How the UEFA Final Could Affect Madrid Vacation Rental Market
AllTheRooms Analytics’ ability to aggregate and catalog every homesharing listing on the planet — including those in the Madrid vacation rental market — puts us in the unique position of providing the most comprehensive insights into the short-term rental industry. One interesting aspect of our data is the ability to leverage previous years of market intelligence to make highly accurate future projections. For property managers, DMOs, and investors, these projections continuously prove to be an invaluable tool.
With the highly-anticipated UEFA Champions League Final coming up this weekend between Liverpool and Tottenham, we set out to predict exactly how Madrid’s vacation rental market will respond. With data sourced from the previous three finals (in the host cities Milan, Cardiff, and Kiev), we used a series of algorithms to make predictions for average daily rates, occupancy rates, supply, and even opportunity costs. Our Event Analysis Reports dissect how each event has a unique impact on the host city’s vacation rental market — and 2019’s Champions League Final is set to be no different.
A Note on Regulations in Madrid
Before diving into the market projections, it’s important to conduct our analysis with a grain of salt. In March of 2019, the Madrid City Council responded to pushback from community organizers by implementing restrictive regulations. The law effectively mandated that all vacation rental homes must have their own private entrance. If the listing is located in an apartment building, it must have its own private elevator or staircase.
If the law is implemented to its full extent (which has yet to be determined) it is estimated that nearly 95% of listings would be unable to obtain the required license. More conservative estimates suggest the law will realistically affect 10,000 properties (of the 14,600 currently in Madrid).
With this in mind, Madrid presents a unique opportunity to study the extent to which an event can impact a highly regulated and highly saturated vacation rental market. Let’s dive into the data.
Average Daily Rate Projections
In the days and weeks leading up to the Champions League Final, ADRs in the Madrid vacation rental market have hovered around the low $90s during the week, and the low $110s on the weekends. While certainly substantial, these numbers shrivel in comparison to other European city averages: Reykjavik ($194), Amsterdam ($178), Edinburgh ($166), London ($154), and Barcelona ($151).
In the week prior to the game, AllTheRooms Analytics predicts a massive surge in booked daily rates. As seen by the chart below, ADRs are set to hover around $213 four to six days before the game, and surge to $264 on June 1st, the night of the match.
Taking a baseline ADR of $100 in Madrid, it’s safe to assume that the final match will cause a 164% increase in the daily rates of vacation rentals.
Madrid Vacation Rental Occupancy Rate Projections
Turning to occupancy rates, Madrid already boasts impressive baseline numbers before the event comes to town. In the first quarter of 2019, hosts and property managers experienced average mid-week occupancy rates of 61%. As for weekend rates, hosts have seen averages of nearly 80%.
Because large events usually welcome a fair share of opportunistic chance hosts who overprice their listings — and taking into account Madrid’s regulations — it comes as little surprise that the match is projected to have a marginal impact on occupancy rates. On the night before the match and the night of the match, Madrid occupancy rates are set to plateau at 85%. This number is still incredibly impressive, but it’s only a few points higher than a normal weekend in Madrid.
Opportunity Costs for Madrid Vacation Rental Hosts
Speaking of chance hosts, another interesting use for vacation rental data is to calculate the projected missed income of hosts who failed to book their listings. In many cases (this past year’s Super Bowl in Atlanta for example), primetime events serve as a lure for first-time hosts who price themselves out of the market. In effect, city-wide occupancy rates actually decrease in the days surrounding the event. This isn’t quite the case in Madrid, but there will still be a significant amount of money left on the table.
Revenue projections for the impact period (the one-week span surrounding the day of the event) show vacation rental hosts in Madrid earning just over $20 million. The most profitable day will likely be June 1st, the night of the game, when hosts can expect to earn a cumulative amount of over $3.6 million. On a per-host level, this works out to $1,266 in earnings over the seven-day impact period.
When calculating missed revenues, hosts who overprice their listings or are unable to lock down a booking will miss out on over $9 million in revenue.
Madrid Vacation Rental Supply Projections
The number of listings available on the market is perhaps the most telling indicator of an event’s impact on not only the accommodations market, but on the related industries of travel, tourism, dining, and shopping. This metric is especially important for hotels looking to track competition and tourism agencies looking to analyze how supply responds to demand.
As is the case for occupancy rates, the upcoming Champions League match is not expected to have earth-shattering effects on the supply of vacation rentals. In the first few months of 2019, the number of vacation rentals in Madrid grew gradually from 14,350 in January to 14,600 in the early part of May. During the impact period, supply is projected to rise towards 16,000. 1,400 listings is not inconsiderable but in terms of percentage (9%), it’s nothing to write home about. For many primetime events, it is not uncommon to see supply rates surge by 30% during the impact period. In the case of the Atlanta Super Bowl and the 2018 European Heat Wave, supply counts surged by over 100%.
After analyzing the projected impact of the upcoming Champions League Final on the Madrid vacation rental market, it’s safe to assume a modest outcome. Spain’s capital already boasts impressive occupancy rates leaving little room to budge. Plus, recently-implemented regulations have kept many hosts on their toes in fear of legal crackdowns. The 9% increase in available listings won’t change the pricing strategies of hotels and other competitors. In the same vein, it seems Madrid’s accommodations market is relatively well-protected against market fluctuations.
The only major changes caused by the game will be in regards to average daily rates. Even when controlling supply and occupancy rates, the fact that hosts can assuredly set prices 164% higher than average makes the game extremely poignant for those in the industry.