Travel demand was expected to soar this summer in short-term rental markets located in sunny destinations around the country. However, at the same time travel costs rose significantly, inflation reached new highs, and a possible recession is looming — a situation not so sunny. So how did short-term rental summer markets do in the U.S., how is Labor Day and the upcoming shoulder season looking, and most importantly, how should property managers respond?
At Beyond, we have extensive market data that allows us to get a clear picture of how 2022 performed when compared to previous years. Let’s take a look at performance in summer destination markets across the U.S. From there, we’ll dive into our recommendations for property managers to keep their businesses going and their owners happy.
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Summer 2022: High Average Daily Rates Paired with Lower Occupancy Levels
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As reflected in these two charts above, 2022 average daily rates (ADRs) were much higher than 2021, but occupancy levels in 2022 were mostly lower in summer destination markets. We can take away a few conclusions from this data.
First, we can see that each booking is bringing in more revenue for property managers due to the higher ADRs. However, when taking occupancy levels into account, we can see that the vacation rentals with higher rates are not being booked as often. Demand for short-term rentals did exist at high levels this summer, however, travelers were not willing to pay what they did last year for their vacation rentals within the U.S.
And second, we can undoubtedly see that the short-term rental industry is growing. While occupancy levels were slightly below last year, they are still much higher than the last pre-pandemic year of 2019 - a great sign for the overall growth and increase in the popularity of vacation rentals.
Labor Day 2022 Forecast
As for the upcoming Labor Day weekend and following shoulder season, we see a different picture. First, we can see the expected drop in occupancy from peak summer, however, that drop approaches 2019 levels. And ADRs are still exceptionally high across the board. In some markets, these high rates are making Labor Day an almost no-event in terms of added demand, and in those markets with added demand, it is much more focused on just the weekend days than in years prior, with most property managers in danger of overpricing their weekdays surrounding Labor Day.
How Property Managers Can Respond
Based on how the market looks for Labor Day and the upcoming shoulder season, we recommend that hosts and property managers evaluate their pricing strategy first and foremost. It might be time to pivot to a strategy that drives for occupancy so that you can capture existing demand.
When demand is lower, you want to ensure that you are getting your fair share of bookings. Think about adjusting minimum prices where necessary, minimum stay requirements, lead times, and length of stay discounts, making sure that every adjustment is still within your standards.
We also recommend that you utilize a revenue management platform to access critical data about your market to inform your pricing strategy.
Lastly, ensure that you are proactively communicating with your owners. While these conversations might be difficult to have with your owners, the overwhelming feedback we hear from our property managers is that it is better to be candid and proactive with owner communications.
Get Actionable, Comprehensive Short-term Rental Market Data with Beyond
With our dynamic, demand-driven pricing tool and extensive market data, Beyond aims to be your best partner in revenue management strategy, helping you make the best decisions for your business.
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