Russia Claims 5 of Top 6 Cities With Most Vacation Rental Market Growth in 2018
Looking back at the cities with the most vacation rental growth in 2018, one theme becomes overwhelmingly clear: the impact of Russia’s World Cup. Much like the Super Bowl Impact on Airbnb Markets, the World Cup was a massive boon for Russia’s tourism industry and especially for vacation rental hosts. When filtering by the key performance indicators of gross revenue and the supply of properties on the market in 2018, five of the world’s top six cities were located in Russia.
Considering the World Cup only takes place every four years — and because Airbnb and other vacation rental sites are relatively young — 2018 provided one of the first true insights into how an event of such caliber can influence the vacation rental industry.
Utilizing AllTheRooms’ unique data, it is clear that, unlike hotels, vacation rentals are not always concentrated in predictable urban areas, meaning smaller neighborhoods and businesses are finally seeing an influx in tourist dollars. It’s equally clear that people who stay in Airbnbs spend twice as much money during their vacation, 45% of which is spent in the area they stay in.
Among these insights, perhaps the most notable is how certain cities witnessed dramatic upticks in year-over-year revenue growth. By diving into AllTheRooms’ Analytics’ Event Analysis Reports, it became apparent that the global vacation rental market is dynamic, amorphous, and often highly dependent upon intermittent events. Here are the top 10 cities with the most growth in 2018.
Located 318 miles southeast of Moscow, Saransk is the capital of Russia’s Republic of Mordovia, and is not traditionally considered a travel destination (even among Russians). That said, when the World Cup came to town in June of 2018, Saransk’s attractions, culture, and vacation homes were put under the spotlight.
In terms of revenue, hosts and property managers in Saransk received a 54,935% increase from the previous year — jumping from just $31,300 in 2017 to a staggering $17,226,165 in 2018. The number of properties grew by a factor of 21, from 34 up to nearly 800 listings.
2. Kuehlungsborn (Kühlungsborn)
Kuehlungsborn is the only city on this list whose growth was unrelated to the 2018 FIFA World Cup. However, the German seaside resort city is still an interesting outlier. Located on the Baltic Sea and known for its long stretches of sandy beaches, Kuehlungsborn has become an extremely popular tourist destination for Germans, Danes, and Brits alike. While there’s a considerable drop-off from ranks #1 and #2, Kuehlungsborn’s 2,807% increase in revenue is still impressive.
Sitting at the confluence of the Volga and Samara Rivers, Samara is a major economic, cultural, and scientific hub of the country that also stands as a major transportation center with an important railway network.
In 2018, the riverfront city of roughly 1 million residents saw its gross vacation rental revenue multiply by a factor of 23, earning over $16,000,000. Supply increases were also impressive as Samara’s 203 vacation rental properties shot up to 1,635 in order to host travelers for its six World Cup Matches.
4. Nizhny Novgorod
Russia’s third largest city, located about six hours east of Moscow, “Nizhny” is often considered the country’s third capital, and roughly on par with St. Petersburg in terms of economic and cultural significance. With a population of over 1.3 million and a well-established tourism sector, it’s surprising to see Nizhny ranking fourth on the list of cities with the highest year-over-year growth — a testament to how an event like the World Cup can disrupt market sizes and user demand.
Jumping from $1,252,300 to $26,919,720, Nizhny witnessed a strong revenue growth of 2,000%, meanwhile, the number of properties in Nizhny jumped from 413 to 2,034.
Rostov-on-Don is a city in southern Russia, whose Rostov Arena hosted five matches during the 2018 FIFA World Cup. Even though the stadium only holds 45,000 fans, the matches generated $12,141,665 in revenue for vacation rental property owners, which was about $11,000,000 more than the previous non-event year. In terms of supply, Rostov-on-Don saw the number of private homes available for rental peak by 391%.
Wrapping up the list of the top six cities with the largest vacation rental market growth is Volgograd, a city in southwestern Russia that hosted four World Cup matches. Volgograd is historically known as the original site of WWII’s Battle of Stalingrad (as the town was formerly known), but today stands as an important shipping port and a great travel destination for history buffs.
Throughout 2018, Volgograd saw rental platforms generate 1,500% more revenue than the previous year, plus had a supply increase of 493%.
A Note on Occupancy Rates
Another interesting data point from Russia’s World Cup event analysis is the minimal — and sometimes negative — changes in occupancy rates. As is the case with many big-ticket events, often new hosts will look to capitalize by inflating their asking prices. However, many hosts often price themselves out of the market. This, combined with the trend of opportunistic hosts publishing their accommodations too late, often result in decreased occupancy rates.
For example, the Russian cities of Samara and Nizhny respectively saw a 2.5% and a 12.5% increase in occupancy rates, which alone don’t account for large revenue boosts. Elsewhere, Volgograd’s average occupancy rate for 2018 actually decreased by 11%. Even Saransk, the most impressive statistical outlier, which had a dismal pre-World Cup occupancy rate of 6%, climbed up to a less-than-inspiring 19%.
The key takeaways from AllTheRooms Analytics’ data are twofold. First, an event like the World Cup has the capacity to lift little-visited travel destinations — no matter how unknown they were — into top-tier revenue-earning locations. If properties are managed correctly, the vacation rental industry can be lucrative. And second, increased revenues don’t always correlate with increased occupancy rates. While occupancy rate is definitely a key performance indicator to be considered, seasonal and event-based demand often compensate for occupancy lulls.