It’s been three years since the world was rocked by the COVID-19 pandemic. While the short-term rental industry took a heavy knock, the latest data shows that supply and demand are currently strong.
The STR market might currently be favorable, but as we know only too well from experience, it can change in an instant. And, with a potential recession looming for later in 2023, investors and hosts should keep an open mind when it comes to alternative avenues. One such path that could offer protection against a recession is luxury rentals.
To learn about new ways to protect and scale your short-term rental business, why not take your learning offline too? With in-person events returning to our professional calendars, stakeholders in the industry are using this newly appreciated opportunity to get together and share ideas. Whether you’re based in the UK or US, we’ve included two must-attend events in this digest, along with all the other headlines this past month.
Luxury vacation rentals’ supply and demand are currently very healthy. According to stats shared by KeyData, a short-term rental data provider, by the end of 2023, this niche can expect to see the average daily rate as well as the length of stay double. This growth is expected to continue and it’s anticipated that in eight years’ time, the global luxury vacation rental sector will be valued at just over $80 billion. This works out to a growth of 13.1% between 2021 and 2031.
William Parry, the CEO of Altido, a UK-based hospitality management provider, explains that investing in luxury rentals can be a smart move as during a recession, they can absorb some of the shock likely caused by a decrease in budget stays. That said, a quick look at history will show that this segment isn’t immune to decline either. According to Bain & Company’s luxury study, the global luxury personal market decreased by almost 10% between 2007 and 2009.
It’s not only the luxury segment that’s experiencing strong supply and demand but also the US short-term rental market as a whole. The numbers shared in a recent report shared by AirDNA reveal that 2023 is expected to be a good year for STRs in the US.
This report highlighted that compared to February 2022, demand was up by almost 20%. Orlando, Gatlinburg, and Panama City are among the top five cities that enjoyed the fastest growth in demand.
As for supply, large cities enjoyed the biggest growth in supply. Some areas observed a supply growth of more than 30% in a single year. While small city and rural markets also benefited from a significant spike in supply, coastal, lake, and mountain markets weren’t as lucky.
What’s more, daily rates are also on the increase. According to AirDNA, the average daily rates increased by almost 6% to reach about $330 in February 2023.
On 27 April 2023, three of the biggest short-term rental associations will join forces to host The Short Stay Summit in London. This year’s theme is: “Maximizing the opportunities available to the short-term rental industry”. The line-up of panelists and speakers includes names like:
Topics that will be explored include:
Skift’s Short-term Rental Summit is another top event that you can add to your calendar. It’s set for 7 June 2023 in New York City and the line-up includes confirmed speakers like:
Topics for this exciting event include:
Fairbnb.coop, an ethical holiday rental site, is set to launch in the United Kingdom. Currently, it has a presence in a number of European countries including Belgium and Italy.
The platform encourages hosts to implement sustainable strategies like switching to eco-friendly cleaning products and promoting local shops. While they also charge a commission per booking, half of the commission charged (7.5%) is used to fund local social and community projects. They hope that this initiative will help travelers to participate in tourism that’s more sustainable and fair and, in doing so, grow community-powered tourism.
Staying on the topic of the environment, Airbnb and Energy Saving Trust have launched a £1 million climate action fund to support young people in tackling the climate emergency. Through a pilot round of funding, £200,000 is being made available to charities in the West Midlands.
Grants are for a two-year period and organizations can apply for up to £40,000. Applications for charities in the West Midlands need to be submitted by 31 March 2023 and for charities nationwide later in the year. Andy Street, Mayor of the West Midlands, Amanda Cupples, General Manager for Northern Europe at Airbnb, and Jim Metcalfe, Chair of Energy Saving Trust Foundation, have all expressed their enthusiasm for the fund’s potential to empower young people, create real change, and build a sustainable future.
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