Here at AllTheRooms Analytics, one of our goals is to conduct comprehensive data analysis to uncover unique insights and rental industry trends. After noticing an eccentric pattern in the data for Europe in 2018, we’ve revealed that weather patterns — much like festivals and sporting events — can be considered occurrences around which hosts devise methodical property management strategies. Here, we dive into AllTheRooms’ data on Airbnb in Europe and find one likely conclusion.
Negative Q1 and Q2 Supply Trends
As a general rule of thumb, vacation rental supply in Europe tends to follow a consistent annual trend: the growth in supply is low towards the beginning of the year when winter is still in full swing, then hosts (both new and existing) tend to add most listings to the market during the spring months from March through to May. This increase makes sense: in anticipation of summer seasonality, hosts publish listings well in advance.
One interesting data point is the negative year-on-year growth of Airbnb listings between 2017 and 2018. In 2017, Europe’s growth in property count peaked in March with more than 61,000 new properties. Throughout the ensuing months of April, May, and June, supply growth remained high with 58,000, 52,000, and 50,000 new properties added each month.
In 2018, however, supply growth through this same period was curiously low. Across the three-month span from March to May, the Airbnb market added 19% fewer properties than it did in 2017. While this trend is certainly unique, what the data shows for the market in June and July is extremely abnormal.
2018’s Dramatic Spike in Peak Summer Months
2017 trends were, like most years, hardly unique — a negative growth rate continued throughout the summer as most hosts had already published their listings. In contrast, 2018 saw a dramatic reversal in the year-on-year growth rate of vacation rental listings. Whereas the market added 19% fewer properties during Q1 and Q2 than it did in 2017, June and July witnessed an 83% increase in property listings.
Here is some more context for these numbers: taken as a whole, Europe added 71,460 new Airbnb properties in June and 83,696 in July. In 2017, the platform added just 50,529 in June and 34,221 in July.
In correlation with the dramatic spikes in supply is a significant uptick in the listed ADRs and occupancy rates in many countries throughout Europe. For example, in July of 2018, vacation rentals in Croatia saw a 25% increase in their average daily rate. Occupancy rates also jumped from 37% in June to over 61% in July. Countries including Norway, Belgium, and Ireland all show similar trends of higher-than-usual ADR spikes during this time period.
Arguably more interesting than Europe’s dramatic spike in listings and ADR in June and July is how quickly hosts then removed properties from the market in Q4.
Stark Regression to the Mean in Q4
Beginning in August and continuing until the remainder of the year, the supply of Airbnb listings in Europe significantly dropped off. Chance hosts who published listings in June and July decided that the window of opportunity had closed and removed their listings from the market — a textbook example of a regression to the mean. The 83% year-on-year increase seen in the peak summer months transformed into a 224% decrease from September through December.
In regards to the vacation rental industry, it is truly rare to see data anomalies — both the summer peaks and the winter valleys — as stark as this. To verify our findings, AllTheRooms Analytics pulled Airbnb data from the United States to see if other locations underwent similar trends.
Europe vs. the United States
As predicted, this rollercoaster supply trend was unique to Europe. Besides a significant month-on-month increase in July, the United States vacation rental market did not mirror Europe’s trends. The data (albeit sporadic) shows 2019’s Q1 and Q2 supply growth just about on par with 2017, and Q4 doesn’t see nearly the same negative decline it did in Europe.
A Potential Cause: the 2018 European Heat Wave
In attempts to find a hypothesis as to what could have caused this abrupt churn in supply, we coupled our data with information on Europe’s record-breaking heat wave.
In 2018, the continent experienced an unprecedented heat wave that caused widespread drought and wildfires, as well as posing dangerous public health risks. The Netherlands experienced its longest heatwave since 2006, Greece’s July wildfires demolished over 1,000 buildings, and water consumption restrictions were implemented in many other countries. In Germany, both April and May set new temperature records as the warmest since record-keeping began in 1881.
What’s peculiar is the strong correlation between regions with high temperatures and their vacation rental market supply. While many regions were bearing the devastating burden of extraordinary temperatures, others were cashing in on the opportunity to make money in the short-term rental space.
When comparing countries and regions that experienced record temperature highs in 2018 against those that didn’t, we can conclude the following: the higher the temperature, the more dramatic the spikes in key performance indicators supply, ADR, and revenue.
Just as we saw in the Super Bowl and the World Cup, events undoubtedly impact vacation rental markets in staggering ways. It is now safe to assume that weather — be it record-breaking heat waves or deep-powder snow storms — is a key variable in determining whether or not hosts add listings, not to mention, how exactly they manage those listings. However, unlike big-ticket events and festivals, the stark drop-off in the number of listings available after unexpected weather patterns seems to be faster and steeper. Hosts are quick to jump on a profitable opportunity, but equally as quick to remove listings and cut losses.