Short-term rentals have maintained higher performance
levels than hotels since the start of the COVID-19 pandemic according to the
preliminary findings of a global analysis prepared jointly by STR and AirDNA.
The study looks at the performance of traditional hotels,
hotel-comparable rentals (studios and one-bedroom units) and short-term rentals
of two or more bedrooms in 27 markets globally, using weekly data from March
2019 through the week ending June 27, 2020.
The two companies gave a preview of the findings
during a webinar Thursday hosted by Cloudbeds.
As COVID-19 took hold around the globe in March, traditional
hotels saw the most severe year-over-year decline in occupancy, down about 77% across
the 27 markets, compared to rentals that were down only about 45%.
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Since then, all sectors
are seeing some recovery, stronger in regional markets than in urban and
stronger for rentals than hotels.
“[Hotels] would typically be
running at a 75% occupancy at the moment, as they were at the beginning of the
year... but they are still only sitting at about 40%,” says Robin Rossman,
managing director at STR;
“Short term rentals... have
been more resilient and are sitting at 58 to 61% occupancy.”
Rossman says that difference
is to be expected since hotels tend to be more oriented toward business
travelers and large groups.
Along with appealing to
leisure travelers, which has been the first category to bounce back in markets around
the world, AirDNA founder and CEO Scott Shatford says short-term rentals are
filling the need for longer stays, with bookings of at least two weeks now more
common than before the pandemic. And they provide “that perceived safety
of not having to interact with people.”
But, he says, the recovery has not been identical across all types of
rentals - the strongest activity has been in large properties like four-bedroom
homes near leisure destinations.
“There are lots of condo-style, apartment-style short-term
rentals with a host that has one property, that doesn’t have professional cleaning
set up, that doesn’t have brand recognition. And so I think those will suffer over
this next year in terms of how they compete with hotels,” Shatford says.
Regarding rates, the
analysis found rates have held steady or even gone up slightly for both small
and large short-term rentals since the start of the year, whereas for hotels
average daily rate has dropped from more than $150 in January to about $104 at
the end of June. Hotel rates dropped below the rate for small rentals in
mid-March and have remained there.
Rossman says while some of
the decline in ADR may be attributable to hotels dropping rates to attract
business, it is more likely due to other factors.
“Most of the demand that is coming through is going to the budget hotels, so
there’s a change in mix for type of hotel,” he says.
“That’s bringing the market average down. And even within the demand that is
there, there’s a change in mix – high-rated group demand, high-rated business
demand is gone. And then add to that
there is no longer a concept of a compression mark anymore where hotels yield
Rossman says mainland China,
where hotel RevPAR has improved from about -50% below prior year levels to now
about -35%, may indicate the “upside case” for the United States and Europe,
and he does not expect the hotel industry to return to 2019 levels until 2023
But he cautions, the story
of the recovery will primarily depend on what happens with the virus.
“It’s really important that we realize how fragile this recovery
is, and if we do have a resurgence of cases... it could push things further
back down,” he says.