Yes – but let’s be clear. Gone are the days when you could just throw any property on the market and make money.

The good news is that overall demand for short-term rentals is actually up. See below chart of Santa Rosa from Q2’2025. It shows a 15% increase in revenue year over year, and a 25% increase in revenue in May 2025 relative to May 2024 (the same patterns were observed across Sonoma County).

However, while demand is up, so is supply (in Santa Rosa there are 430 vacation rentals, up 3% annually)—competition has never been fiercer. There are more short-term rentals on the market today than ever before, and at the same time, guest expectations have risen dramatically. Guests are no longer satisfied with sleeping on someone else’s air mattress (the initial inspiration of “Airbnb” as the company’s name). What guests are now looking for is a “micro-resort” experience. As a result, many short-term rental owners are seeing flat or even declining revenue growth, despite the broader market growing. They’re missing out on the growth of the market, and the key difference comes down to execution.

The economics of vacation rentals is that it is a marketplace economy that follows the Pareto principle: profits are not distributed equally, but rather disproportionate gains go to the top performers. For example, in Santa Rosa from Q2’2024 – Q2’2025, the 95th percentile 4 and 5 bedroom properties made more than twice as much as the average, 50th percentile properties!

So how do I be like the 95th percentile?

They say a product had to be “demonstrably cheaper or demonstrably better” than competitors. In other words, you’re either an interchangeable commodity and have to compete on the lowest price, or you have a superior product that people will pay a premium for. Differentiation gives you pricing power, and that’s what luxury property owners should strive for.

You’re not selling a property, you’re selling an experience.** Keep this in the forefront of your mind when setting up and marketing a vacation rental! Do Apple ads tell you the processor speed, RAM, and camera megapixels, or do they just show you the amazing photos you can take with them? Do you know the technical specifications of your iPhone – do you even care?

Design, photos, and marketing are what set your listing apart from the average masses. Design doesn’t have to break the bank. It doesn’t have to be a six-figure renovation with high-end furniture. It just has to be a cohesive theme that attracts your guest avatar. On the left side of the bottom image is a 3 bedroom cabin. It was built in 2018, and is a very nice log cabin with modern amenities. But it’s bland and uninteresting. There are literally dozens of cabins just like it in its area. On the right is the same cabin infused with design elements that add a touch of elegance and warmth. A few small tweaks turned this cabin into the #1 3BR property in its market.

In addition to the design improvements, it is clear to see that the photos above on the right are also far better. Photos are by far the highest ROI investment you can make in your vacation rental. However, these days, just having high-quality photos isn’t enough. Your listing needs “lifestyle photos” that help the guest imagine themselves at your property. Lifestyle photos are in stark contrast to typical real estate photography on Zillow that is generally lifeless and sterile. They may show a throw blanket lightly tossed onto a sofa or a half-drunk wine glass, as if someone was just there. Remember, you’re not selling a property, you’re selling an experience.

Owning your guest relationships

Airbnb is to STRs what champagne is to sparkling wine. It’s a brand name that’s become so ubiquitous that people use it as a generic term to represent the entire category. Airbnb is just one of several OTAs (online travel agencies) where people can book STRs. A successful host needs to have a multi-channel approach. Being listed on multiple OTAs is table stakes. It is easy to think that the guests from OTAs are your customers, but that is absolutely not the case: the guests are their customers, and you as a host are simply a vendor.

You need to go beyond the OTAs and have a direct marketing strategy to really maximize your profits. This is two-pronged: i) Marketing to your prior OTA guests to get **repeat, direct bookings** and ii) Paid marketing to acquire your own customers.

Conclusion

In summary, differentiation and superior guest experiences reign supreme in today’s vacation rental market. Properties that have a sophisticated marketing, pricing, and operational strategy are the ones thriving. They’re the ones capturing outsized demand—and ultimately, profitability. So yes, short-term rentals can still be profitable. But it requires more intentionality and professionalism than ever before.

While some owners with marketing and hospitality backgrounds have the expertise to navigate and excel in today’s vacation rental market, many DIY owners are struggling to capture the increased demand in vacation rentals in Sonoma County and surrounding areas. Sophisticated property managers know how to elevate a luxury home to the standards that are required to not just compete but thrive. A Vinifera Homes, we leverage a variety of proven marketing, pricing, and operational methods, learned from our decades in the hotel industry, to ensure our clients perform at the peak of their potential.

Written by Anish Patel, Head of Owner Relations at Vinifera Homes (anish@viniferahomes.com)