As we approach the end of Q1 2021, there are 3 things that we can already say about 2021 that will have a strong effect on the short-term rental industry:
- Airbnb has solidified itself as the dominant presence in the market
- The number of people vaccinated is steadily climbing
- Pent-up demand to travel is going to explode
Airbnb Declared “The Best Asset In Travel”
Airbnb, the giant of the online travel agents (OTAs) for short-term rentals, had a wildly successful Initial Public Offering (IPO) last December, and their dominant presence in the industry was solidified last week with the success of their first post-earnings quarterly report. One financial analyst even went so far as to proclaim Airbnb “the best asset in travel.”
Airbnb's success is a direct result of the growth and strength of the short-term rental market, which we outlined in our Short-Term Rental Trends Report. While over the last five years the travel industry has only grown by single digits, for example, the short-term rental market has grown by over 20%.
Short-term rental owners and managers largely depend on Airbnb and other OTAs like Vrbo and Booking.com for customers and revenue. We continue to believe, however, that while listing on the OTAs is absolutely necessary, diversifying your revenue with a direct booking option is a smart strategic play to ensure the maximization of potential revenue.
Vaccine Rollout Happening Faster Than Expected
When the Biden administration took the reigns of the United States Government in January, the hope was that all American adults could be vaccinated by the end of the calendar year. It was then pushed up to the end of the Summer as the infrastructure to deliver and administer doses was set up and began to function.
Now, with Johnson & Johnson's vaccine gaining approval, the timeline has shortened even further—it's a real possibility that there will be enough vaccines for all American adults by Memorial Day Weekend.This doesn’t mean, however, that things will immediately go back to normal. Scientists still recommend people to social distance and wash their hands even after they get vaccinated and until we can reach herd immunity.
Additionally, having enough vaccines available doesn’t mean they're automatically injected into arms. How well the distribution and coordination rollout of the vaccine goes will be a major determining factor on exactly when we can go back to normal. But it is good news indeed that we can expect normal sooner rather than later.
Pent Up Demand is Ready to Burst
Most of the world has been cooped up in their homes for the better part of a year, and people are ready to get out and explore the world again. For some, they're ready to get out regardless whether or not they've been vaccinated or we've reached herd immunity.
The record number of canceled trips last year has made folks determined to get out this year. We are already seeing record demand for the summer months, with places like the UK and the United States seeing triple-digit growth in bookings.
We've also seen a dramatic increase in the average daily rate (ADR) demand year over year - a sure sign that people are willing to not only travel but to pay a premium to get out of their homes and travel this year.
All of this signals to us that the wind is behind the back of the short-term rental market. While it's still uncertain exactly when we can declare victory against COVID-19, what we can say is that when we are able to, what had already promised to be a banner year for the industry is set to potentially shatter all records.
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