2021 was a stand out year for the short-term rental market in almost every region across the U.S. Varying restrictions and comfort levels around COVID-19 made vacation rental homes immensely popular with travelers; whether it was families with open travel schedules due to their children learning online, remote workers looking for a change in scenery, or travelers with a perception that vacation homes were a safer option over staying in a hotel. All of this added up to a boom in rates and occupancy levels, even during typical shoulder seasons.
2022, however, is behaving differently. Now that most students are back in-person at school, workers are back in the office, and more travelers feel comfortable traveling beyond their nearest drive-to destinations, we are starting to deviate from trends in the vacation rental industry in some markets.
Here’s a look at what we are seeing across the Traditional East Coast Summer markets, as well as how short-term rental property managers and hosts can adjust their strategies to ensure they are capturing their fair share of existing demand.
Weak Shoulder Season on Traditional Markets
The majority of property managers and owners are experiencing fewer bookings and lower occupancy levels than in 2021, from March all the way to May and early June. However, peak season summer remains un or less affected than the Spring. Traditional summer markets in the U.S., including regions like the Florida Panhandle, further North in Saint Simons Island, and even off the coast in the North Carolina Mountains, are starting to show a return to typical, pre-pandemic vacation seasons. It looks like “every season” is not “high season” anymore.
While this is not great news for those who had record highs last year, the fall in occupancy can be attributed to guests waving demand, but also to the higher rates that are in place. PMs have raised and are getting booked at 10-30% higher rates than last year, but as a result, are dealing with less occupancy in the shoulder seasons. These opposing forces have netted out only minimal changes to total revenue and RevPAN so far, but have the possibility to leave a lot of nights unfilled.
What You Can Do
If you are leaving high premiums over 2021 in the shoulder season, it might be time to adjust. First, you should take a look at how your properties are pacing to determine how you are being affected. In the Insights tool in Beyond (which is free to all property managers & hosts), you can see key information about your short-term rental portfolio performance, including total revenue, average daily rates, occupancy, and RevPAN. For this case, we recommend that you focus on your occupancy levels as we get closer to the spring stay dates and compare them year-over-year. This will give you a clear picture of how your properties are performing so far this year.
If you see that your occupancy levels are currently pacing behind last year, here are a few things you can do to capture more bookings:
Modify Last Minute Discounts: Now is the perfect time to take a close look at your last-minute discounts and adjust if necessary. It’s great that you got some great ADR bookings for spring, but the remaining owners still need their houses booked! First, take a look at your booking lead time to see if there are any shifts. If the booking lead times have shrunk, then you should ensure that your last-minute discount rates and percentages also shrink to make sure you are not handing out too many discounts. You should also ensure that you are not discounting your peak bookings period.
Focus On Occupancy: When demand is lower, you want to ensure that you are getting your fair share of bookings. A realistic, occupancy-based revenue strategy will help to capture existing revenue. However, we do not recommend setting your prices too low or lowering your standards when accepting new reservations. Every booking should still be profitable and be up to your standards.
Adjust Minimum Prices: If you raised your minimums last year to keep up with 2021 demand, then it might be time for an adjustment. Take a look at your minimum prices, and determine if they are still accurate. We do not suggest dropping prices too low across the board; this is a careful reconsideration of what a minimally acceptable price may be for your market right now. As we have said earlier, every booking should still be profitable and up to your standards.
When the markets change like this, staying on top of trends and adjusting your revenue management strategy is important so that you can get your fair share of demand — and it doesn’t have to be hard with these tips. Beyond is here for you. If you have any other questions feel free to contact us.
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