Sponsored by Generali Global Assistance
By George Meshkov
With the end of the year right around the corner, I want to share some encouraging insights about the short-term rental market. As a proud special project sponsor, we at Generali Global Assistance are releasing this data courtesy of Phocuswright, which fielded an online survey of over 900 travelers and 90 property managers earlier this year. If you’re part of the reported 80 percent of said property managers looking to acquire more inventory or sign more clients, or if you’re wanting to earn a little more from your existing listings, these data-driven insights might help you find new ways to grow—or simply feel a little more optimistic about the future of the industry and the opportunities ahead.
Demand on the Rise, Recovering Supply
After the 2020 dip, demand for short-term rentals was on the rise this year with the first half even surpassing pre-pandemic levels. Data shows over 50 million nights were booked in Q2 of this year and over 51 million nights in Q1. The industry also saw an increase in both occupancy and average daily rates (ADR) in the first half of the year, compared to the same time in 2019. In Q2, ADR reached $257 a night, and occupancy levels rose to 65 percent. These increases can largely be attributed to rising demand as supply continues to recover from the 2020 low. After an 11 percent decline in 2020, data projects substantial supply recovery this year with a 9 percent total increase.
This increase in demand is not evenly distributed across all destinations, and some are faring better than others. In terms of popularity, coastal and smaller/non-urban destinations are the most popular, as was the case pre-pandemic. What’s perhaps most striking is the growing disparity between the popularity of these destinations and the lack thereof among urban rentals. Coastal and smaller/non-urban destinations have reached new heights with 15 million nights booked at each type in Q2, compared to 12 million coastal nights and 13 million small/non-urban nights booked in Q2 of 2019. On the other hand, large city destinations remain well below pre-pandemic popularity levels, with six million nights booked in Q2 of this year compared to nine million nights booked in Q2 of 2019. As rentals in large cities still struggle with the pandemic’s effects, mountain destinations have emerged as the third most popular destination type with 10 million nights booked in Q2 of this year compared to the eight million nights booked in Q2 of 2019.
On the whole, the short-term rental industry should enjoy noteworthy growth this year. Increased demand and recovering supply are projected to result in 37 billion in gross bookings by the end of the year, a 52 percent increase compared to last year when the industry endured a 29 percent downturn. Compared to 2019, this year’s projected results would produce a modest gain—growth that is expected to steadily continue year over year through 2025, with 2025 projected to turn over 50 billion in gross bookings.
Making the Most of the Months Ahead
Rules of Four
Guests were asked what they were looking for in a rental property and key variables included length of stay and number of guests. As you would expect, when more guests are staying in a rental, finding a property with more sleeping space becomes more important. For groups with fewer than four guests, only 21 percent of travelers seek out multiple bedrooms compared to 48 percent of travelers in groups of four or more. Length of stay is another important factor here. When renting the property for four nights or longer, 36 percent of guests prefer multiple bedrooms versus only 26 percent of guests staying for three nights or fewer. This pattern holds true for other amenities—the longer the stay, the more guests look for features that will recreate the comforts and conveniences of home. When staying for four nights or more, 42 percent of guests seek a rental with a full kitchen and laundry, compared to 30 percent of guests staying for fewer than four nights. Thirty-seven percent of guests staying for four nights or more look for a “home-like feel” versus only 26 percent of guests staying fewer than four nights. Finally, 42 percent of guests with longer stays prefer a detached home compared to 33 percent of guests with reservations for three nights or fewer.
When deciding between similar properties with comparable rates, guests look at other features that the rental has to offer. The survey asked guests to select the amenities they value most. Of the travelers surveyed, 35 percent chose high speed Wi-Fi, 29 percent chose positive ratings and reviews, 24 percent selected a scenic view, 23 percent valued on-site parking, and 22 percent chose having a hot tub, pool, or jacuzzi available. These responses differed slightly from property manager survey responses, though both property managers and the general guest population valued access to high speed Wi-Fi more than any other amenity. A whopping 73 percent of property managers chose Wi-Fi, 61 percent look for a pool, 51 percent want a waterfront property or water access, 48 percent value having a full kitchen, and 40 percent seek a scenic view when staying a rental. The persistent high-value of high-speed Wi-Fi could be symptomatic of the emergence and continued popularity of the “flexcation” trend. With more people traveling to work and working while traveling, making Wi-Fi and dedicated work spaces available continues to present a sound investment. According to survey results, only 32 percent of property managers have updated their Wi-Fi or property setup to accommodate remote workers since the pandemic began.
Why Travel Insurance?
As property managers make adjustments for day-to-day uncertainties, travel insurance can help by providing coverage for some of the situations that might force guests to cancel or interrupt their trip—in particular, coverage for COVID-19 sickness and other illness. With winter’s arrival and the future of travel remaining unpredictable, travel insurance helps guests stay well, in addition to helping protect their travel investment. Guests who buy travel insurance from Generali Global Assistance receive 24/7 travel assistance and telemedicine access should they get sick during their trip and need help. With 43 percent of renters saying that travel insurance is more important today than it was before the pandemic, adding coverage from the industry’s leading provider to your booking path is one more way to keep your guest experience a step ahead of the rest.
Wishing you a happy and healthy holiday season and a great start to 2022.
About Generali Global Assistance
When you partner with Generali Global Assistance, you’re working with a company with 30 years of experience and backed by one of the world’s largest insurance providers. Our success is built on our reputation for assisting travelers in the most difficult of circumstances and delivering vacation rental protection solutions designed to meet your needs.
Reach out to us to learn more about Generali Global Assistance, how we help travelers stay well, and the ways we add value to your reservations.
George Meshkov is the senior vice president of travel insurance sales at Generali Global Assistance.