U.S. Market Review: Supply Grows to Meet Demand

U.S. Short-term Rental Supply Growth Surges to Meet Rising Demand

U.S. short-term rental (STR) demand showed no weakness in May, with nights stayed up another 17.9% compared to last year (+26% vs. 2019).?New bookings were also healthy in May, topping 17.1 million nights booked during the month, which were up 2.6% compared to last year after two consecutive months of being below 2021 levels.?

The hospitality industry is benefiting from a strong labor market and a shift in consumer spending towards services like hotels, STRs, and flights. U.S. employment increased by another 390,000 jobs in May, with 20% of them (84,000) added in the leisure and hospitality sector. Consumer spending growth has slowed in recent months, mostly from a lack of spending on goods, where spending has fallen for two consecutive months.?Spending on services like travel, however, has remained strong and was up 5.9% in April, which was the last month of reported data.

Oil prices have been increasing rapidly over the past month and surpassed $120 per barrel over the last week. Further increases in oil prices could slow the growth of the summer travel season as high gas prices combined with high inflation reduce consumers' ability to further spend on trips. The strong dollar could also impact travel in the U.S. this summer as it makes travel to the U.S. more expensive (curtailing inbound travel to the U.S.) and travel overseas cheaper (increasing outbound travel from the U.S.).

At a glance: key U.S. short-term rental performance metrics for the month of May 2022:

• Available listings?reached?1.34 million, up 24.7% YOY (+11.8% vs. 2019)
• Demand?is up 17.9% YOY (+26.1% vs. 2019)
• Occupancy was?down?8.6% YOY to 60.2% (+8.6% vs. 2019)
• Average daily rates?(ADRs) are up 4.6% YOY (+31.5% vs. 2019)
• Revenue?is 23.3% higher YOY (+65.8% vs. 2019)
• Nights booked were up 2.8% YOY to?17.1 million

Occupancy Plunges as New Supply Additions Come Online

In May, hosts in the U.S. added 84,000 new listings, and after subtracting properties that left, saw a net increase of 57,000 listings.?There were 1.34 million unique listings available for rent on Airbnb and Vrbo, which is up by 24.7% over the previous year and marks?a new record high for listings in the U.S.

Supply growth substantially outpaced demand growth for the month, though, with occupancy falling by 8.6% in May to 60.2%. Listings growth could be slowing in coming months, though, as Redfin?reports?that their home buyer demand index was down by 12% YOY over the past month after a very strong start to 2022.?

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