Despite a looming recession, travel tailwinds are expected to fuel supply and demand for the vacation rental industry in the United States in the coming year, according to a new report from AirDNA.
Most forecasts fall short of the “dramatic” recovery that short-term rentals experienced in 2021 and 2022, but they often outpace 2019 levels.
Subscribe to our newsletter below
Continued recovery in urban areas, plus changing preferences that prioritize travel, create a strong position for STR going forward, AirDNA’s U.S. 2023 Short-Term Rental Outlook states.
According to Jamie Lane, vice president of research at AirDNA: “Consumers will still prioritize travel, as we can see by the current strength of future bookings. The STR market has matured and become a strong option for many more travelers, pointing towards a bright future for 2023 and beyond.”
The analysis predicts demand will rise only 5.5% in 2023 - down from spikes of 21.1% in 2022 and 20.5% in 2021. The report attributes the slowdown in demand to “the maturing market recovery.”
AirDNA is a Denver-based data company that tracks the STR industry. It finds that occupancy is expected to dip only slightly to 56.4% - from 58.3% in 2022 and 60.3% in 2021 - and remain “still significantly higher than pre-pandemic levels.”
Occupancy is forecast to drop more sharply “in areas where pandemic-era occupancy skyrocketed, such as coastal and mountain resort areas. As revenue per available room (RevPAR) is forecast to decrease 1.6%, hosts and property managers in these locations will have to pay close attention to the data to make sure their properties remain attractive to guests,” Lane says.
Nights listed are expected to rise only 9%, compared to a 25.3% spike in 2022. However, homeowners - particularly owners of second homes - may resort to short-term renting, the study shows.
Economic pressures and inflation-weary consumers will cause the average daily rate (ADR) to gain just 1.7% in 2023.
AirDNA expects RevPAR to dip to -1.6%, down from a 2.1% climb in 2022 and a 27.8% spike in 2021. The report reveals that overall RevPAR is expected to shrink because the small increase in ADRs will not be enough to offset the decline in occupancy.
“This will be felt most strongly in resort locations and small cities, where occupancies have already begun to slip from their peak. Other city locations, experiencing a lagged recovery to pre-pandemic performance, may see small RevPAR gains, too,” the report states.
AirDNA got a new CEO in October with the promotion of Demi Horvat, who had been serving as chief operating officer.
At The Phocuswright Conference, Horvat talked to PhocusWire's Linda Fox about her background, her priorities as CEO and where she sees opportunities for the company to grow. Watch the full discussion below.
Executive Interview: AirDNA