As the effects of COVID-19 slowly begin to recede and more and more countries reopen, it should come as no surprise that travel is making a comeback.
However, so far we’ve seen a highly uneven recovery. Rural destinations are outperforming urban, short-term rentals have done much better than hotels, and domestic travel is booming while international and business travel are still languishing.
What does the rest of the year hold in store for the short-term rental markets and short-term rental hosts? We took a look at the data to find out, with a focus on 3 of the largest national short-term rental markets: the US, Canada, and the UK.
When evaluating the outlook for a short-term rental market, we typically look at two main metrics. First up is the forward short-term rental occupancy rate. The forward occupancy rate tells us what % of short-term rental listings in a given market are booked for any given day up to 180 days into the future.
Short-term rental markets in the United States have rebounded significantly this year. In the chart below you can see how short-term rental occupancy rates over the next 180 days are trending well above 2020 levels, and even above 2019 levels too. To put this into numbers, occupancy rates over the next 180 days of 2021 are 401% higher than for the same period in 2020, and 26% higher than the same period in 2019.
The second metric we use when evaluating the outlook for a market is the forward short-term rental average price, also known as the forward ADR (Average Daily Rate). This metric tells us what the average price a short-term rental was booked for in a market on any given day up to 180 days into the future.
This year we’ve seen higher average prices in US short-term rental markets, and that trend looks set to continue throughout the rest of 2021. What’s driving this increase? The answer is that it’s largely driven by very strong demand for short-term rental stays in the US, which has allowed hosts to jack up their listing prices in destinations across the country. Average prices in the US over the next 180 days of 2021 are 25% higher than they were during the same period in 2020, and 32% higher than in 2019. Another factor driving the increase has been hosts charging higher cleaning costs, which is understandable given the stricter cleaning standards that are now required. A third possible explanation is economics - we’re seeing rising prices across numerous sectors of the economy, and the short-term rental industry is no exception.
Highest Occupancy Short-Term Rental Markets Over The Next 180 Days: United States
The short-term rental market outlook in Canada is less rosy. While short-term rental occupancy rates over the next 180 days are 292% higher than 2020 levels, they are still 22% down compared to 2019 levels. The rebound in short-term rental bookings in Canada has been muted by the continuation of lockdowns and border closures in a number of provinces.
There’s room for cautious optimism in Canadian short-term rental markets however. Despite a weaker rebound in demand, Canadian short-term rentals are being both listed and booked for higher average prices in 2021. Average short-term rental prices in 2021 over the next 180 days are currently pacing 32% higher than for the equivalent periods in both 2020 and 2019. The fact that Canadian hosts appear to have been able to increase prices by a similar magnitude as their American counterparts implies that the higher short-term rental prices we’re seeing in various countries will be a long-term trend, and is probably driven by a combination of increased cleaning fees and the broader inflationary trend of rising prices across developed economies.
Highest Occupancy Short-Term Rental Markets Over The Next 180 Days: Canada
If the US short-term rental market can be described as booming, and the Canadian market as sluggish, then the UK short-term rental market is somewhere in the middle. Occupancy rates over the next 180 days are 292% higher than they were in the equivalent period in 2020, and 7% higher than the same period in 2019. The UK has made significant progress in controlling the virus in the last few months, thanks largely to a speedy vaccination rollout, which has allowed the government to permit the reopening of hospitality venues and the country to ramp up it’s spending on domestic travel.
As we have seen in the US and Canada, short-term rental prices in the UK are also looking buoyant. Average prices over the next 180 days are 31% higher than they were in the same period of 2020, and 26% higher than in the same period in 2019. The same factors that are driving rising prices in the US and Canada are probably at play here - strong demand, hosts passing on higher cleaning costs, and inflationary pressures across the economy driven by the reopening and government policy.
Highest Occupancy Short-Term Rental Markets Over The Next 180 Days: United Kingdom