As the COVID-19 pandemic weighs on, demand for short-term rentals in the United States has fallen, according to new data from AirDNA.
While overall, short-term rental demand dropped by 15.3% in December 2020, demand trends vary considerably by location type, AirDNA finds: In fact, mountain destinations – where travelers are afforded more space to socially distance - grew demand by 15.5% compared to December of last year.
Urban and suburban destinations, meanwhile, saw demand decrease by 55.5% and 33.5%, respectively.
With overall short-term rental demand down, available supply contracted by even more, resulting in an overall rise in occupancy levels for the average unit: Occupancy averaged 47.9% last month, up 5.8% year-over-year.
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Average daily rates (ADRs) grew in December by 7.3%, led by higher occupancy levels and traveler preference for larger units, particularly in destination and resort markets.
However, the uptick is less than the 12.3% ADR increase short-term rentals saw in November.
“Short-term rentals demand in destination markets is exceeding all expectations. Nevertheless, supply continues to contract as many second-home owners are keeping their properties for personal use instead of renting them out,” says Jamie Lane, vice president of research at AirDNA.
“Properties that remain on the market are now able to raise their rates due to a lack of available inventory in many high-demand rental markets.”
Of the largest U.S. short-term rental markets, Gulf Shores/Mobile, Alabama, led with RevPAR up 86% year-over year, followed by the Lower Hudson Valley in New York (up 84.9%), and the Coachella Valley (up 84.3%), Big Bear (up 73.1%) and Lake Tahoe (up 67.4%), all in California.
RevPAR declines continued in most major urban markets, with RevPAR slumping in New York by 55.9%, in Maui, Hawaii, by 27.3% and in Las Vegas by 18.6%.
Looking ahead
As vaccine distribution gets underway and travelers turn their attention back to travel, new bookings are on the rise, increasing 10% in December over the same period last year.
The majority of those new bookings, 70%, are for destinations outside of major metro areas. Markets that cater to outdoor adventures – including near national parks – drove many of the new bookings.
In the first half of 2021, short-term rentals in destination and resort markets are expected to outperform as they did in 2020.
AirDNA says a strong peak season in ski areas, as well as bookings that extend into the spring – normally a weak demand period – account for the increased demand in those markets.