AirDNA Market Review | U.S. February 2022
Record Short-Term Rental Demand Drives Higher Average Daily Rates in 2022
Record-setting momentum continued for the American short-term rental (STR) industry in February, with year-over-year bookings not only exceeding 2021’s numbers but 2020 and 2019’s pre-pandemic numbers as well.
A total of 16.5 million nights were booked this February, which is a 21% increase from last year but noticeably lower than?the 41% surge reported for January 2022. Booking pace for spring travel is also 49% higher than this time last year and 26% higher than at the same time in 2019.
The bottom line is that, right now, STR demand is greater than ever before. Many factors are driving this trend, but it ultimately speaks to both the maturation of the STR industry and to Americans’ habit of making travel arrangements in the early months of a new year.
However, occupancy and supply data are needed to better understand if, when, and how this trend may curtail (which we cover later in this review).
What more bookings mean for spring and summer ADRs
Average daily rates (ADRs) are also on the rise for two reasons: the recent surge in bookings along with the growing costs of cleaning and operating STRs. For example, ADRs are trending 15.4% higher than last year and have even grown 16.7% in coastal destinations and 19.7% in mountain destinations.
As we look toward summer, we see similar booking trends with 46% more nights booked compared to last year. But ADR growth slows compared to last season’s elevated rates. So far, ADRs are only up 5.5% versus last summer.
The average revenue earned per available listing in the U.S. rose by 16% over the past year. This is largely due to higher ADR, which increased 13.2% from $241 to $273 over the same period. With demand returning to cities—where it has been below average since the onset of the pandemic—the highest ADR growth is now found in properties located in both urban (+25%) and suburban (+19.1%) markets.
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Demand is driving record occupancy levels—for now
U.S. STRs hit record-high occupancy levels in February at 56.5%, which is 2.5% higher than last year. This high mark is the natural result of still-growing demand, which increased by 34.6% year-over-year. Overall demand still lagged behind that of February 2020, though, mainly because of depressed demand in large cities, where it’s 30% lower than it was two years ago. It’s also worth noting that urban areas in winter months typically generate a larger share of overall demand as demand drops elsewhere across the country.
Urban areas are slowly recovering
Urban areas are now the only location type where demand has yet to recover to pre-pandemic levels. Coastal cities such as?Boston, MA, (-49.4%),?New York, NY, (-47.2%),?Los Angeles, CA, (-46.6%),?Oahu, HI, (-41.55%), and?San Francisco, CA, (-38.9%) are lagging the most in terms of demand compared to 2019. However, demand recovery is progressing; February 2022’s demand was 22.7% below February 2019, compared to -25.3% in January.?
These markets have been highly reactive to the ebb and flow of COVID-19 cases, with demand recovery declining as a result of both the Delta and Omicron variants in October 2021 and January 2022, respectively.
Demand recovery in urban areas has also been hampered by diminished supply and restrictions on inbound international travel. As more people return to in-person workplaces and begin traveling between cities, we expect demand recovery to pick up, but it will probably take years to fully recover in these markets.