2022 is the summer of travel. Eased pandemic-related restrictions coupled with outsized travel demand have created the perfect storm of travelers looking to explore new destinations. However, at the same time flight costs are increasing due to factors like rising inflation, labor shortages at airlines & airports, and reduced flight schedules.
With the inflation occurring, it is understandable to be anxious about what this may mean for the short-term rental industry. At Beyond, our goal is to help you stay ahead of the curve. In an effort to monitor the effects of high fuel costs, we are tracking the changes in airfare pricing in comparison to the occupancy of specific markets in order to find any correlations. By keeping an eye on travel costs and occupancy, we can then make recommendations to pivot your revenue management strategy so that you can capture the most revenue and highest occupancy.
Let’s take a look at some specific markets and trends below, and tactics you can do right now to help ward off any ill effects.
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U.S. Travelers Flock to Europe Amid Rising Flight Costs
The travel industry predicted record travel to Europe from the U.S. this summer, and most of Europe is seeing demand at 55% higher than in 2021. Americans’ return to European travel can be attributed mainly to the easing of pandemic-related restrictions and pent-up travel demand. For vaccinated travelers, it’s simple to enter most EU countries and even simpler to return home now that the U.S. dropped its COVID testing entry requirements.
The surge in travel demand coupled with labor shortages have left airlines struggling to keep up at airports around the world. Long security lines, higher volumes of delayed or canceled flights, lost baggage, and huge crowds usually await travelers this summer.
U.S. Markets Showing an Average 22% Rise in Flight Costs
In these states across the U.S. with a few of the top vacation rental markets, airline costs rose on average 35% during the last year. In all states, airline costs are up on average 22% compared to the same period last year. Despite these soaring prices, U.S. travelers are still buying flights in record numbers: Spending at airlines and travel agencies are up 60% year over year according to a Bank of America survey.
Within these states in the chart above, let’s take a look at some popular vacation rental markets. In these markets, we can see that occupancy levels were holding steady at or above last years’ levels, but started to drop off in the spring and are really dropping off as the summer continues. While a lot of elements factor in for this drop-off (especially the unheard-of 2021 occupancy levels due to pent-up travel demand, seasonality, etc.), we can see that higher flight costs might be a factor now too.
What Property Managers Can Do
While demand in some fly-to markets is still high for summer travel, your market may still be facing less demand than last year and/or pacing towards lower demand for the remainder of the year.
One thing you can do is shift your marketing tactics to help drive demand. For example, consider marketing to locals or your loyal repeat customers to drive demand when it lowers. Offer discounts, specials for booking on your slowest weeknights, or even consider partnering with a local restaurant or business by offering a mutual discount.
You should also consider looking into your pricing strategy. Think about adjusting minimum prices where necessary, minimum stay requirements, lead times, and length of stay discounts, making sure that every adjustment is still within your standards.
Additionally, as your business is directly tied to airlines, we recommend you familiarize yourself with current airline policies, any expected cancellations, and general conditions of the airports in your area. Keeping a pulse check on flights to and from your area will help to inform your anticipated demand.
Beyond is here to help
With the ups and downs of the market, we know it’s difficult to keep up and know how your business needs to respond. With our dynamic, demand-driven pricing tool and extensive market data, Beyond aims to be your best partner in revenue management strategy, helping you make the best decisions for your business.
Not using Beyond or new to dynamic pricing? Get all your questions answered and even see what Beyond can do for your business by contacting us.