We are a few weeks into the new year, so you may be wondering what vacation rental property managers should expect for 2023.
In the ever-shifting climate we’re living in, where financial, health, and political events make historical data harder and harder to rely upon, we know that macroeconomic analysis and forecasting is critical to driving the best revenue outcomes for our customers. Historical data will always be an element of what we utilize, but it’s table stakes when it comes to creating a competitive revenue management strategy in 2023.
So, we polled a few experienced veterans of the vacation rental industry to get a sense of how they are preparing for the year ahead. We heard everything from big bets for 2023 to thoughtful lessons learned to expert advice for property managers.
Jason Bryant, Owner/President at Bryant Real Estate
“I still expect demand to be strong – the impact of COVID-19 and individuals' value of vacation time is still robust. I expect supply to keep increasing, and unique homes will command significant increases in ADR based on inflation. However, homes that are more common and less unique will continue to see ADR pressure. I expect the supply increases will normalize come summer 2023, as any impacts as a result of recession or fear of such will likely have driven all interested parties (especially from the recent wave to first-time second home buyers) to the market.
In the off-season, where supply always outstrips demand, price management aligned with owners’ objectives will be key as there will be a lot more pressure to chase price for the shoulder demand. Some STR managers might find that they hit occupancy levels they want in the short term, but sacrifice price to the point that property owners will make a switch.
This year and next year will truly segment the market between professional revenue managers and those that are not. The performance will be one aspect, and communication with the owner on the market conditions and accomplishing our mutual goals will be another.”
Jeremy Clayton, Owner & Operator at Vacation Rental Consulting Services
“In 2023 I predict that we will see a compression in the number of property managers, in part due to mergers and acquisitions, but more so due to expectations.
This may not apply to every single market, but in many markets real estate has been crazy and a lot of buyers were sold on a property based on the record-breaking rental income the property did in 2020-2021. The level of expectation for these new owners starts at those record-breaking levels; they only expect it to go up from there.
For their cap rate formula or financials to make sense, they need those same rental income figures to continue for them to stay in the black or break even on the property. If/when properties do not meet those expectations, we’re going to see one of two things happen: the owners change management companies or they try to sell the property.
Either of those two things means there will be opportunities for PMs to grow. For the companies that set expectations appropriately, this will not be a problem but for the (big and small) companies that have grown their business based on the inflated figures of 2020-2021, they’re going to see that churn rate get cranked up.”
Mark Bastin, CMO at Yonder
“In 2023, tech will continue to play a bigger role in our strategies and how we do business, and the tech that will flourish are the vendors that do not become complacent with their product or service. Fingers crossed, data - specifically predictive data - will become more abundant and accurate. There will be more players/disruptors in the marketplace (and this is a good thing).
In our region of North Carolina, demand will slowly inch closer to supply, especially with 2-4 bedroom properties. Tailoring guest experiences and scaling the quality of services as we grow will become a larger part of our guest acquisition and retention strategies. STR regulations at both the local and the state levels will still be a negative force. And seeing the growth of STR’s, hotels will continue to elbow their way into this industry.”
What are you keeping in mind for 2022? We'd love to chat about!
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