Valuation of short-term rentals as income-producing residential assets: a hybrid-hedonic framework

Abstract

This study examines whether financial performance mediates the relationship between conventional hedonic property attributes and short-term rental value, and whether short-term rentals should therefore be underwritten as hybrid income-producing residential assets rather than as ordinary housing alone. AirDNA listing-performance data were matched with Stellar MLS property and transaction records to create a property-level panel for a major destination market in Central Florida. Panel diagnostics were conducted for cross-sectional dependence, stationarity, serial correlation, heteroskedasticity and model selection, with conservative inference based on Driscoll-Kraay standard errors. Durable tangible attributes, including configuration, accessibility and leisure amenities, are associated with both revenue and sale price. Platform-facing and management-related intangible variables strongly influence financial performance, but most lose direct significance once revenue enters the value equation. A 1% increase in revenue is associated with an approximately 0.349% increase in sale price. The results, therefore, indicate partial mediation for tangible attributes and a predominantly income-based transmission channel for most intangibles. Institutional property managers, lenders and appraisers should apply dual-lens underwriting that combines residential collateral analysis with stabilized cash-flow analysis. Verified operating history should inform NOI normalization, repayment-capacity testing and destination-level concentration-risk assessment. The paper develops a hybrid hedonic-income framework for valuing short-term rentals and positions the asset class as a form of operating real estate exposure embedded in residential property. It contributes by distinguishing durable collateral features from operator-contingent platform signals and by showing that most intangible effects are capitalized indirectly through financial performance rather than directly into transaction price.