Published on and written by Cyril Jarnias
Short-Term Rental via Airbnb vs. Long-Term Rental in the Philippines
In an economic climate where every investment decision deserves careful evaluation, the choice between short-term rental via Airbnb and a long-term rental strategy is drawing increasing interest among Filipino property owners.
This article aims to provide an in-depth analysis of the profitability of these two approaches in several key cities in the Philippines, taking into account seasonal fluctuations, occupancy rates, and rental yields.
While Airbnb’s popularity continues to grow, transforming the traditional rental market, it is crucial to understand how these dynamics play out according to the economic and tourism characteristics specific to each region.
The goal is to provide investors with a clear and nuanced view of the best rental strategies in this country, considering the subtleties of the Philippine real estate market.
Good to know:
Seasonal fluctuations can significantly impact Airbnb income, especially in tourist destinations like Boracay or Palawan.
Analysis of Short-Term Rental Yields in the Philippines
The yield on short-term rentals in the Philippines varies by city and time of year, but it remains generally attractive compared to long-term rentals. The key indicators are as follows:
| Indicator | Short-Term Rental | Long-Term Rental |
| Occupancy Rate | 55-75% (seasonal) | 80-90% (urban) |
| Average Revenue per Night | $30–$90 (depending on region) | ~$450–$700/month |
| Gross Annual Rental Yield | 5–12% | 4–7% |
Detailed Analysis by Tourist City:
- Manila: Capital and economic hub, high weekday occupancy due to business tourism and expatriate relocation. Well-located apartments show an average revenue/night around $40 to $70, with strong demand for modern studios.
- Cebu: Popular beach destination; peak occupancy during the high tourist season (December-April), rates above the national average. Yields up to 10%, especially in neighborhoods near beaches or the city center.
- Davao: Dynamic southern city, still less saturated; occupancy rate more variable but competitive rents. Advantageous for long stays or families, with a lower average revenue/night (~$25–$50).
Seasonal Fluctuations
Tourist peaks coincide with the Northern Hemisphere winter (December-March), Easter, and certain local festivals, increasing the daily rate by up to +30%. The rainy low season can cause occupancy rates to drop below 50%, especially outside highly touristy areas.
Comparison with Long-Term Rental
Annual rental generates superior stability thanks to a constant occupancy rate (>85%) but generally offers a lower gross yield (4–7%) compared to the high seasons of short-term rentals where it is possible to temporarily exceed 10%. However, the risk of vacancy between two tenants is reduced.
Economic Trends and Tourism Influence
Urban population growth supports the traditional residential market, while the continued expansion of international tourism post-pandemic strongly favors short-term rentals – particularly via Airbnb and similar platforms. However, some urban markets are experiencing temporary oversupply, which can temporarily push prices down.
Case Studies & Testimonials
“I started renting out my apartment near the BGC district in Manila on Airbnb during the post-pandemic recovery: I regularly exceed my old standard monthly rents as soon as I approach festive periods or major sporting events,” testifies Lucille S., a French owner who has been living there for five years.
“In Cebu City Beachfront, we are fully booked three months a year but need promotional rates during the monsoon,” explains Ramon D., a local manager who also highlights “the growing importance of complementary services like high-speed Wi-Fi or airport transfers.”
Observed Advantages:
- Pricing flexibility allowing quick adjustments based on demand
- Increased profitability during tourist peaks
- Easy diversification via digital platforms
Challenges Encountered:
- Increased logistical management between each stay
- High dependence on global/economic tourism fluctuations
- Evolving local regulations that may restrict certain short-term rentals
Short-term rentals therefore offer higher potential in dynamic or coastal areas of the Philippines – especially when combined with good operational management – but require anticipation of climate/economic variations as well as careful monitoring of the local legal framework.
Good to know:
Analysis of short-term rental yields in the Philippines reveals that occupancy rates vary between 60% and 80% depending on the season, with an average nightly revenue around $30 to $50 USD, with peaks observed during local festivals. In comparison, long-term rentals offer income stability but less flexibility to adjust rates. Manila, Cebu, and Davao are among the cities where economic fluctuations and tourism growth strongly influence rental trends, making short-term rentals more lucrative during periods of high tourist traffic. Host testimonials indicate that active and dynamic management is necessary to maximize profits, while tenants see the opportunity for authentic local experiences as a key advantage. For example, in Cebu, hosts focus on personalized tropical experiences to attract travelers. Challenges, however, include the need for regular maintenance and managing seasonal fluctuations.
Performance Comparison Between Airbnb and Long-Term Lease Contracts
Real Estate Performance Criteria in the Philippines
| City | Airbnb Occupancy Rate (%) | Average Daily Rate (USD) | Airbnb Monthly Revenue* (USD) | Long-Term Monthly Rent (USD) |
| Manila | 65-75 | 45-60 | 900-1,350 | 500-700 |
| Cebu | 60-70 | 35-50 | 650-1,050 | 400-600 |
| Davao | 55-65 | 30-40 | 500-800 | ~350 |
*Calculations based on the average occupancy rate for each city and the corresponding daily rate.
Revenue and Net Profitability Comparison
Owners using Airbnb in major Philippine cities generally see gross revenues 20 to 30% higher compared to long-term rentals, especially in neighborhoods popular with tourists. For example, in Manila, the income generated by a short-term rental property can reach $1,200 USD/month, while a standard rental often caps out around $600 USD/month. However, net profitability must factor in:
List of Main Factors Influencing Performance:
- Season:
- High tourist season = high occupancy rate
- Low season = increased revenue volatility
- Additional Costs:
- Increased property maintenance (professional cleaning between guests)
- Daily management or via agency (~15–25% of gross revenue)
- Local Regulations:
- Some municipalities require mandatory registration or limit Airbnb supply
- Specific taxation on short-term rentals
Case Studies and Testimonials
“In Manila, I tried Airbnb for a year with my studio in Makati: I earned an average of $1,000 USD/month, but I had to budget at least $200 USD for cleaning and a local manager. With long-term rental, my previous tenant only paid me $550 USD, with no logistical hassle or vacancy” — Local owner testimonial.
“In Cebu, outside the high tourist season, my apartment would sometimes sit empty for a whole week… That significantly reduces the annual average despite very lucrative peaks” — Expatriate investor.
Quick Comparative List of Models:
- Airbnb Advantages
- Potentially higher income
- Flexibility in using the property
- Airbnb Disadvantages
- Irregular income depending on the period
- Time-consuming or costly management
- Long-Term Rental Advantages
- Income stability
- Less daily effort required
- Long-Term Rental Disadvantages
- Lower overall annual income
- Rigid contractual commitment
In summary, choosing between these two models depends mainly on:
- Your risk tolerance,
- Your availability to manage the property,
- And the local regulatory context, which is evolving rapidly in some Philippine tourist cities.
Good to know:
In Manila, the average occupancy rate for Airbnb rentals can reach 75%, with an average daily rate of 3,500 PHP, surpassing long-term contracts that can guarantee a fixed monthly income of 30,000 PHP, meaning a gross profitability often 20% lower than Airbnb. In Cebu and Davao, Airbnb rentals benefit from profitability peaks during the high tourist season, but maintenance and management represent higher costs than a long-term rental where fees are on average 15% lower. Local regulations sometimes impose Airbnb restrictions, thus impacting net profitability and requiring management adjustments. For example, a property owner in Cebu mentions that Airbnb’s flexibility allows for quickly adjusting prices based on demand, increasing annual yield. However, the requirements for frequent cleaning and hosting costs can reduce profit margins, unlike the stability of a long-term rental which, while less flexible, ensures a steady income all year round.
Factors Influencing Profitability by City
Main Differences Between Airbnb and Long-Term Rental by City
| Criterion | Airbnb (Short-Term) | Long-Term Rental |
| Potential Revenue | Higher (20-30% to 50% higher in tourist cities) | More stable but generally lower |
| Management | Requires active involvement (check-in/out, cleaning, communication) | Little intervention after lease signing |
| Revenue Volatility | High seasonality, fluctuating income based on demand | Predictable and constant monthly income |
| Flexibility | High (owner can use the property as they wish) | Low (long-term contractual commitment) |
| Vacancy | High risk off-season or in case of competition | Low, but depends on the local market |
| Regulation | More complex, increasing restrictions in some neighborhoods | More stable and well-known regulation |
Impact of Seasonality and Local Events
- Demand for Airbnb in major Philippine cities (Manila, Cebu, Davao) is highly sensitive to the tourist season (December to April, festival periods, and school holidays).
- Major events (conferences, festivals, sports competitions) generate booking spikes and allow for significantly increasing nightly rates.
- Example: In Manila, the ADR (Average Daily Rate) reaches $38 in 2025, with an average annual revenue of $3,518 per listing, but an occupancy rate of only 35%, reflecting high demand volatility.
Analysis of Local Real Estate Prices and Their Influence on Profitability
- Purchase prices are higher in urban centers (Makati, BGC in Manila, Cebu IT Park), which increases the initial investment.
- Airbnb profitability remains interesting in these high-demand tourist areas, but competition and market saturation can lower occupancy rates and therefore net income.
- In long-term rental, the yield is directly linked to the rental value of the neighborhood and the stability of residential demand, which is often less subject to seasonal fluctuations.
Local Regulations and Impact on Profitability
- More and more condominiums and central neighborhoods (Makati, Pasay in Manila) impose restrictions or outright ban short-term rentals, thus limiting the Airbnb supply.
- Regulations aim to address resident complaints regarding security and noise.
- Long-term rentals are generally less affected by these restrictions, offering greater legal and administrative security for the investor.
Other Influential Socio-Economic Factors
- Infrastructure development (metro, airports, roads) in major cities stimulates demand for both types of rentals, particularly for Airbnb when new attractions or business districts open.
- Tourism trends (rise in international tourism, promotional campaigns) especially benefit short-term rentals.
- Saturation of the Airbnb market in some neighborhoods pushes new owners to offer differentiating services or amenities to maintain profitability.
- Economic crises, pandemics, or travel restrictions very strongly impact the profitability of short-term rentals, while long-term rentals remain more resilient.
Concrete Examples by City
- Manila: High Airbnb profitability in tourist neighborhoods, but intense competition and strict regulations. Long-term rental preferred in stable residential areas.
- Cebu: Strong tourist demand and international events, but saturation of the Airbnb market in central neighborhoods.
- Davao: Growing Airbnb market, but profitability heavily depends on seasonality and local tourism development.
Key Takeaways
Profitability varies greatly depending on the city, the precise location of the property, the season, and the regulatory framework. Owners must evaluate hidden costs (maintenance, vacancy, management) and stay alert to changes in local laws to optimize their investment strategy.
Good to know:
Profitability between Airbnb and long-term rental varies considerably depending on the Philippine city, influenced by various local factors. In Manila, Cebu, and Davao, seasonality and events like festivals increase demand for short stays, favoring Airbnb. High real estate prices in Manila can reduce the profit margin for long-term rentals, while short-term rentals can offset this cost with high daily rates. Regulations, for example those limiting short-term rentals in certain areas, can also alter profitability. Furthermore, infrastructure development, such as improved transportation in Cebu, can boost both types of rentals by increasing tourist appeal. Finally, economic fluctuations and tourism trends, such as an increase in domestic tourism, significantly impact demand for one type of housing or the other.
Conclusion on the Best Rental Investment Option
| City | Airbnb: Average Annual Profit | Airbnb: Occupancy Rate | Airbnb: Costs/Constraints | Long-Term Rental: Profit | Long-Term Rental: Advantages | Risks/Constraints |
|---|---|---|---|---|---|---|
| Boracay | ~630,000 PHP ($10,000) | 52% | Seasonal, lenient laws, volatile income, high competition | Lower than Airbnb in high season | Income stability, little management | Sensitivity to tourism, slow rent growth |
| Manila (Metro) | ~200,000 PHP ($3,500) | 35% | Stricter regulations, high competition | ~180,000 PHP ($3,200) | Less vacancy, simplified management | Lower yield, contractual rigidity |
| Cebu, Palawan, etc. | Varies, generally high | 40–55% | Fluctuating local regulations, high management costs | Lower, but more stable | Continuous occupancy, less management | Risk of unpaid rent, variable valuation |
Comparison of Potential Profits
- Airbnb offers superior returns, particularly in highly touristy areas like Boracay, with average annual revenues of around 630,000 PHP and an occupancy rate of 52%. During the high season, monthly revenues can exceed 67,000 PHP, whereas they drop off-season.
- In Manila, average annual revenues are lower (~$3,500/year), with an occupancy rate of about 35%, which is explained by increased competition and restrictive regulations.
Risks and Maintenance Costs
Airbnb involves higher maintenance and management costs (cleaning, turnover, booking management, furniture). Profitability heavily depends on tourist seasonality and the quality of the property.
Long-term rental offers lower management costs and greater stability (fixed monthly rent, less tenant turnover), but yields are generally lower, especially in secondary cities or outside tourist areas.
Occupancy Rates
Airbnb: Highly variable depending on season and location. Example: Boracay shows 52%, but this rate can drop in the low season or in saturated cities (Manila ~35%).
Long-Term Rental: Generally more stable, with rare vacancies if the property is well-located and priced at market rate.
Recommendation Criteria
- Financial Stability: Long-term rental is preferable for investors seeking cash flow security and simplified management, especially in urban or less touristy areas.
- Flexibility: Airbnb allows the owner to reclaim use of their property at any time, but this comes with income volatility and increased management constraints.
- Long-Term Return on Investment: Airbnb can generate a higher ROI, but requires constant monitoring of the market, regulations, and tourism trends. In case of saturation or regulatory tightening, profitability can quickly decline.
Aspects Specific to the Philippine Context
- Local Regulations: Some cities like Makati and Pasay heavily restrict short-term rentals in residential buildings, limiting the Airbnb supply and increasing the risk of non-compliance.
- Seasonal Tourism Variations: Demand is cyclical, with peaks during holidays and festivals, but can drop sharply in the low season or during unforeseen events (natural disasters, health restrictions).
- Market Saturation: In tourist hubs and metropolises, the proliferation of Airbnb listings leads to a decrease in occupancy rates and pressure on prices, which reduces margins.
Key Takeaways
Airbnb rental is more profitable in top tourist destinations and during peak periods, but it remains subject to high volatility and increasing regulatory risks. Long-term rental, while less lucrative, ensures stability and simplified management, particularly suitable for cautious investors or urban areas with strict regulations.
Recommendation
For an investor seeking a balance between profitability and security in the Philippines, long-term rental is generally preferable in large cities with strict regulations, while Airbnb remains interesting in major tourist areas, provided one accepts active management and more uncertain income.
Before investing, it is essential to check local regulations and analyze the seasonality of the target market.
Good to know:
After analysis, investing in Airbnb in the Philippines can offer higher potential profits in tourist cities like Cebu and Palawan, due to more fluctuating but generally higher occupancy rates during the high season. However, this comes with higher maintenance costs and increased risks related to seasonality and regulations that are becoming stricter. In contrast, long-term rental guarantees greater financial stability with often lower but constant income, suitable for urban areas like Manila where demand remains high. For a long-term return on investment, long-term rental might be wiser in the Philippine context, as it minimizes the impact of seasonal variations while being less subject to legislative changes. Investors must therefore assess their risk tolerance and consider operational costs to choose the option that best aligns with their financial goals.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
