What is a Market Overview of the Short-Term Rental Market?
Short-term rental market overview
In the past few years, the short-term rental market has drastically impacted the hospitality industry and is on track to continue growing in upcoming years. Airbnb has undoubtedly led the charge, but companies like Expedia and TripAdvisor are now firm strongholds on the s&p 500 list. However, there are mixed opinions on the industry. Positive stories, such as enabling homeowners to earn additional income, as well as more critical ones, like its impact on affordable housing, all point to the controversial effect of the short-term rental market. With such predicted expansion and very real consequences, what does 2019 and beyond look like for short-term rentals?
Short-term rentals emerged onto the market around the early 2000s, with a majority of rental bookings conducted via in-person agreements. With the introduction of platforms such as Airbnb and HomeAway, online travel agencies have been a huge component in the growth of the short-term rental market. According to Euromonitor International, by 2022 online direct and intermediates will control over two-thirds of the short-term rental market while offline methods will shrink to just 33%.
Predicted market trends
One of the trends expected to develop in 2019 is more investments made in cities in the Midwest for vacation rental properties. With booming housing markets like New York and California, there is a lower ROI for rental investments due to the high competition there. Some of the more attractive alternatives within the U.S. are based in Indiana and Illinois, where the market has been experiencing a strong increase in occupancy over the past year. Indianapolis, Indiana for example, experienced a 256% increase from 2017 to the begin of 2018.
One of the biggest trends of the past year has been Airbnb’s presence in New York City. AllTheRooms Analytics’ market overview of NYC shows how bookings have fallen not only in the instant book category but also in overall bookings. In fact, Airbnb rentals there have declined by 34%, from 34,548 to 22,679 listings, within the past 20 months. The likely cause of the decrease is due to the state law regulations enforced by the City of New York to minimize illegal rentals through Airbnb.
Data such as this is extremely valuable for property managers and owners who plan to list or invest in New York City. The dynamics of the market are of the utmost importance when deciding how to best list, promote, and pinpoint competitors for an existing or potential rental property.
What does a market overview look like?
A market overview is extremely detailed, consisting of multiple elements that determine the breakdown of a market. Here are a few:
– RevPAR – (Revenue per available room) The average income of a property, per room, based on room type, over a specified time period. Here’s a more detailed rundown on What is RevPAR?
– ADR – (Average daily rate) The average price a property charges per night, over a specified time period. Applies only to available dates to book. Find out What is ADR? to get a better grasp on one of the industry’s most important metrics.
– Occupancy % – Average percentage of nights a property is booked over an observed period. Here are some great ideas on how to improve your home rentals and How to Increase Your Airbnb Occupancy Rates.
– Blocked % – Average estimated percentage of nights a property host has prevented from being booked over an observed period. Accounting for blocked % helps us accurately gauge market sizing and plan accordingly.
– Market Analysis – An analysis that includes RevPAR, ADR, Occupancy%, Blocked%, Supply, and Demand figures for a period of time based in a geographic area.
– Monthly Trends – A yearly analysis that states how RevPAR, ADR, Occupancy%, Blocked%, Supply, and Demand have changed per month.
– Year-on-Year Trends – A year-over-year comparison of specific areas of focus that include RevPAR, ADR, Occupancy%, Blocked%, Supply, and Demand performance
AllTheRooms Analytics employs all of these tools within a data report to provide clients with the most accurate, representative information about the short-term rental market. The industry is undeniably flourishing, and for short-term rental owners and property managers, it’s vital to utilize data from market analysis to consistently perform well among the competition. AllTheRooms Analytics provides valuable insights into historical data and projections for any geographical market. If you are interested in how an ATR Analytics market overview report could benefit your vacation rental, contact us.