs must be considered. These include cleaning, technical service, utilities, insurance, marketing activities, and costs related to reservation handling.

It is also important that many of these costs are variable and depend on the number of bookings. Therefore, transparent administration of rental apartments is crucial to realistically assess the financial outcome of the investment.

6. Sample revenue and profitability model

From our experience, larger apartments are characterized by greater revenue stability, especially in variable market conditions. They allow flexible price management during weaker demand periods without having to drop to breakeven levels.

In the case of small-sized units, based on low unit prices, there is much less room for manoeuvre. When demand falls, there is often nothing left to cut to maintain occupancy. That is why during market uncertainties, such as the pandemic, large premium apartments behaved more stably and recovered occupancy faster.

A well-managed large apartment, appropriately promoted and tailored for group stays, can generate high revenues with less price pressure. Profitability depends on skillfully combining price, occupancy, and costs. The experience of rental companies plays a key role here.

7. When short-term rental does not work

Not every property is a good investment in the short-term rental model. Problematic location, low standard, formal restrictions, or lack of professional organizational support can significantly reduce profitability.

In such cases, another rental model or a change in investment strategy may be a better solution. A realistic approach and potential analysis before starting rental are key.

Short-term rental with Tyzenhauz

At Tyzenhauz, we have been comprehensively managing short-term rentals in Krakow, Gdańsk, and Zakopane for years. We work with both large apartments for groups and families, as well as intimate studios for couples and business guests. We treat each property individually, selecting the strategy, level of service, and promotion method according to its real potential.

Thanks to the team's experience, transparent administration of rental apartments, and thoughtful promotion, we help investors achieve stable and predictable results without the need to engage in daily management. This approach allows assessing whether short-term rental really pays off and how to best use the apartment's possibilities.