The short-term rental market hit a new milestone last month, with March 2021 showing the highest occupancy on record.
According to AirDNA, occupancy in the United States rose to 60.9% for the month as spring break crowds swarmed coastal destinations, namely in Florida.
Meanwhile, occupancy in March of 2020 was just 47.2%, down from 58.2% in 2019. Even when compared to prior years, March 2021 occupancy levels were 4.6% higher than the previous record in 2019.
AirDNA says occupancy gains were broadly a result of a recovering demand and a reduction in the available supply of short-term rentals. The March 2021 demand level was 97% of March 2019 demand, which is the highest it’s been since the start of the pandemic.
The recovery in demand has varied by location, with demand in hard-hit urban areas reaching just 55% of the 2019 level. Rural locations and small cities, however, are at 165% of 2019 demand. Destination/resort locations are also trending ahead of previous years.
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With many short-term rental operators temporarily or permanently removing their properties because of low demand, available supply is down about 7% relative to 2019. This trend is most visible in major cities where the number of available listings has fallen by more than 30%.
According to AirDNA, urban locations have lost 39% of their available supply. That – coupled with demand trends – has resulted in an 11% overall drop in occupancy. If supply had remained consistent, the resulting drop in occupancy would have reached -45%.
Because supply hasn’t kept up with the strong demand outside of large cities, there have been significant occupancy increases in March for units outside of urban locations.
Higher occupancies and demand for larger homes in destination markets have pushed average daily rates in March to $254.70 – 18% higher than March 2020 and 192% higher than March 2019.
Average daily rates are expected to climb even higher this summer, though as demand begins to recover in large cities, average daily rates will fall back toward 2019 levels.
Summer surge
Reservations made during March 2021 marked another record - exceeding February’s all-time high - with guests booking both near-term trips for April and further out into June and July.
With the surge in future reservations during the first three months of 2021, April, May, June and July now have more demand booked through the first week of April 2021 than for the same months in 2019 as of early April 2019.
“Looking at this data we are expecting a record summer for the short-term rental industry,” says AirDNA CEO Scott Shatford.
“For the first time, we see guests confident enough to book both near-term trips and plan further out into June and July.”