The real estate market is shifting, consumer spending is slowing, yet there are signs that consumers are setting aside money to continue traveling and staying in short-term rentals.
A new report from short-term rental data company AirDNA shows that nights booked was 2.6 percent above last year, a time when the U.S. saw a burst of travel demand.
But the report showed a surge in STR listings outpaced the amount of demand in the first indication that the market was equalizing.
“Supply growth substantially outpaced demand growth for the month, though, with occupancy falling by 8.6 percent in May to 60.2 percent,” according to the report.
Investors have been quickly ramping up the number of STRs on the market after ongoing high travel demand amid continued comfort with traveling amid the pandemic.
In May, there was a net increase of 57,000 listings, AirDNA reported. That amounted to 1.34 million unique listings on Airbnb and Vrbo alone, up 24.7 percent from the prior year and a new record high. The rush of supply led to the drop in occupancy.
Overall demand is up 12.8 percent compared to last summer and up 21.8 percent compared to the summer of 2019.
Despite the dip in occupancy rate, investors are reaping the benefits of sustained high demand.
The average daily rate grew at its slowest pace since the onset of the pandemic. Still, ADRs are 31.5 percent higher now than they were in 2019, and revenue per rental has grown nearly 66 percent compared to 2019.
“The hospitality industry is benefiting from a strong labor market and a shift in consumer spending towards services like hotels, STRs, and flights,” AirDNA wrote in its May 2022 report.
“Consumer spending growth has slowed in recent months, mostly from a lack of spending on goods, where spending has fallen for two consecutive months,” it continued. “Spending on services like travel, however, has remained strong and was up 5.9 percent in April, which was the last month of reported data.”
- Available listings grew 24.7 percent YOY (up 11.8 percent compared to 2019)
- Demand is up 17.9 percent YOY (up 26.1 percent compared to 2019)
- Occupancy was down 8.6 percent YOY to 60.2 percent (up 8.6 percent compared to 2019)
- Average daily rates (ADRs) are up 4.6 percent YOY (up 31.5 percent compared to 2019)
- Revenue is 23.3 percent higher YOY (up 65.8 percent compared to 2019)
- Nights booked were up 2.8 percent YOY to 17.1 million
Potential warning signs?
While May’s report was good news for those who have benefited from the rampant demand in the STR space compared to 2019, the report included a few words of warning.
“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 report said.
One other source of potential trouble? The U.S. dollar’s impact on international travelers.
“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.).”