Demand for short-term rentals on the rise

Demand for short-term rentals in the United States accelerated in October, reaching the highest growth rate since the start of the global pandemic, according to Jamie Lane, Vice President of Research, AirDNA, which tracks industry data.

As concerns about COVID-19 have eased, demand in October increased 12.2% from October 2019 and 35.8% more than in October 2020. This is a gain significant compared to the 4.3% increase in September and a 1.5% decline in August.

Average Daily Rates (ADR) are also increasing, reaching $ 243.28 in October, up 24.7% from 2019.

“The combination of rising tariffs and demand means more revenue than ever is coming to the industry,” said Lane in the October AirDNA report.

“Strong growth is expected to continue, building on higher bookings and revenues reported by Airbnb and Vrbo in the third quarter. In the United States, short-term rentals (STR) generated 40% more revenue in October 2021 than in October 2019, compared to an average of 24% more in Q3 2021 than in Q3 2019.

2022 is expected to overtake all other years

While STR’s global listing growth increased 9.4% in 2021, 2022 is currently expected to overtake all previous years with listing growth of 20.5%, said Richard Chandler, Director, Products and Data – Migo , Flexible Living, at GlobeSt.

“Occupancy rates have actually set records this year, with demand for short-term rentals increasing 27.5% in 2021, while new listings only increased 9.4%; more demand than there were listings in most markets, ”Chandler said.

“While demand in 2022 is expected to increase by 23.4%, enrollment growth will also significantly exceed demand by a much lower margin than in 2021. This margin is so low that occupancy and ADR will decrease. most likely by 2022. “

Overall, 2022 is currently expected to lose around 1% occupancy and 7.1% ADR due to strong enrollment growth, Chandler said, and he believes enrollment numbers will not hit the peaks. pre-COVID levels before the start of 2022. There were 1.175 million registrations in 2019.

Migo is a piece of equipment that allows multi-family owners and residents to participate and enjoy home sharing on Airbnb.

STR Suppliers Offer Variable Business Models

While its effects are still largely unknown at this time, the emergence of the Omicron variant could impact this industry, as well as other real estate industries.

However, STR is an asset class that matches the behavioral trends that have arisen from the pandemic, Roman Pedan, co-founder and CEO of Kasa, a national short-term rental operator, told GlobeSt.-to know, “Have flexibility in everything we do, especially where you work and live. People choose employers who allow them that freedom.

Kasa works with institutional apartment owners so that part of a community’s units are available for short-term rental for any length of stay. The average stay in Kasa is five to seven nights.

Kasa’s model allows investors to take advantage of periods of ‘good’ or ‘high demand’ and earn additional income that could flow from them, while at the same time, if things slow down, operators can convert these homes. short-term rentals in more traditional, long-term housing. – term rentals, which helps maintain the flow of income.

During the pandemic, Kasa outclassed hotels of similar quality in its areas by 2 times and 3 times the average revenue per room. Its tariffs and occupancy rate continue to perform well, with rates up over 80% since January and an occupancy rate maintained within a range of 65% to 80%.

“Business travelers find that longer stays (around a week or so) can give them a taste of what it’s like to live in this region as they decide where to live more permanently,” said Pedan.

“When we started five years ago, we had to explain to investors what short stays are and how they would benefit from offering them. Today everyone sees and understands it. Soon, it will be unimaginable to think that a community would not have a short-stay component in its business plan.

Cities still avoided

Even with record numbers of people staying in short-term rentals, guests have yet to find their way back to the towns, Lane said.

“A combination of remote working, closed international borders, unvaccinated children and avoidance of large crowds has limited the recovery in demand,” he said.

In October, demand was still 20% lower than 2019 levels in the 50 largest cities in the United States, while demand outside these cities, including destination / resort markets and small towns and cities. averages, was 33.8% above 2019 levels.

However, from January 2021 to July 2021, the recovery in demand increased steadily. The percentage drop from 2019 fell from 50% less in December 2020 to only around 22% less in July. After that, the increase in COVID-19 cases associated with the Delta variant led to a further contraction in demand in urban areas.

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