The Evolution of Short-term Rentals In The post-pandemic world
Introduction:
As the world gradually reopens following an extended period of COVID-19 restrictions, the prospect of long-awaited vacations is bringing excitement to a growing number of people. However, the pandemic has ushered in several changes, notably shifting travelers' expectations for their holiday experiences. The desire for more unique and personalized travel experiences is increasingly being met by short-term rentals, rather than traditional hotel or motel accommodations. In this comprehensive research summary, we'll delve into the key takeaways and trends that shape the evolving landscape of short-term rentals.
Key Takeaways:
1. Market Valuation and Growth:
- By the year 2026, the short-term rental market is expected to reach an impressive valuation of $8,907.1 million.
- The vacation rental market is set to experience a substantial compound annual growth rate of 19.1% from 2022 to 2032, driven by factors like the thriving tourism industry and the growing popularity of vacation rentals.
- In 2022, the U.S. saw a 20.5% increase in the average number of short-term rental listings, reaching 1,278,254. This number is projected to continue rising to 1,424,441 in 2023.
- The percentage of nights listed for vacation rentals reached a peak of 25.3% in 2022, indicating significant growth compared to just 5.7% in 2021.
2. Host Perspectives:
- Approximately 45% of hosts reported that short-term rentals were instrumental in meeting their financial needs.
- Nearly 50% of hosts disclosed that income from short-term rentals helped cover their expenses, while more than 20% of hosts stated that rental income prevented foreclosure or eviction.
- Among vacation rental property managers, 82% expressed plans to implement keyless technology, and 34% considered investing 11% to 25% more in technology.
3. Traveler Insights:
- As of April 2022, 18% of American adults had expressed their intention to stay at a vacation rental, showcasing the diverse accommodation preferences among Americans.
- The number of adult users on Airbnb was projected to reach 45.6 million by 2022, attributed to its cost-effective lodging options and distinctive accommodations.
- Around 93.06% of American adults place significance on sustainable travel, with environmentally friendly choices being a priority for over 82% of adults.
- Approximately 64.84% of women and 53.82% of men prioritize cost when booking travel, but both genders equally emphasize sustainability and minimizing their carbon footprint.
4. Online Platforms:
- In 2022, Booking.com secured around 17.1 million downloads, solidifying its position as a preferred option among travelers.
- The platform's mobile app climbed to the top of Apptopia's list of the most downloaded online travel agency (OTA) apps in the U.S.
- In September 2022, the number of active Airbnb rentals exceeded pre-pandemic levels by 19.2%, with over 6.1 million listings.
5. Costs and Revenue:
- Cleaning costs for 1-bedroom vacation rentals surged by 25.08% since Q1 2021, reflecting the increased focus on cleanliness.
- In 2022, vacation rental companies faced an average turnover cost of nearly $4,000 per property when vacant.
- Cleaning fees for vacation rentals in 2022 amounted to a total of $8.1 billion, with 15% of vacation rentals waiving cleaning fee charges.
- The projected average daily rate (ADR) for short-term rentals is expected to reach $278.19 in 2023.
6. Investment Opportunities:
- The cap rate for short-term rentals is expected to increase to 7% in 2023, driven by growing demand and improved profitability metrics.
- Short-term rentals have contributed to an average increase of 17% to 20% in home appreciation across the United States.
- In small city/rural areas, the demand for short-term rentals saw an average growth of 25%.
- In 2023, Indialantic, Florida is projected to achieve an impressive occupancy rate of 70%.
7. Competition and Market Preferences:
- Short-term rentals are gaining greater popularity in coastal areas compared to hotels, with a notable 17% difference.
- As of June 21, 2020, hotel revenue per available room (RevPAR) decreased by a staggering 64.8%, whereas short-term rental RevPAR only dropped by 4.5%.
- The majority of respondents believe that hotels will explore alternative accommodation choices, such as short-term rentals, in their business models.
- There is a growing interest in distinctive and unconventional accommodations, with a substantial 28.0% surge in stays in 2021.
8. Challenges and Future Trends:
- Some U.S. cities like San Diego are expected to experience a decrease in the number of short-term rentals due to new regulations.
- The demand for short-term rentals in urban areas faced challenges as of April 2021, with a decline of over 40% compared to the pre-pandemic period.
- The number of users in the home-sharing economy is expected to surpass 68.2 million by 2023.
Conclusion:
In recent years, the U.S. vacation rental industry has witnessed significant growth and transformation, driven by evolving traveler preferences and the economic environment. While it has faced some challenges, the industry is poised for continued expansion. Vacation rentals are becoming the preferred choice for many travelers, offering cost-effective, eco-friendly options and distinctive accommodations. As we look to the future, the industry is expected to see a rise in valuation, occupancy rates, and user numbers, reinforcing its position as a formidable player in the hospitality sector.
Sources:
futuremarketinsights.com
airdna.co
airbnb.com
seetransparent.com
statista.com
thevacationer.com
rmscloud.com
turno.com
globest.com
guesty.com
outdoorsy.com
koapressroom.com
avalara.com
rentresponsibly.org
usfa.fema.gov
bmj.com
daedal-research.com
