“There is a boom coming in the short term rental market”.
So says Jasper Ribbers, Airbnb specialist and creator of GetPaidForYourPad.
And the recent Transparent and Amadeus Hotel and Vacation Rental Outlook Report (April 29, 2021) supports his claim. Indeed, some are predicting a revenge travel boom in the short term rental sector in 2021 after months of pent-up cabin fever.
Jetstream Hospitality Solutions CEO Mike Liverton said: “Short term rentals as a preferred choice for travellers have grown in popularity exponentially over the last few years. Since the pandemic struck, we’ve seen this sector outpace hotels in terms of occupancy rates in many locations.
“Consumers just want more and more of the convenience, privacy, space and home-like qualities that rentals offer,” he added.
But back to the Transparent and Amadeus report. The two companies combined their datasets to highlight the reactions of accommodations to the new travel trends post COVID-19.
Here are some of their key findings:
1 World-wide short term rental occupancy is almost back at pre-COVID-19 levels. Of course, there’s considerable variability over different markets, i.e. remote markets outperform urban areas.
2 Average daily rates (ADRs) are HIGHER than pre-Covid-19 times at $150 a night. It is clear that people are tired of lockdowns, desperate to vacation and are willing to pay up to go on a trip. Some hotels are trying to attract occupancy by lowering their rates by up to 26 per cent in 2021 compared with 2020.
Vacation rentals however have largely increased their rate with an average price rise of seven per cent year on year. This makes an average night in a vacation property more expensive than a hotel.
3 Booking lead times have increased, after being suppressed for the most part of 2020. This means travelers are booking further into the future, as they become more confident that travel will soon open up. Hotels bookings are more last-minute with lead times half that of rentals.
Airbnb’s first quarter 2021 results released this month (May 13) provide further insight. Seen as a barometer for the return of travel after the pandemic, the company’s earnings have been hit hard by travel restrictions.
- Revenue increased by 5% year-over-year and exceeded Q1 2019 levels.
- Airbnb attracted over $10B of bookings in Q1 2021, an increase of over 50% from the same prior-year period as travel returns.
- Net loss was impacted by several significant items, including a $377M loss related to the repayment of debt, a $292M non-cash mark-to-market adjustment for warrants, and a $113M expense related to a lease no longer deemed necessary.
- Adjusted EBITDA materially improved due to a reduction in operating expenses.
- Active listings in non-urban areas in Q1 2021 increased almost 30% from the same period in 2019
Responding to the results Airbnb Co-Founder and CEO Brian Chesky said:
“We are proud of our strong results. We surpassed 2019 revenue levels even though urban travel and cross-border travel, two of our strongest segments historically, have not yet recovered.
“We expect a travel rebound, unlike anything we have seen before. Travel is coming back and Airbnb is ready.”
The strength of Airbnb’s Q1 results could well indicate the beginning of this travel rebound. Travel is coming back and Airbnb and the short term rental market is ready – are you?