If you are looking at a villa in Bali, Phuket, Koh Samui or another tourism hotspot and wondering is short-term rental worth it, the answer is still yes — but with a much bigger asterisk than a few years ago. Tourism across Southeast Asia remains strong, but the number of properties competing for those travellers has grown quickly too. A good destination alone is no longer enough to make a good short-term rental investment.
That is the part investors sometimes miss.
A villa can sit in one of the busiest tourism destinations in Asia and still struggle. Another property five minutes away can perform extremely well. The difference usually comes down to the market around it, how replaceable the property is, whether the numbers still work after costs, and how professionally the business is run.
So rather than asking whether short-term rentals are “good” or “bad” investments, it is more useful to ask whether this particular property, in this particular market, has a strong business case.
Is Short-Term Rental Still Profitable in Bali and Thailand?
There is still plenty of demand.
Bali welcomed 6.95 million direct international visitors in 2025, up 9.72% from the year before, according to Statistics Indonesia’s Bali office. Australia alone represented more than 23% of international arrivals.
Thailand also remained one of Asia’s largest tourism markets, receiving 32.97 million international visitors in 2025, alongside more than 202 million domestic trips. (Tourism Authority of Thailand)
Those numbers help explain why short-term rental in Bali and short-term rental in Thailand continue to attract investors.
But visitor growth tells only one side of the story.
The OECD reports that short-term rental listings in Bali increased by 162% between 2022 and 2025. That means owners are competing for a growing number of tourists, but they are also competing against a much larger pool of accommodation.
We explored this in more detail in our article on Bali villa oversupply. The important point is not that Bali suddenly became a bad market. It is that demand and supply need to be looked at together.
The same applies to a Phuket villa investment. CBRE reported that passenger arrivals at Phuket International Airport fell 1.4% year on year in the first half of 2026, while another 224 villa units across 16 projects entered the development pipeline during the same period.
A destination can therefore remain popular while becoming more competitive for owners.
How to Analyse a Short-Term Rental Market Before Investing
The first step in any short-term rental market analysis is to stop thinking at country or island level.
“Bali is busy” is not enough.
“Thailand gets millions of tourists” is not enough either.
What matters is whether there is enough demand for the exact property you are considering.
A one-bedroom villa aimed at couples in Canggu is competing in a very different market from a six-bedroom family villa in Seminyak. The same applies in Phuket, where a luxury villa in Kamala may attract a very different guest from a smaller property in Rawai.
Before investing, look at who is travelling to the area, how long they typically stay, what type of property they book, how seasonal the market is and how many comparable properties are already available.
The most useful question is simple:
Is demand for this type of property growing faster than the supply competing with it?
This is especially important in markets experiencing short-term rental oversupply. High visitor numbers can hide a weaker reality if hundreds of similar properties are chasing the same guests.
A Good Short-Term Rental Investment Needs a Reason to Be Chosen
Once the market looks healthy, the next question is about the property itself.
Open Airbnb, Booking.com or another major platform and search exactly as a guest would. Use the same dates, number of guests, location and approximate budget.
Then look at the results.
If twenty or thirty properties look very similar to yours, the property may have a weak competitive position. When guests see little difference between options, price becomes one of the easiest ways to choose.
That is where profitability can start to erode.
A stronger vacation rental investment has a clear reason why someone would choose it over nearby alternatives. That might be genuine beach access, a particularly good location, views, architecture, a better layout for groups or facilities designed around a specific type of guest.
Sometimes the advantage is much more practical.
A family villa with pool fencing, children’s equipment and connecting bedrooms may be more attractive to parents than a more expensive villa designed mainly to photograph well. A six-bedroom villa where every couple gets a good ensuite bedroom can be easier to sell to groups than one with a huge master suite and several noticeably weaker rooms.
The point is not to make the villa different for the sake of being different.
It is to make it more useful to the guest you actually want to attract.
How to Calculate Short-Term Rental ROI Properly
This is where many investment projections become optimistic.
Gross revenue is easy to make impressive. Take a strong nightly rate, multiply it by a high occupancy assumption, and the result can make almost any villa look attractive.
But short-term rental profitability depends on what remains after the property is operated.
Typical expenses can include management fees, OTA commissions, staffing, housekeeping, utilities, linen, pool and garden maintenance, repairs, insurance, marketing, payment fees, accounting, guest amenities and periodic refurbishment.
For that reason, short-term rental ROI should be based on net operating income rather than headline booking revenue.
A simple calculation is:
Net operating income = rental revenue − operating expenses
That income can then be compared with the total capital invested in the property, including purchase or lease costs, furnishing, renovation, professional fees and other setup expenses.
Occupancy also needs context.
A villa booked for 300 nights at an average rate of $250 generates $75,000 in annual revenue. Another villa booked for 220 nights at $400 generates $88,000.
The second property has lower occupancy but higher revenue.
Once expenses are included, the gap could change again.
That is why owners should look at occupancy, average daily rate, revenue per available night and net operating income together rather than treating occupancy as the main measure of success.
Stress-Test Your Short-Term Rental Investment
A sensible financial model should also include weaker scenarios.
If the investment only works when occupancy is high, rates keep rising and nothing expensive breaks, the margin for error is very small.
Run a base case using realistic expected performance, then test what happens if occupancy falls, nightly rates soften or expenses increase.
You should also consider whether the property has another viable use if short-term demand weakens. In some markets, medium-term or long-term rental may provide a fallback. In others, that option may be much less attractive.
The aim is not to predict every possible problem. It is to understand how much pressure the investment can absorb before the returns stop making sense.
Short-Term Rental Regulations in Bali, Thailand and Southeast Asia
Regulation is another part of the investment case that cannot be treated as an afterthought.
Indonesia’s official Online Single Submission system classifies villas within the country’s short-term accommodation framework, while the OECD has highlighted increasing attention around licensing, zoning and platform accountability in Bali.
Thailand has its own accommodation, licensing and property rules, and the requirements can vary depending on how a property is structured and operated.
The practical lesson is simple: never assume that a villa can legally be operated as a nightly rental because neighbouring properties appear on Airbnb.
Anyone considering a Bali villa investment, Thailand property investment or wider villa investment in Southeast Asia should confirm ownership or lease rights, accommodation licensing, zoning, taxation and operating permissions before committing capital.
Local legal and tax advice should be part of the feasibility work, not something arranged after the property has already been bought.
The Short-Term Rental Business Is More Than Owning the Villa
Even a good property can underperform if the commercial side of the business is weak.
Owners need to think about how bookings will actually reach the property. That can include Airbnb, Booking.com, specialist villa agencies, travel advisors, direct bookings, referrals and repeat guests.
This is where the short-term rental business starts to look very different from passive property ownership.
Someone still needs to manage pricing, respond to enquiries, monitor booking pace, update content, manage reviews and recognise when the property is losing ground against competitors.
We look at these areas in more detail in our Villa Growth Framework, which focuses on five connected areas of villa performance: visibility, trust and guest experience, conversion, revenue control and retention.
That matters because two very similar villas can produce very different results depending on how they are distributed and managed.
Buying the asset is only the first part of the job. The return comes from the business built around it.
Are Emerging Southeast Asian Short-Term Rental Markets Better?
Some investors look at growing competition in Bali or Phuket and decide the answer must be to find “the next Bali.”
Sometimes that creates opportunities, but emerging markets bring their own trade-offs.
They may have fewer competing properties, but they can also have less mature tourism infrastructure, smaller premium travel segments, limited historical rental data and less developed distribution. Seasonality may be stronger, while property and accommodation rules may still be evolving.
ASEAN tourism continues to recover strongly overall. According to the ASEAN Secretariat, international arrivals across the region had returned to around 92% of pre-pandemic levels by mid-2025, with destinations including Vietnam and Laos already exceeding 2019 visitor numbers. (ASEAN Tourism Outlook 2025)
That growth is encouraging, but it does not remove the need for proper due diligence.
Whether you are evaluating Bali, Phuket, Vietnam or another short-term rental market, the same fundamentals apply: demand needs to be strong enough, competition needs to be manageable, the numbers need to work, the property needs to be legal to operate, and there needs to be a credible plan for generating bookings.
So, Is Short-Term Rental Worth It in 2027?
Yes, short-term rental investment can still be worthwhile in Bali, Thailand and other parts of Southeast Asia.
But it is becoming harder to succeed with an average property and an optimistic spreadsheet.
The most promising opportunities tend to be properties that serve a clear type of guest, have some protection from direct competition, produce acceptable returns after realistic costs, and can still cope when market conditions are weaker than expected.
That is why the best question before buying is not, “How much could this villa earn?”
Ask instead:
“What needs to be true for this villa to earn that amount consistently?”
If the answer depends on unusually high occupancy, constant tourism growth and very little competition, the investment is fragile.
If the numbers still work under conservative assumptions and there is a clear reason guests would choose the property, the business case becomes much stronger.
Short-term rental is still worth considering. It just needs to be treated for what it really is: a hospitality business built around a property, not a property that automatically becomes a business.
