Where Short-Term Rental Demand Soaring & Falling

AirDNA?reported that high travel demand for short-term rentals was +24.7% higher in March 2022 than last year and +16.1% higher than in March 2019.

Short-Term Rental (STR) Supply AND Demand Higher in March 2022

In a just released report from industry analysts with?AirDNA,?the short-term rental (STR) industry is doing just fine, thank you.

For the seventh consecutive month, demand momentum is tracking positive.?STR demand in March 2022 was +24% higher y/y and +16.1% higher than in March 2019.?Additionally, STR occupancy rates at 60.4% in March 2022 were higher than occupancy rates recorded in March 2019, 58.2%.

STR Occupancy Rate?Slightly?Down

The STR occupancy rate in March 2022 was 60.4%, down from 60.6% in March 2021.

Wait a minute…how can occupancy rates be slightly down if demand is tracking higher, as stated in the first topical focus?

Increased supply or an increase in available listing nights is the answer.?In March 2022, there were +25.1% more available listing nights than there were last year during the same time period and +11.9% more available listing nights than in March 2019.

As stated in?AirDNA’s?report, “As supply increases, demand must catch up, meaning occupancy will sometimes decrease as a result.?But this -0.3% change should cause little concern for the industry as a whole.”

STR Demand Fell in Some Mountain Destinations during March 2022

Demand dropped in some markets that saw significant demand increases last year.?Take a look:

• Big Bear CA – -23.8%
• Lake Tahoe CA – -13.3%
• Pocono Mountains PA – -10%
• Lower Hudson Valley NY – -9.1%
• Adirondack Mountains NY – -7.8%

One data point to notice is that STR demand for the Pocono Mountains, though down -10% y/y, is up +120% compared with 2019 demand levels.

Note also that year-over-year demand in most small city/rural areas was up +22% and +15% in mountain/lake destinations.?However, these upticks in demand did not match the upticks in supply in these areas.?Overall occupancy rates dropped?-6.3% y/y in small city/rural areas and -5.5% y/y in mountain/lake destinations in March 2022.

STR Demand Soared in 50-Largest Cities

Cities with the strongest year-over-year occupancy growth in March 2022 included:

• Washington DC – +39.3%
• Boston – +30.6%
• New York NY – +24.1%

These largest cities have yet to see much, if any, increase in supply or available night listings.

Know too that demand in the largest US cities is still -13% below 2019 levels.?Overall demand in?both larger and smaller urban areas remains -25% below pre-pandemic levels.?Demand in suburban areas, however, now exceeds 2019 levels as of January 2022.

Average Daily Rate Growth

Average Daily Rate (ADR) growth increased +10.4 y/y in March 2022.?In early April 2022, rates were trending +11.7% y/y for the remainder of spring and +5.9% y/y for summer.

Cities that have historically attracted leisure and business travelers have seen the strongest ADR growth, +20% y/y.?Cities with the highest ADR growth include:

• Phoenix AZ – +27.6%
• Fort Lauderdale FL – +23.6%
• Nashville TN – +22.8%

Impact of Booking Pace

Given that booked nights were averaging +30.3% y/y higher at the beginning of 2022, US STR demand is well above 2021 levels.?For April and May, STR demand is pacing +29% higher than in 2021.?For summer, pacing is +26% higher.

There are several factors that?AirDNA?believes could well accelerate and perhaps exceed pre-pandemic STR demand levels in urban areas.?These factors include:

• Return to On-Site Offices – More remote workers will be traveling for in-person meetings.
• International Travel – Between 30-40% of demand for STRs in large cities came from international travelers pre-pandemic. As international borders open and travel restrictions ease, it’s likely that many of these international travelers will return to US cities in the summer of 2022.
• Nomad Remote Workers – Some remote workers may never return to on-site offices but these same nomadic remote workers may increasingly seek both short-term and long-term rentals.

Thanks to AirDNA.