Watertown, SD Airbnb Market Data, Statistics, and Occupancy Rates

Watertown Short-Term Rental Market Overview

Watertown, SD presents an intriguing niche opportunity for short-term rental investors, with an ROI score of 55 out of 100 — placing it in the "Attractive Opportunity" tier. With just 33 active Airbnb listings and average annual revenue of $27,647, this small South Dakota market offers limited competition and meaningful upside for larger properties, where 4-bedroom units pull in roughly $65,301 per year. However, occupancy sits at 30% versus the 43% state average, so investors should plan for pronounced seasonal swings and price their listings strategically.

Key Market Statistics

According to Rabbu market data, the Watertown short-term rental market shows:

Data sources: Rabbu proprietary analytics as of Apr, 27 2026 and Zillow Home Value Index (ZHVI) as of Apr, 27 2026.

Why Investors Consider Watertown

Watertown's low listing count and favorable revenue-to-price dynamics make it appealing for investors seeking a less competitive market with room to differentiate.

Expert Market Assessment

"Watertown represents a moderate-opportunity market best suited for investors comfortable with seasonal income patterns and willing to target larger property configurations. Revenue swings are significant — October peaks at $4,141 while January drops to just $758 — so cash reserves and smart pricing are essential. The balance of healthy demand relative to property values keeps the market interesting, though the below-average growth trend and occupancy rate (30% vs. 43% statewide) temper expectations. Investors focused on 3- or 4-bedroom properties near the lake stand to capture the strongest returns."

— Rabbu Market Analysis Team

Key Airbnb Metrics & Trends in Watertown

Average revenue by month in Watertown

Watertown exhibits sharp seasonality, with October ($4,141) and July ($3,786) delivering peak revenue while January ($758) and February ($856) represent clear off-season troughs — a roughly 5.5x spread between the best and worst months. Investors should plan cash flow around a strong summer-to-fall season and lean winter months.

Active Airbnb listings by property size in Watertown

One-bedroom units dominate supply with 12 of the 33 active listings, followed by 9 two-bedroom properties. The relative scarcity of 3-bedroom (5 listings) and 4-bedroom (6 listings) options, combined with their stronger revenue performance, could signal an opportunity for investors willing to go larger.

Average daily rate (ADR) by property size in Watertown

ADR jumps dramatically at the 4-bedroom level, reaching $363 per night — more than double the $160–$161 range for 2- and 3-bedroom units. One-bedroom properties sit at $106, making the premium for 4-bedroom configurations the most notable pricing inflection in this market.

Average RevPAN by property size in Watertown

Revenue per available night tells a compelling story for larger properties: 4-bedroom listings lead at $121, followed by 3-bedrooms at $73, while 1- and 2-bedroom units cluster near $30–$31. The gap between small and large properties is nearly 4x, underscoring the outsized earning potential of bigger homes.

Average occupancy rates by property size in Watertown

Three-bedroom listings achieve the highest occupancy at 46%, well above the market average, while 4-bedroom units sit at 33% and 1-bedrooms at 29%. Two-bedroom properties lag notably at just 19%, suggesting that mid-size units may face the toughest competition for bookings in Watertown.

Average monthly revenue by property size in Watertown

Four-bedroom properties generate $5,441 per month on average — more than double the next closest tier (3-bedrooms at $2,644) and nearly four times what 1-bedroom units earn at $1,378. This steep revenue curve makes larger homes the clear top earners on a monthly basis.

Average annual revenue by property size in Watertown

At $65,301 in average annual revenue, 4-bedroom properties vastly outperform all other sizes and represent nearly 2.4x the market-wide average of $27,647. Three-bedroom units at $31,735 offer a solid middle ground, while 1-bedroom listings at $16,538 may appeal to investors seeking a lower-cost entry point.

Most common amenities for Airbnb listings in Watertown

Kitchen and parking lead at 91% prevalence each, signaling that guests in Watertown expect self-sufficient, drive-in accommodations — consistent with a recreational and road-trip-oriented market. Lake access (24%) and waterfront positioning (21%) appear among a meaningful share of listings, suggesting these features can serve as strong differentiators for properties that offer them.

Understanding Watertown's ROI Score: 55/100

Rabbu's ROI Score is a proprietary metric that evaluates short-term rental investment potential based on multiple factors.

How the ROI Score is Calculated

What This Means for Investors

Watertown's ROI score of 55 out of 100 places it in the "Attractive Opportunity" band, reflecting average revenue-to-price ratios and occupancy stability balanced against a below-average market growth trend. The supply/demand balance is rated average, meaning the market isn't oversaturated but isn't seeing the demand acceleration that would push scores higher. Investors should pair these metrics with thorough local regulatory research and a clear strategy for managing seasonal income fluctuations.

Short-Term Rental Regulations in Watertown

Understanding local STR regulations is essential before investing in Watertown. Here's the current regulatory landscape:

Permit Requirements

Short-term rental operators in Watertown, South Dakota may need to obtain a business license or STR permit before listing their property. Investors should verify current requirements directly with the City of Watertown and Codington County, as local regulations can evolve.

Key Restrictions

Common STR restrictions in markets like Watertown can include occupancy limits, noise ordinances, parking requirements, and potential HOA covenants that restrict or prohibit short-term rentals. Some jurisdictions also impose minimum stay requirements or cap the number of permits issued, so it's important to review all applicable rules before purchasing.

Tax Obligations

South Dakota does not levy a state income tax, but STR operators are typically subject to state sales tax and any applicable municipal lodging or tourism taxes. Many booking platforms collect and remit these taxes automatically, though hosts should confirm their obligations with local tax authorities.

Regulations subject to change. Always verify with local authorities before purchasing. A Rabbu partner agent specializing in Watertown can provide current regulatory guidance.

Future Outlook & Long-Term Forecast

"Over the next 12–18 months, Watertown's STR market is likely to see continued seasonal volatility, with peak revenue concentrated in late summer through fall. The 195% year-over-year growth in active listings signals rising investor interest, which could put modest downward pressure on occupancy unless demand keeps pace. Expect ADR to remain in the $190–$200 range given the market's positioning below the $261 state average, though larger properties may command premium rates. Investors entering now should budget conservatively for winter months, when revenue can dip below $800."

— Rabbu Market Analysis Team

Frequently asked questions about Airbnb in Watertown, SD

What is the average Airbnb occupancy rate in Watertown?

The average Airbnb occupancy rate in Watertown is currently 30%, which falls below the South Dakota state average of 43%. Occupancy varies significantly by property size — 3-bedroom listings lead at 46%, while 2-bedroom units lag at 19%. Seasonal demand plays a major role, with the strongest bookings concentrated from May through November.

How much do Airbnb hosts make in Watertown?

On average, Airbnb hosts in Watertown earn approximately $2,303 per month and $27,647 per year based on the trailing 12 months of historical booking data. Revenue varies considerably by property size: 1-bedroom listings average $16,538 annually, while 4-bedroom properties can earn around $65,301 per year. Monthly earnings range from as low as $758 in January to over $4,141 in October.

Is Watertown a good market for Airbnb investment?

Watertown scores 55 out of 100 on Rabbu's ROI Score, placing it in the "Attractive Opportunity" category. The market benefits from low competition (just 33 active listings), reasonable revenue-to-price ratios, and strong performance from larger properties. However, occupancy is below the state average and seasonal swings are pronounced, so success depends on choosing the right property size and managing expenses during slower winter months.

What is the average daily rate (ADR) for Airbnb in Watertown?

The average daily rate in Watertown is $195, compared to the South Dakota state average of $261. ADR scales significantly with property size — 1-bedroom units average $106 per night, 2- and 3-bedroom properties are around $160–$161, and 4-bedroom listings command a premium at $363 per night.

Are short-term rentals legal in Watertown?

Short-term rentals are generally permitted in Watertown, SD, though operators may need to obtain appropriate licenses or permits from the city. As with any market, local regulations can change, so prospective investors should verify current rules with the City of Watertown and review any HOA restrictions that might apply to a specific property.

When is peak season for Airbnb in Watertown?

Peak season in Watertown runs from roughly July through October, with October being the single highest-earning month at $4,141 in average revenue. July ($3,786) and September ($3,331) are also strong performers. Winter months represent the low season, with January averaging just $758 and February around $856.

How many Airbnbs are there in Watertown?

As of April 2026, there are 33 active Airbnb listings in Watertown. The supply is dominated by smaller units — 12 one-bedroom and 9 two-bedroom properties — with 5 three-bedroom and 6 four-bedroom listings rounding out the market. Notably, active listings have grown 195% year-over-year, indicating rising investor interest.

How is Airbnb revenue calculated in Watertown?

The annual and monthly revenue figures for Watertown are derived from the trailing 12 months of historical booking performance for active comparable Airbnb listings in the market — they are not forward-looking projections. We average each comparable listing's actual revenue per available night (RevPAN) by month over the past year, remove regional outliers, and roll the results up to a market-level historical average. This approach anchors the figures to what hosts have actually earned recently while naturally reflecting seasonal peaks and slower months, since each month uses its own historical performance. Individual results can vary based on property quality, pricing strategy, and how actively the listing is managed.

About Rabbu Market Data

Rabbu provides Airbnb and short-term rental market data and statistics across the United States. Our mission is to empower investors with accurate insights and easy-to-use tools, so they can confidently identify and act on the best opportunities in the Airbnb market.

What this data includes

• Regularly updated active Airbnb and STR listing counts for the Watertown market
• Average daily rate, occupancy, and RevPAN trends by property size
• Monthly and annual revenue metrics based on trailing 12-month booking data
• Popular amenity data across active listings to identify guest expectations
• Home value benchmarks from the Zillow Home Value Index (ZHVI)

Sources and disclaimers

Rabbu proprietary analytics as of Apr, 27 2026 and Zillow Home Value Index (ZHVI) as of Apr, 27 2026. Revenue projections are estimates based on comparable properties and do not guarantee future performance. Data reflects trailing 12-month historical averages and may not capture recent market shifts or regulatory changes. Individual property results will vary based on location, quality, pricing strategy, and management approach.