Analyze Any Short-Term Rental Market

Search for your city, neighborhood or postal code.

Coronavirus Pandemic Continues Infecting Short-Term Rental Markets

Part 2 – April 2, 2020

Since we put out our first report on the coronavirus outbreak two weeks ago, a lot has changed. The World Health Organization officially labelled COVID-19 a pandemic.1 Globally, the coronavirus has continued to spread like wildfire, with over 885,000 confirmed cases and more than 44,000 deaths spread across almost 180 countries.2 In Asia, China and South Korea remained high on the list in regards to prevalence of COVID-19, but the number of cases reported outside of China surpassed those inside.2 Italy and Spain have both outnumbered South Korea in the number of reported cases this week.Other European countries such as France and Germany also saw a significant upsurge in cases last week and the World Health Organization announced that Europe had become the epicenter of the disease.3 The United States reported new cases all across the country and quickly surpassed China in terms of coronavirus prevalence. The truth is, it’s hard to find a corner of the earth not affected by the coronavirus pandemic. 

As the reach of coronavirus has expanded, so too has the economic cost. Markets around the world have fallen and Bloomberg News estimated that the coronavirus could cost the global economy $2.7 trillion.4-7 The economic toll is being felt all across the board – and the travel and hospitality sectors undoubtedly sit at the center of this crisis. Global markets are highly reliant on the travel industry and thus the impact of coronavirus on airlines, hotels, and vacation rentals have had a significant toll on the global economy. Within the global economic sector, the travel industry is without question bearing a disproportionate amount of the burden. The result of this recent development has been unrelenting and the vacation market is undoubtedly at the center of this crisis. Countries have closed off borders, airlines have reduced flights and events around the world have been cancelled, which has resulted in a drastic reduction of bookings across the entire vacation accommodation sector. Panic is spreading almost faster than the actual virus – and the short-term rental (STR) market has not been immune to the impact of this pandemic. 

The objective of this report is to provide an update on the situation in Asia from the previous report and analyze how the coronavirus impact on the short-term rental market has evolved in these areas. Additionally, we aim to demonstrate the impact in the more severely affected countries in Europe and various states around the United States, as both the number of cases and fear of travel have begun to impact vacation rental markets all around the globe. In order to conduct this analysis, we employed AllTheRooms Analytics data on key performance indicators of short-term rental markets in countries around the world up until March 22, 2020. 

1. North America - First Case: January 21, 2020

THE UNITED STATES

On March 26th, the United States surpassed China for the greatest number of confirmed cases of coronavirus.With almost 190,000 confirmed cases of COVID-19, the situation in the United States has become dire.2 As the situation unfolds, we are able to track the changes to key performance indicators (KPIs) of the short-term rental market in the US.

Supply and Demand

As we can see in Figure 1.1., the supply for vacation rentals dropped an insignificant 4% from January to March 2020. While supply hasn’t been impacted considerably by the coronavirus outbreak, demand was a completely different story. On the demand side, we see a significantly sharper drop beginning 2020 (Figure 1.2). In March 2020 alone, there was 44% less demand in the short-term rental market compared to a year ago. Both supply and demand have been significantly reduced in the US vacation rental market in response to the coronavirus outbreak.

Figure 1.1: Year-over-year average supply of short-term rentals in the United States. 

Figure 1.2: Year-over-year demand for the United States’ short-term rental market.

Occupancy Rates

With respect to occupancy rates, the US short-term rental market took a huge hit. The occupancy rates for the short-term rental market were down 36% compared to last year (Figure 1.3). Adjusted occupancy rates were down 34% compared to last year (Figure 1.4). As we see in the graphs for occupancy rates, there was an upward YOY trend for the months of January to March before the coronavirus outbreak. The impact of the pandemic have undoubtedly altered the normal trends of the market.  

Figure 1.3: Year-over-year occupancy rates for the United States’ short-term rental market.

Figure 1.4: Year-over-year adjusted occupancy rates for the United States’ short-term rental market.

Revenues

When considering the different performance indicators of the short-term rental market in the United States, perhaps the one least impacted by the coronavirus has been the Average Daily Rate (ADR). As can be observed in Figure 1.5, the ADR does not show as dramatic a change as the other indicators of the short-term rental market. In 2020 so far, the average ADR is down less than 1% from the year before. It is important to note that ADR has risen slightly from January to March 2020, indicating that US STR hosts haven’t responded to the pandemic by changing listing prices in any drastic way. The total gross revenue for the US short-term rental market in 2020 plunged well below the gross revenue in 2018 (Figure 1.6). In March 2020, gross revenue fell by 44% compared to the previous year. Assuming the trends we’ve witnessed in the short-term rental market before the coronavirus outbreak, the projected revenues for 2020 should have been considerably higher than the previous year, which demonstrates how drastically the market has been impacted by this pandemic. 

Figure 1.5: Year-over-year average ADR for the United States’ short-term rental (in USD).

Figure 1.6: Year-over-year gross revenues for the United States’ short-term rental market (in USD).

The vacation rental market in the United States has been devastated by the short-term rental market. Demand, occupancy rates and gross revenue have been substantially reduced in 2020 in the country overall. Supply and  ADR were the only STR performance indicators that weren’t severely impacted by the pandemic – implying that vacation rental hosts have not yet responded by removing their listings nor adjusting listing prices, at least in the United States. Below we will look at the impact on some of the top-performing states across the United States. 

1A. NEW YORK

Within the United States, New York has seen the fastest growth of reported coronavirus cases than any other state. With over 60,000 cases reported, it ranks high above any other US state in terms of cases and deaths.New York has quickly become the center of the coronavirus outbreak in the United States. In response, New York’s short-term rental market has taken a huge hit.

Supply and Demand

As we see in the figures below, while we see no discernible changes in supply in 2020, we see a huge reduction on the demand side. In Figure 1A.1, we see that supply of New York’s vacation rentals dropped by an insignificant 2% from January to March 2020. There was, however, a major reduction in demand, as observed in Figure 1A.2. In March 2020, the number of vacation rental listings booked in New York State decreased by over 50%. Normal market trends suggest that the expected number of listings booked should have increased as consistent with the growth observed in previous trends, which demonstrates how significant this drop in demand really is. Demand in New York’s short-term rental market was severely impacted by the coronavirus pandemic, while supply remained virtually unchanged. 

Figure 1A.1: Year-over-year average supply of short-term rentals in New York. 

Figure 1A.2: Year-over-year demand for New York’s short-term rental market.

Occupancy Rates

As observed from the charts below, occupancy rates for short-term rentals in New York have plummeted. Average occupancy rates were down 40% in March 2020 compared to the previous year (Figure 1A.3). And adjusted occupancy rates in New York fell by 38% (Figure 1A.4). These results are surely having a detrimental impact on vacation rental hosts in the area and could explain the reduction of supply observed in New York’s short-term rental market as hosts chose to switch their properties over to the long-term rental market. 

Figure 1A.3: Year-over-year occupancy rates for New York’s short-term rental market.

Figure 1A.4: Year-over-year adjusted occupancy rates for New York’s short-term rental market.

Revenues

As we see in Figure 1A.5, the ADR for vacation rental listings in New York hasn’t been significantly impacted by the coronavirus pandemic. In 2020 so far, ADR has increased by 5% compared to the previous year and we’ve seen a slight increase in ADR from January to March 2020. However, the gross revenue for the short-term rental market has deteriorated immensely. In March 2020, gross revenues from the short-term rental market in New York fell by 47% compared to a year ago (Figure 1A.6).

Figure 1A.5: Year-over-year average ADR for New York’s short-term rental (in USD).

Figure 1A.6: Year-over-year gross revenues for New York’s short-term rental market (in USD).

According to our data on New York’s short-term rental market, we see that the impact of coronavirus is pretty consistent overall with that of the United States as a whole. Supply and ADR in the New York STR market remained relatively unchanged from the pandemic. As expected, the observed reductions in demand, occupancy rates and gross revenues are higher in New York than the US average since it’s the state hit hardest by the pandemic.

1B. CALIFORNIA

As a top performer in the US short-term rental market, California has been hard-hit by the coronavirus pandemic. With over 6,000 reported cases, the state is surpassing many countries with respect to COVID-19 prevalence.2 The Californian rental market has suffered correspondingly.

Supply and Demand

While demand took a big hit in 2020, supply remained virtually unchanged in California’s STR market, as can be observed in the following figures. In Figure 1B.1, we see that the number of available short-term rental listings remained relatively stable from January to March 2020. Demand, however, was adversely affected, with a decrease of 52% in March 2020 compared to a year ago (Figure 1B.2). As we see in this graph, normal market trends predict an increase in demand around March, however, we see that there was a sharp drop in demand in March 2020. In 2020 so far, the number of vacation rental listings booked dropped by 20% compared to the previous year. 

Figure 1B.1: Year-over-year average supply of short-term rentals in California. 

Figure 1B.2: Year-over-year demand for California’s short-term rental market.

Occupancy Rates

Occupancy rates in California’s short-term rental market have seen a sharp decline since the outbreak of coronavirus. As we see in the following graphs, both occupancy and adjusted occupancy rates are down significantly compared to previous years. In March 2020, occupancy rates were down 40% and adjusted occupancy rates were down 38% from a year ago (Figure 1B.3, 4).

Figure 1B.3: Year-over-year occupancy rates for California’s short-term rental market.

Figure 1B.4: Year-over-year adjusted occupancy rates for California’s short-term rental market.

Revenues

As we’ve seen so far in the US, ADR on average hasn’t been impacted much by the coronavirus pandemic. California is not an exception to this trend, however we do see a slight drop in ADR from February to March 2020 (Figure 1B.5). In contrast, gross revenues dropped massively in response to coronavirus. In March 2020, gross revenues for the short-term rental market in California fell 53% (Figure 1B.6).

Figure 1B.5: Year-over-year average ADR for California’s short-term rental (in USD).

Figure 1B.6: Year-over-year gross revenues for California’s short-term rental market (in USD).

The results we’ve seen in California’s short-term rental market are consistent with what we observed in the US market overall. While supply and ADR were not impacted significantly – demand, occupancy rates and gross revenues were all heavily disrupted by the coronavirus outbreak.

1C. MASSACHUSETTS

With almost 6,000 reported coronavirus cases, Massachusetts is high up on the list of impacted countries in the United States.2 In order to track the impact of the coronavirus outbreak on the STR market of this typically high-performing state, we ran analysis on key performance indicators including supply, demand, occupancy rates, ADR and gross revenues. 

Supply and Demand

In Figure 1C.1, we see that there was no significant change in the STR supply in Massachusetts from January to March 2020. In fact, the number of available vacation rental listings remained quite stable throughout this time of pandemic uncertainty. While supply dropped by 7% in March 2020 compared to last year, we see from the figure that these numbers began declining before the onset of the coronavirus epidemic, and so this observed decrease in supply levels is most probably unrelated to the crisis. Demand for vacation rentals dropped by a staggering 58% in March 2020 compared to the previous year (Figure 1C.2). The impact of coronavirus has been appalling massive on Massachusetts’ short-term rental market. 

Figure 1C.1: Year-over-year average supply of short-term rentals in Massachusetts. 

Figure 1C.2: Year-over-year demand for Massachusetts’ short-term rental market.

Occupancy Rates

Occupancy rates also fell considerably in the Massachusetts short-term rental market. As we see in Figure 1C.3, occupancy rates were down 38% in March 2020 compared to last year. Adjusted occupancy rates were also down 37% in this time period (Figure 1C.4). 

Figure 1C.3: Year-over-year occupancy rates for Massachusetts’ short-term rental market.

Figure 1C.4: Year-over-year adjusted occupancy rates for Massachusetts’ short-term rental market.

Revenues

ADR in Massachusetts’ short-term rental market was virtually unchanged by the coronavirus pandemic. As seen in Figure 1C.5, there was no significant impact of coronavirus on the ADR of short-term rentals in Massachusetts. Gross revenues, however, suffered some serious blows in 2020. In March 2020, gross revenues were down 58% as compared to the previous year (Figure 1C.6). 

Figure 1C.5: Year-over-year average ADR for Massachusetts’ short-term rental (in USD).

Figure 1C.6: Year-over-year gross revenues for Massachusetts’ short-term rental market (in USD).

Consistent with findings from our analysis in other states across the United States, the Massachusetts short-term rental market has taken a huge blow. Demand, occupancy rates and gross revenues fell starkly in response to the coronavirus pandemic, while ADR and supply levels remained virtually unchanged in 2020. 

1D. FLORIDA

With over 5,000 confirmed cases of coronavirus, Florida has suffered tremendously at the hands of the pandemic.2 It should come to no surprise that the results of our analysis of its short-term rental market follows similar patterns to that of other states around the US. However, we do see one metric in which Florida differs from other states around the United States, and that is supply. 

Supply and Demand

As we see from the following figures, both supply and demand dropped in 2020. With regards to supply, there was an 15% decrease in available listings in March 2020 compared to January (Figure 1D.1). It is not entirely clear why Florida has seen a drop in supply, while other US states haven’t, however it is important to note that the Governor of Florida has been making a push to ban short-term rentals.12  While it is not clear yet why supply has dropped, this could be a potential reason as hosts begin preemptively moving their listings to the long-term market. On the demand side, we see an even more drastic reduction as depicted in Figure 1D.2. In March 2020, the number of listings booked dropped by 43% from the previous year. 

Figure 1D.1:  Year-over-year average supply of short-term rentals in Florida. 

Figure 1D.2: Year-over-year demand for Florida’s short-term rental market.

Occupancy Rates

As we see in the following graphs, occupancy rates have plunged in response to Florida’s short-term rental market. In Figure 1D.3, we see that occupancy rates in March 2020 were down by 36% from last year. Adjusted occupancy rates were also down by 37% during that time period.

Figure 1D.3: Year-over-year occupancy rates for Florida’s short-term rental market.

Figure 1D.4: Year-over-year adjusted occupancy rates for Florida’s short-term rental market.

Revenues

The average ADR for Florida’s short-term rental market dropped an insignificant 1% in March 2020 from last year (Figure 1D.5). This result is consistent with the analysis of ADR in other states within the United States. However, gross revenues in March 2020 fell by a whopping 43% compared to the previous year (Figure 1D.6).

Figure 1D.5: Year-over-year average ADR for Florida’s short-term rental (in USD).

Figure 1D.6: Year-over-year gross revenues for Florida’s short-term rental market (in USD).

As a top-performing state in the US vacation rental market, we were interested in analyzing the toll of the coronavirus pandemic on Florida. In line with the other states we analyzed across the US, Florida’s short-term rental market was badly hit by the outbreak. While ADR was not significantly impacted – supply, demand, occupancy rates and gross revenues were all down significantly from the previous year, even though we would have expected growth in the market following normal trends. Curiously, supply was impacted in Florida’s STR market – a trend we have not yet witnessed in the US STR market. 

1E. WASHINGTON

The first US case of the coronavirus was identified in Washington state and the STR market has been very much impacted. Today, the number of reported cases in Washington is over 5,000.2 

Supply and Demand

As we see in the graphs below, demand in the short-term rental market in Washington has plummeted since the onset of the outbreak, while supply has remained relatively stable. In Figure 1E.1, we see that there was an insignificant change in supply from January to March 2020. However, on the demand side, we see a much different story. The number of listings booked fell by 50% from March 2020 compared to the previous year. 

Figure 1E.1: Year-over-year average supply of short-term rentals in Washington State. 

Figure 1E.2: Year-over-year demand for Washington’s short-term rental market.

Occupancy Rates

Occupancy rates fell sharply in 2020, as observed in the following graphs. Occupancy rates in March 2020 were down 38% compared to last year (Figure 1E.3). Adjusted occupancy rates also fell pretty drastically. In Figure 1E.4 we see a sharp drop of adjusted occupancy rates in March 2020. In March, adjusted occupancy rates were down about 36% from the previous year. 

Figure 1E.3: Year-over-year occupancy rates for Washington’s short-term rental market.

Figure 1E.4: Year-over-year adjusted occupancy rates for Washington’s short-term rental market.

Revenues

While we don’t observe a huge change in ADR in 2020 compared to the previous year, we see in Figure 1E.5 that ADR dropped from February to March 2020 which goes against the normal YOY trends in Washington’s STR market. Gross revenues dropped significantly in 2020 as observed in Figure 1E.6. As we can see from the graph, if gross revenues were to follow normal market trends, they should have increased in March 2020. Instead, we see that in March 2020, gross revenues declined by 50% from a year ago.

Figure 1E.5: Year-over-year average ADR for Washington’s short-term rental (in USD).

Figure 1E.6: Year-over-year gross revenues for Washington’s short-term rental market (in USD).

As the first state to fall victim to the coronavirus pandemic in the United States, Washington state has been dealt a huge blow in terms of health and economic consequences. While ADR and supply have remained relatively constant, demand, occupancy rates, and gross revenues for Washington’s STR market have all seen significant reductions. 

1F. TEXAS

As of today, Texas reported over 3,000 coronavirus cases.2 In order to track the impact of the coronavirus outbreak on the STR market of this typically high-performing state, we ran analysis on key performance indicators including supply, demand, occupancy rates, ADR and gross revenues. 

Supply and Demand

As we see from the figures below, while supply of STRs remained constant, demand of vacation rentals in Texas was heavily impacted by the coronavirus. In Figure 1F.1, we see that the supply of vacation rentals in Texas wasn’t significantly impacted by the coronavirus. While you may be able to observe a slight drop in supply in 2020, the percent change was insignificant and had similar fluctuation to YOY market trends. While supply remained constant, demand was down significantly in 2020 – as observed in Figure 1F.2. In March 2020, the number of STR listings booked decreased by 41% compared to the previous year. We see from the YOY graph that an increase in demand from January to March is in line with normal market trends. This was not the case, however, in March 2020, suggesting STR guests have been cancelling bookings or not booking new listings in response to the coronavirus outbreak in Texas. 

Figure 1F.1: Year-over-year average supply of short-term rentals in Texas. 

Figure 1F.2: Year-over-year demand for Texas’ short-term rental market.

Occupancy Rates

Occupancy rates for the Texas STR market also fell drastically in response to the coronavirus pandemic. In March 2020, there was a 37% drop in occupancy rates compared to last year (Figure 1F.3). We see similar results in adjusted occupancy rates for the STR market in Texas as they fell by 34% compared to the previous year (Figure 1F.4). 

Figure 1F.3: Year-over-year occupancy rates for Texas’ short-term rental market.

Figure 1F.4: Year-over-year adjusted occupancy rates for Texas’ short-term rental market.

Revenues

With respect to ADR, there was a 5% drop in March 2020 compared to the previous year (Figure 1F.5). It is interesting to note that while there was a reduction compared to the previous year, ADR still did spike in alignment with normal market trends – just not as much as it did in previous years. On the revenue side, we saw huge drop in 2020 (Figure 1F.6). In March 2020, the gross revenue fell by 44% compared to the previous year.

Figure 1F.5: Year-over-year average ADR for Texas’ short-term rental (in USD).

Figure 1F.6: Year-over-year gross revenues for Texas’ short-term rental market (in USD).

Overall, there was a substantial collapse of the Texan STR market in response to the coronavirus outbreak. Demand, occupancy rates, ADR, and gross revenues all fell quite dramatically in 2020, while supply remained relatively constant.

1G. HAWAII

With only slightly over 200 reported cases, Hawaii ranks pretty low in terms of coronavirus prevalence in the US.2 It was critical for us to analyze this region because we wanted to see if there was a correlation between reported coronavirus cases and impact on the STR market. The results of our analysis showed that having fewer confirmed cases of COVID-19 did not protect the STR market from the impact – at least in Hawaii. 

Supply and Demand

We observed a huge drop of vacation rental listings booked in 2020, while available listings in the Hawaiian STR market remained stable. In Figure 1G., we see that supply of STRs has remained relatively constant considering the pandemic conditions. On the demand side, we see a 50% decrease in the number of listings booked in March 2020 (Figure 1G.2). The YOY graph shows that demand for STR typically increases in the month of March, however, we see that in 2020, there is a huge deviation from that norm. Normal YOY market trends show that there is usually an upsurge of demand starting February, however, we see that the market in 2020 has really strayed from the bounds of normalcy. 

Figure 1G.1: Year-over-year average supply of short-term rentals in Hawaii. 

Figure 1G.2: Year-over-year demand for Hawaii’s short-term rental market.

Occupancy Rates

With respect to occupancy rates in the Hawaiian vacation rental market, the following graphs track the impact coronavirus has had. In Figure 1G.3, we see that occupancy rates in 2020 are much lower than those in the previous years. In March 2020 alone, there was a 32% decrease in STR occupancy rates in Hawaii compared to the previous year. Adjusted occupancy rates were also down in response to the COVID-19 crisis, with a 23% decrease observed in March compared to a year ago (Figure 1G.4).

Figure 1G.3: Year-over-year occupancy rates for Hawaii’s short-term rental market.

Figure 1G.4: Year-over-year adjusted occupancy rates for Hawaii’s short-term rental market.

Revenues

Surprisingly, ADR for vacation rentals in Hawaii experienced an increase from the previous year. As we see in Figure 1G.5, ADR in 2020 was up by 9% as compared to the previous year. However, ADR did seem to drop slightly from January to March 2020, indicating that vacation rental hosts in Hawaii did seem to adjust (slightly) according to the changing market. With respect to gross revenues, we saw a striking reduction in March 2020 compared to previous years. As we can see in Figure 1G.6, there was a 47% decrease in gross revenue for the Hawaiian STR market in March 2020 compared to last year. 

Figure 1G.5: Year-over-year average ADR for Hawaii’s short-term rental (in USD).

Figure 1G.6: Year-over-year gross revenues for Hawaii’s short-term rental market (in USD).

Results from the analysis of the short-term rental market in Hawaii gave rise to an important discovery – that coronavirus prevalence in regions is not directly correlated to the impact on the short-term rental market in those areas. Therefore, at least in the United States, it is not necessarily safe to assume that STR markets in states with fewer reported COVID-19 cases are protected from the impact of coronavirus. 

2. Europe - First Case: January 24, 2020

The first reported case of coronavirus in Europe occurred on January 24, 2020.2 Since then, there have been over 430,000 reported cases on coronavirus across Europe.2 Most of the cases across Europe spread from Italy and in March 13, 2020, the World Health Organization announced that Europe had officially become the new epicenter of the disease.3

2A. ITALY

As the second worst-hit country, Italy has reported over 105,000 cases.2 Italy has had the highest number of deaths from COVID-19 than any other country in the world.2 Strict quarantine measures have effectively slowed growth of the outbreak in the country, but have also destroyed the tourist industry in a country which is one of the main industries in Italy.9

Supply and Demand

As expected, there was a sharp drop in demand in the Italian STR market in 2020, while supply has remained somewhat constant. As we see in Figure 2A.1, from January to March 2020, supply stayed constant. Demand, however, was heavily impacted by the coronavirus disturbance to the STR market. The number of STR listings booked dropped by 57% in March 2020 from the previous year (Figure 2A.2). 

Figure 2A.1:  Year-over-year average supply of short-term rentals in Italy.

Figure 2A.2:Year-over-year demand for Italy’s short-term rental market.

Occupancy Rates

As we see from the following graphs on occupancy rates in Italy’s STR market, both took big hits in March 2020. Occupancy rates (Figure 2A.3) and adjusted occupancy rates (Figure 2A.4) were both down 46% in March compared to last year. Airbnb hosts in Italy are understandably economically devastated by the impact of coronavirus on the STR market. 

Figure 2A.3: Year-over-year occupancy rates for Italy’s short-term rental market.

Figure 2A.4: Year-over-year adjusted occupancy rates for Italy’s short-term rental market.

Revenues

While ADR was slightly down from a year ago, we see from Figure 2A.5, that there wasn’t a drastic change in prices set by vacation rental hosts in 2020. However, in March 2020, we do see an 8% reduction of ADR for vacation rentals. While the impact on ADR remained minimal, gross revenues of Italy’s STR market took a huge hit in 2020. Figure 2A.6 shows that gross revenues were down 61% in March 2020 compared to the previous year. 

Figure 2A.5: Year-over-year average ADR for Italy’s short-term rental (in USD).

Figure 2A.6:Year-over-year gross revenues for Italy’s short-term rental market (in USD).

As the second-leading country in terms of coronavirus cases around the world, Italy has surely bore the burden of the crisis heavily. Demand, occupancy rates, ADR and gross revenues all fell considerably in response to the coronavirus outbreak in the country, while supply remained relatively constant. 

2B. SPAIN

With over 102,000 reported COVID-19 cases, Spain has quickly become Europe’s second worst-hit country.2 The key performance indicators of the short-term rental marker have been severely impacted accordingly. 

Supply and Demand

As we see in Figure 2B.1, supply in Spain’s STR market remained relatively constant from January to March 2020. On the demand side, we see that the market followed normal trends up until around March 2020 (Figure 2B.2). In the graph, we see that in March 2020, there was a significant drop in the number of STR listings booked. In fact, demand dropped by 43% in March 2020 compared to the previous year. 

Figure 2B.1:  Year-over-year average supply of short-term rentals in Spain.

Figure 2B.2: Year-over-year demand for Spain’s short-term rental market.

Occupancy Rates

As we see in the following two figures, occupancy rates fell severely in response to the coronavirus outbreak in Spain. In Figure 2B.3, we see that occupancy rates in general were down from normal YOY trends. Despite this, however, we are still able to see a sharp drop in occupancy rates in March 2020. Occupancy rates went down 43% in March 2020 compared to last year. Adjusted occupancy rates follow a similar pattern (Figure 2B.4). In March 2020, adjusted occupancy rates for Spain’s STR market were down 42%. 

Figure 2B.3: Year-over-year occupancy rates for Spain’s short-term rental market.

Figure 2B.4: Year-over-year adjusted occupancy rates for Spain’s short-term rental market.

Revenues

ADR for vacation rentals was somewhat impacted by the coronavirus outbreak in Spain. In Figure 2B.5, we see that ADR followed normal market trends up until 2020. From January to March 2020, we see that ADR did not follow the typical increase observed in previous years. The slopes for ADR are significantly steeper in previous years. In March 2020, there was a 4% reduction in ADR compared to a year ago. With regard to gross revenues of the STR market, Spain took a pretty big hit. In March 2020, gross revenues dropped by 45% compared to the previous year (Figure 2B.6). 

Figure 2B.5: Year-over-year average ADR for Spain’s short-term rental (in USD).

Figure 2B.6: Year-over-year gross revenues for Spain’s short-term rental market (in USD).

Coming in third place by a very narrow margin of 3,000 reported coronavirus cases, Spain’s STR market has been undoubtedly eviscerated by the pandemic. Demand, occupancy rates, ADR and gross revenues were all down in response to the coronavirus outbreak, while supply remained relatively constant.

2C. GERMANY

With over 74,000 reported cases of COVID-19, Germany is quickly surpassing other countries with respect to coronavirus prevalence.Although its disease prevalence isn’t as high as some of the other countries we’ve analyzed, the impact to Germany’s short-term rental market has been substantial.

Supply and Demand

As we can see in Figure 2C.1, supply of vacation rentals remained relatively stable in 2020. On the demand side, we see a massive drop in March 2020 (Figure 2C.2). The number of STR listings booked in March fell by 37% compared to last year.  While supply remained constant through the coronavirus pandemic, demand in the German STR market fell significantly.

Figure 2C.1:  Year-over-year average supply of short-term rentals in Germany.

Figure 2C.2: Year-over-year demand for Germany’s short-term rental market.

Occupancy Rates

Occupancy rates for the German STR market also fell accordingly, as observed in the following two graphs. In Figure 2C.3, we see that occupancy rates in March 2020 were down by 39% compared to last year. With respect to adjusted occupancy rates, Figure 2C.4 shows they fell by 38% in March compared to the previous year. 

Figure 2C.3: Year-over-year occupancy rates for Germany’s short-term rental market.

Figure 2C.4: Year-over-year adjusted occupancy rates for Germany’s short-term rental market.

As we see in Figure 2C.5 below, ADR was slightly impacted by the coronavirus outbreak in Germany. While ADR experienced an upward trend from January to February 2020, we see that in March 2020, ADR dropped 4% compared to the previous year. With respect to gross revenue, Figure 2C.6 illustrates the YOY trends for the German STR market. As we see from the graph, gross revenue fell dramatically in March 2020. In fact, gross revenue was down 39% in March compared to a year ago. 

Revenues

Figure 2C.5: Year-over-year average ADR for Germany’s short-term rental (in USD).

Figure 2C.6: Year-over-year gross revenues for Germany’s short-term rental market (in USD).

Germany’s short-term rental market certainly hasn’t been immune to feeling the impact of coronavirus. Demand, occupancy rates, ADR and gross revenue all fell in response to the crisis, while supply remained relatively stable. 

2D. FRANCE

The first case of coronavirus in Europe was reported in France on January 24, 2020.On February 14, 2020, the  first death of COVID-19 in Europe was also confirmed in France. Since then, France has reported over 52,000 cases of coronavirus throughout the country.2 

Supply and Demand

The impact of coronavirus has most definitely been felt in France’s vacation rental market. From the figures below, we see that there are evident drops in demand of the STR market, while supply has remained constant. In Figure 2D.1, we actually see that supply grew slightly between January and March 2020, although an insignificant change. On the demand side we see a different story (Figure 2D.2). The number of vacation rental listings booked dropped by 30% in March 2020 compared to the previous year. As we see from normal market trends, demand is typically meant to increase beginning February, however the impact of the coronavirus have brought these figures down significantly.

Figure 2D.1:  Year-over-year average supply of short-term rentals in France. 

Figure 2D.2: Year-over-year demand for France’s short-term rental market.

Occupancy Rates

Occupancy rates in France’s STR market also fell dramatically in response to the coronavirus outbreak. In Figure 2D.3, we see that the occupancy rate decreased by 32% in March 2020 compared to last year. We see a similar story in adjusted occupancy rates for France’s vacation rental market (Figure 2D.4). In March 2020, adjusted occupancy rated dropped a whopping 31% from the previous year. 

Figure 2D.3: Year-over-year occupancy rates for France’s short-term rental market.

Figure 2D.4: Year-over-year adjusted occupancy rates for France’s short-term rental market.

Revenues

As we can observe in Figure 2D.5, ADR was slightly impacted by the outbreak of COVID-19. While ADR was down in general prior to the spread of coronavirus, we see a sharper-than-normal drop in ADR in March 2020. ADR dropped 6% in March 2020 compared to the previous year. With respect to gross revenue, we saw a 34% reduction from March 2020 compared to a year ago (Figure 2D.6). 

Figure 2D.5: Year-over-year average ADR for France’s short-term rental (in USD).

Figure 2D.6: Year-over-year gross revenues for France’s short-term rental market (in USD).

It is clear from the analysis above that the toll of coronavirus has wrecked havoc on the STR market in France. Demand, occupancy rates, ADR and gross revenue all fell drastically in response to the spread of coronavirus, while supply of STRs remained constant.

2E. THE UNITED KINGDOM

With over 29,000 reported cases of coronavirus across the country, the United Kingdom has not been immune to the impact of coronavirus.2 As with short-term rental markets across Europe and the world, the UK’s STR has been dealt a huge blow in the past couple of months. 

Supply and Demand

As we see in the following two figures, demand in the UK’s STR market have been hit hard by the pandemic, while supply remained constant. In Figure 2E.1, we see that supply remained relatively stable in 2020, with a small increase in supply from January to March 2020. On the demand side we see a different story (Figure 2E.2). YOY trends show that the market typically sees an increase in demand in March, however, in 2020 we see a huge drop in demand due to the impact of coronavirus on the STR market. The number of STR listings booked decreased by 34% in March 2020 from the previous year. These results from 2020 were inconsistent with normal STR demand trends in the UK. 

Figure 2E.1:  Year-over-year average supply of short-term rentals in the United Kingdom.

Figure 2E.2: Year-over-year demand for the UK’s short-term rental market.

Occupancy Rates

As we can see from the following two figures, occupancy rates for the UK’s short-term rental market also fell sharply in response to the pandemic. In Figure 2E.3, we see that there was a 35% drop in occupancy rates from March 2020 compared to the previous year. Adjusted occupancy rates also fell by 34% in March 2020 compared to last year (Figure 2E.4).

Figure 2E.3: Year-over-year occupancy rates for the UK’s short-term rental market.

Figure 2E.4: Year-over-year adjusted occupancy rates for the UK’s short-term rental market.

Revenues

As we can see from Figure 2E.5, ADR for vacation rentals in the UK were somewhat impacted by the coronavirus outbreak. We can see from the graph that normal market trends dictate an increase in ADR in the month of March, however, we see that in March 2020, that does not seem to be the case. We observe a downward trend of ADR from February to March 2020 which is inconsistent with the normal pattern of ADR in the UK’s STR market. In March 2020, ADR was down 4% compared to the previous year. Gross revenue was also hit hard by the outbreak (Figure 2E.6). In March 2020, profits from the UK’s STR market was 36% lower than last years gross revenue. 

Figure 2E.5: Year-over-year average ADR for the UK’s short-term rental (in USD).

Figure 2E.6: Year-over-year gross revenues for the UK’s short-term rental market (in USD).

Although the United Kingdom has a fewer number of confirmed coronavirus cases than the other countries in Europe we analyzed, we see that its STR market was not immune to the impact of the pandemic. In line with the other European countries affected with COVID-19, the UK saw a decline in demand, occupancy rates, ADR and gross revenue of its STR market, while supply levels remained constant.

3. Asia - First Case: December 31, 2019

As the source of the first coronavirus outbreak, Asia has been severely impacted by the pandemic.2 China and South Korea, which both dominated the charts in the beginning of the pandemic, have reported fewer and fewer cases every day and have been relatively successful at containing the spread of the virus.2 However, as they initially sat at the center of this very public pandemic, it is likely the impact on the countries at least in terms of the travel industry doesn’t subside as fast as the number of reported cases. 

3A. CHINA

China has reported a little over 81,000 cases of coronavirus since December 31, 2019.2 With its city of Wuhan being the origin of the coronavirus spread, China has been hit especially hard in this pandemic. The data reflects this, as the devastation observed in China’s STR market is much higher than what we observed in both the USA and Europe. 

Supply and Demand

As we can see from the following two figures, supply and demand in China’s short-term rental market were severely impacted by the coronavirus outbreak. In Figure 3A.1, we see that there was a sharp reduction in supply from January to March 2020. The number of available listings dropped by 8% during this time period. This decline can be explained – at least in part – by Airbnb’s decision to block off listings in Beijing as an preliminary response to the outbreak.10

On the demand side, we see a similar story (Figure 3A.2). The number of STR listings booked in China dropped drastically starting January 2020 – in contrast to normal STR market trends. In March 2020 alone, demand was down by 62% compared to the previous year (Figure 3A.2). From January to March 2020, demand dropped by 75%. These figures demonstrate exactly how devastating the impact of coronavirus has been on the vacation rental market in China. 

Figure 3A.1: Year-over-year average supply of short-term rentals in China. 

Figure 3A.2: Year-over-year demand for China’s short-term rental market.

Occupancy Rates

Occupancy rates also followed a massive downward  trend in response to the outbreak. In Figure 3A.3, you can see how occupancy rates were skewed from normal trends of the STR market in China. In March 2020, occupancy rates were 73% lower than the year before. Adjusted occupancy rates also fell accordingly, as observed in Figure 3A.4. In March 2020, the adjusted occupancy rate dropped 69% compared to the previous year. 

Figure 3A.3: Year-over-year occupancy rates for China’s short-term rental market.

Figure 3A.4: Year-over-year adjusted occupancy rates for China’s short-term rental market.

Revenues

In Figure 3A.5, we can see that the ADR for vacation rentals in China dropped significantly in response to the outbreak. This indicator was not as impacted in other countries we analyzed, so it is important to note that hosts in China’s STR market did react considerably by slashing prices, compared to other countries around the world. We can see from the graph below that from January to March 2020, there was a significant drop in ADR. In March 2020 alone, ADR dropped 15% compared to the previous year. Gross revenue of the STR market in China has also taken a massive hit, as expected (Figure 3A.6). In March 2020, gross revenue was down by 68% compared to the previous year. 

Figure 3A.5: Year-over-year average ADR for China’s short-term rental (in USD).

Figure 3A.6: Year-over-year gross revenues for China’s short-term rental market (in USD).

As we continue to assess the situation in China, it will be interesting to see whether its short-term rental market is able to recover as successfully as their COVID-19 containment policies. Or whether – due to stigma, panic, and the strictest travel bans the world has ever seen – if their STR market continues to struggle even after coronavirus subsides. So far, the effect of coronavirus has been devastating to China’s STR market, with substantial drops in supply, demand, occupancy rates, ADR and gross revenue. 

3B. SOUTH KOREA

When we put out our first piece reporting on the impact of coronavirus on STR markets around the world, South Korea had the second highest number of confirmed cases in the world. Since then, its ranking has dropped to 14th, and with slightly over 9,800 reported cases of COVID-19, the outbreak in South Korea has begun to stabilize.2 Unfortunately, we can not say the same regarding the key performance indicators of the STR market in South Korea. The vacation rental market in South Korea has taken a massive hit, and has not yet shown any signs to match its coronavirus recovery. 

Supply and Demand

As we can see in the following two figures, while supply remained relatively stable, demand for South Korea’s STR market has been severely impacted by the spread of coronavirus. In Figure 3B.1, we see that the number of available listings actually grew slightly from January to March 2020. On the demand side, however, we see a very similar story. In Figure 3B.2, we see that demand fell sharply around January 2020. In March 2020, the number of STR listings booked fell by 43% compared to the previous year. While demand dropped significantly, supply stayed relatively stable during times of coronavirus. 

Figure 3B.1: Year-over-year average average supply of short-term rentals in South Korea. 

Figure 3B.2: Year-over-year demand for South Korea’s short-term rental market. 

Occupancy Rates

Occupancy rates for the South Korean short-term rental market also dropped significantly in response to the coronavirus outbreak. In Figure 3B.3, we see that occupancy rates began falling in January 2020, in contrast to normal YOY market trends. We see a very similar story with the adjusted occupancy rates in Figure 3B.4. In March 2020, both occupancy and adjusted occupancy rates fell by 49% from the previous year. 

Figure 3B.3: Year-over-year occupancy rates for South Korea’s short-term rental market.

Figure 3B.4: Year-over-year adjusted occupancy rates for South Korea’s short-term rental market.

Revenues

In Figure 3B.5, we see that ADR for vacation rentals in South Korea dropped in 2020. In March 2020, the ADR was 10% less compared to a year ago. With respect to overall gross revenue of the market, we saw a massive drop in 2020 (Figure 3B.6). In March 2020, the gross revenue decreased by 48% compared to the previous year. From January to March 2020, gross revenue fell by a whopping 70%. 

Figure 3B.5: Year-over-year average ADR for South Korea’s short-term rental (in USD).

Figure 3B.6: Year-over-year gross revenues for South Korea’s short-term rental market (in USD).

The impact of coronavirus outbreak in South Korea has been absolutely devastating to its vacation rental market. While supply remained relatively constant, demand, occupancy rates, ADR and gross revenue for the South Korean STR market have dropped substantially and there are no signs yet of recovery. 

Conclusion

In order to get a better understanding of the impact of the coronavirus pandemic on short-term rental markets around the world, we employed data from Alltherooms Analytics to assess changes in the key performance indicators of the vacation rental market. And while there was a certain degree of fluctuation with respect to the severity, the markets basically reacted in the same way around the world. 

In response to the pandemic, we saw that countries all around the world behaved in similar patterns, with small exceptions to the overall trends observed. We saw that supply of STRs remained relatively constant in times of coronavirus. And while there were small differences in how hosts adjusted ADR, for the most part we saw stability in ADR and at times a slight decline in listing prices in response to the pandemic. We also saw that demand, occupancy rates, and gross revenues in short-term rental markets from the United States, to Europe and Asia all consistently dropped significantly in 2020. These are the changes that are wrecking havoc to STR markets and undoubtedly contributing to the economic crisis we’ve seen all over the world. 

While the United States and Europe were similar in terms of the magnitude of decline seen in their STR markets, we noted more severe reductions in China and South Korea’s markets – undoubtedly due to their position in the pandemic and how much earlier they were hit with the coronavirus outbreak. It will be interesting to monitor the changes to the market in our third coronavirus piece (coming soon) to see how quickly markets in Asia recover and to see whether the US and Europe follow a similar path to what we observed in China and South Korea. 

It is still hard to gauge the extent of coronavirus or to predict when it will stabilize enough to restart the travel industry, but we remain hopeful as history has shown that it is one of the most resilient markets. In 2003, hotel occupancy rates bounced back just three months after the restrictions in relation to the SARS outbreak were lifted in China.11 Although the travel industry has evolved significantly in the last 17 years, we can cautiously take this comparison as a prediction of how and when the market will recover.11 

We will continue to track the changes to the market and analyze the data in a way that can prove useful to the different stakeholders navigating the vacation rental market.

References