In this episode, we are going to talk about AirDNA’s 2022 Vacation Rental Outlook Report.
Video Transcript
00:00:00
In this video, we’re talking about air DNAs, 2022 Vacation Rental outlook report. So stay tuned.
00:00:16
Hey, welcome back. Host nation to another episode of Vacation Rental Machine I’m Julian Sage with John Bell. And in this video, we’re going to be reviewing together air DNA’s Vacation, Rental outlook. In this video, we’re going to be talking about the Vacation Rental report, which they have collected a lot of really valuable data for us. And as well as information on over 10 million vacation rentals in 120,000 different global markets. rDNA if you don’t know, they are the leading tool in the short-term mental space for data, a lot of investors use them for being able to help analyze properties and find out how much a property could potentially make in a specific market. If you haven’t already checked out some of our videos about rDNA as well as being able to analyze markets, you can check the videos down in the description box, where we have talked about that, but in this video, we just wanted to go over together and highlight some of the things that John and I noticed inside of the report and help share that with you in case you are not aware.
00:01:19
So rDNA starts their report basically recapping 20, 21 and also wrapping up the year. So on the demand side, rDNA says that even while demand has been strong, there has been delayed recovery for larger cities and their demand increase that they forecast is, is actually down 22.4%. So really what they’re trying to say there is that, you know, cities haven’t been as strong, but in previous reports that rDNA has put out more of those staycation outside of the city locations. I’ve actually seen a drastic increase since the previous years in the supply side, rDNA says that their current expectations of is 2.6% increase in available listings, which is which falls short of their original forecast of 9.4%. So they were actually expecting a 9.4% increase while the number of listings that have been coming onto the platforms is only 2.6%. While rDNA also says here is that the run-up of single family home prices.
00:02:30
So the increase in the prices of homes, in addition to the week supply trends in more of those urban markets, a lot of the markets that we operate in have hindered new investments into the sector. So again, there is a very, very little supply because a lot of places are getting purchased up right now, as well as the prices of single family homes has just been through the roof. So the number of properties that have been coming online in these urban markets has been a lot slower, but due to the low supply, it’s actually increased the occupancy. So we’ve actually been able to see higher than average occupancy levels for short-term rentals, their revised forecast now calls for the us occupancy to average 60.3%, which is slightly higher than the 58.9% forecast that they had back in may because of the low supply and high occupancy that has allowed hosts to be able to increase their rental rates.
00:03:33
So like what we were talking about previously in our own portfolio, we’ve been actually, we’ve actually been able to increase a lot of the prices. And 2021 was actually not a bad year for a lot of operators, because a lot more people were looking to start traveling. They felt a lot more confident, but because there was a lot less supply and a much higher demand and just not as many operators, operators were able to increase their prices and capture that, that gap. And that’s basically what this report is saying here is that ADR should end up, should end the year up 11.6% higher than the 9.1% growth rate for 2020. And then obviously just to kind of take all of those into account revenue is higher due to the low supply, high occupancy, higher ATRs. And on average listings are expected to earn 26.4% more revenue in 2021 compared to 2020. And this is on top of the annual growth of 8.6% in 2020,
00:04:39
Right on this next slide. We’re talking about the promise economic outlook lays the groundwork for short-term rentals in 2022 overall employment levels are just 2.6% lower than February, 2020. So prior to COVID and for the category of professionals where employers typically work in the office, which is just 1% lower, that is labeled in the blue line. All right. So the next line right here that you see on this chart is overall customer spending, which surpasses 2019. This is definitely due to stimulus funds that everybody received as well as just the general inflation of 7%, which of course is in the news more and more now than ever before. All right. So this next line is talking about overall GDP and how customer outlooks and spending moving forward has decreased just a little bit, of course, through the different variants. And of course the notable variants here are Delta and Alma crime, but predictions still show that within the next couple of quarters, we’re going to be above our pre pandemic trend back in 2019 quarter for
00:06:08
All right. So those numbers we’re really wrapping up 2021. So what about 2022 and the Vacation Rental industry outlook? So in this next slide here, you can see a graph in the bottom right hand corner that shares some of air DNA’s industry, leading predictions based on over 10 million vacation rentals and 120,000 different markets along with third-party data on economic performance. And they share some of their key takeaways for us. So first is while the stage is set for demand to fully recover by the end of 20 21, 2 0.6% higher than in 2019, they expect a man to grow another 14.1% in 2022, over 2021 levels next with the number of available listings, still 9% below 2019 levels and existing properties, essentially full during peak travel periods. The man growth will hinge on more on supply coming online to accommodate more travelers or higher occupancy of existing listings.
00:07:08
So we’re either going to see more, more supply come into the market or a higher occupancy. Next occupancy is set to continue its strong trend in 2021 with an average rate of 59.8% in 2022 average daily rates will decrease by 4% due to changing seasonality patterns and increase supply. And then revenue per available listing will settle down due to the influx of new operators and decreased nightly rates. So in the operator seat, you could see that 20, 21 kind of like we were talking about what we predicted during the beginning of the pandemic, after we had had time to recover and try to calm down when we started to come up with, you know, what would the future of travel look like? What we believed would that we would see people want to start getting, you know, having that real pent up demand to want to go travel.
00:08:04
And we did see that in 2021, we saw an increase across the board even more than probably what we even anticipated or expected because we knew that with the, the initial round of COVID, that it did shift the seasonality because we were supposed to be going into our peak season, but the peak seeks and because the variant or COVID came at around the March timeframe, which would be the peak season for most markets really wiped out that that initial revenue or that growth that we would expect. So we were anticipating maybe during the slower season. So during the winter months, there could be that potentiality for people looking to travel. And I believe that we did see some of that. Some of that come true, some more people did start to travel, but it really was 2020. It was more so of a wash. And you can see here on the graph, you know, the listings dropped down by around 11.5% demand dropped by 16.2 occupancy was down to 53.2, but it honestly wasn’t too, too bad after the initial scare.
00:09:15
And after people stayed inside towards the end of the year, we actually did see that winter boost. But then that continued on through 2021. And we did see those really great numbers, an increase of 2.5% of, of listings coming onto the market, which again, wasn’t, wasn’t a crazy amount. We didn’t see a lot of new listings, which did increase the demand. The occupancy rates, the average daily rates went up from around 2 33 in 2020 to two 60 and 2021. And then the ADR increased by 11.6%. So we were able to see a rev par of 1 56 in 2021 versus in 2020 of 1 24. So 2021 was actually a pretty strong year, which I know a lot of people were maybe suspicious when we were talking about, Hey, you know, 20, 21 is not a bad time to get into the short-term rental market. And it really wasn’t because there just wasn’t as much supply. A lot of people were taking their properties off out of fear, but we are seeing that leveling in 2022, as more people start to come in, that’ll decrease the, the occupancy as more supply comes onto the market.
01:10:26
All right, on this slide, air DNA is declaring the demand back for urban areas over the past two years, some of your scenic or a roll stays, or you’re definitely a unique stage. They definitely seen a boost and bookings as people continue to social distance, but 2022, it looks like people are coming back to the major cities. This also could come back for the business traveler businesses, just getting back to work and travel, just kind of getting back to normal. This also could mean just people visiting some of their family and things that they might not have seen over the last few years, but this definitely shows that there’s an uptick of about 33% that has started to kind of come in around the end of the year, last year. And lastly, they do predict that we won’t see the full recovery in these areas until 2023. These are areas like New York, Boston, San Francisco, of course, with the big swings back to the cities, we need to talk about some of the urban areas. This slide really just talks about the impact that they could sustain, just because travel patterns kind of shifting on them. It’s basically saying that the biggest end packed here could mean that some of those destinations might go down and bookings, but our overall demand for properties and coastal destinations is still going to grow by 3%.
01:12:07
All right, page five is the nightly rate. Frenzy is coming to an end. Us ATRs or average daily rates are expected to fall by 4% in 2022 with most of the drop caused by changing of mixes of properties being rented in 2022, compared to 2021. For example, demand growth will be strongest in urban markets where ATRs are lower, a 180 5 ADR in 2021 compared to the us average of two 60 other factors that may negatively impact EDRs are changing seasonal patterns where peak season extended into the shoulder seasons may have to reduce pricing as seasonality adjust the future demand trends, and then also new supply. So the increase revenue potential should bring the new should bring new people into the market. And this additional supply could reduce pricing power, especially during peak seasons. The next page here says that supply will capture shifting demand over the past two years, hosts and investors have adapted to the changing demand by removing listings where travelers have yet to return and investing into new homes where demand is greatest, the return of demand to small cities and destination resort markets throughout the U S has led to significant gains and new supply in these specific areas.
01:13:19
So like we were talking about in some of the other reports from rDNA, or they said that more of those urban or more of those rural getaway type of staycation destinations, that definitely saw a significant increase where there are urban markets started to bleed a little bit more. They’re saying that this should start to level out. As more people will be investing back into the urban markets yet in the same way that supply chain problems have hindered the global economy short-term rental supply has been unable to keep up with demand, even with the new additions. This is resulted in record occupancy levels throughout 2021 factors that negatively impacted supply growth in 2021 include owner use of second homes to work remotely strong demand for longterm housing, home price appreciation and reducing of investment. In 2022, we expect many of these factors that change and investor’s interest to surge as demand continues to grow in many areas throughout the U S overall rDNA expects a 15% increase in the U S listings in 2022, over 2021 with gain spread across large cities, destinations and resort markets.
01:14:27
Supply growth is expected to be strongest in areas such as Coachella valley in California and in the green mountains in Vermont, where occupancy has jumped more than 30% in 2021. So then you can see at the bottom, right, there is a little chart that shows some of the different markets and where the total number of listings versus the demand is. So you could see down at the bottom of the chart, large city urban that the total number of listings decreased nearly 20%, but the demand for those listings had decreased almost to 40% in the large city areas where areas such as small city rural have actually seen an increase of only 20, about 25%, where the demand has gone up nearly 60% versus 2019. And that demand has increased across the board pretty significantly around 20% for a destination resort areas such as mountain lakes, coastal and mid-sized cities has also gone up, but the largest demand has been those small city, rural destinations.
01:15:34
All right. So flex work is the next big flex. Definitely this title says it all. This is definitely the newest target probably from here forward. Since about 60% of the employers expect to have some type of hybrid approach for returning back to the office. This means digital nomads are definitely who we should add into our list of people that we want to serve. All right, with that discharge shows that unfortunately not everyone will want to stay in the U S as they continue to, to work, and they can work from anywhere. This shows that people are looking to go elsewhere. Other countries like south America, Brazil, Columbia, Peru, Chile, some of the cheaper countries where they could definitely take those American dollars and live like a king, but there is a good mix of people that want to go over to Europe, but people are expecting to stay longer. So booking 28 days or more in some of those areas, we did see this already within the us, which is why I think this report is possibly true, that we won’t see as many mid-term or long-term stays as we did within the U S is related to COVID stays. However, outside of the U S as borders, somewhat start to open, and as people are getting vaccinated, we can travel abroad and spend significant time elsewhere, which is unlike, just travel in general. For most
01:17:18
Page 12 here says that revenue potential of short-term rentals has continues to rise. The average annual revenue earned by short-term rentals, listed a full-time grew to $56,000. That’s the highest level ever at the end of 2021. This is a full 35% higher than at the start of the pandemic. One key thing to note here is this growth has outpaced even the meteoric rise in housing prices, which has gone up by 24.8% over the same period. According to Zillow, Zillow also expects the U S demand to EAD the supply of available homes in 2022. But for home value appreciation to slow down with 6.4 million existing homes to close in 2022, there’ll be many opportunities to invest them into high potential short-term rental markets. The combination of increased supply and weakening ADR growth will lower the overall revenue potential of the U S in 2022, with an expected decline of 4.8%.
01:18:15
It’s expected to stabilize and increase again, starting in 2023, page 13 says travel in 2022 is that big stays and unique experiences are on the rise. One of the defining trends of the pandemic is the appeal of short-term rentals that accommodate groups and families in 2021, the average number of rooms for booked properties was around 2.5 rooms. This figure has grown consistently over the past five years and has, and has really jumped in 2020 as guests avoid smaller urban properties in favor of larger homes and destination locations. And then in the graph on the right here, you can see that there is a definite change in the way that people are traveling in 2017. The average number of rooms booked per reservation was around 2.3 rooms. And now in 20 21, 20 22, you can see that has jumped up quite significantly, where it’s around 2.5 rooms that people are looking to book. What this tells us is that there is a much larger demand for those larger properties. So maybe when you are looking at a potential property, don’t be so fearful of renting or purchasing something that is a little bit larger, because there is a trend that we can clearly see of people looking to book larger properties.
01:19:35
Speaking of trends, let’s talk about one of the fastest growth property types. And to me, it’s definitely not a surprise. If we look down the list of one through 10, they are all small space category homes with the exception of the dome house, which is probably more economical and just definitely unique. These are all experienced stays. And that seems to be what’s. People are looking to book at this moment. So in a similar vein guests today are looking for unique experiences when they book either for an annual family trip or for a weekend, get away, definitely take a look at all of these categories. You can see from that, that there is no mention of homes or apartments. That category actually decreased 5% over the past year. So I would say if you got some space, if you have, you know, maybe some, some land somewhere, you might be able to consider building a tiny home, possibly even you’re renting and moving an RV and creating your RV rental arbitrage portfolio, kind of capitalizing on this, that would be definitely very cutting edge.
02:20:56
But also remember earlier in this report, it did say that people are looking to go back to more urban areas. So there’s a unique blend that’s here that we also need to kind of keep keeping our planning envisioned for this coming year with all of that. One of the things that I do think COVID for is definitely people booking in advance. This chart simply shows that people are booking for weeks in advance. This is great because this gets us booking. If you’re doing everything, how we talk about it, doing a new VRF program, you book for more money, the further people book out. So this definitely does affect the ADR rate at the same time. Being able to book ahead in most markets allows us some more comfort in just being able to plan out what we’re going to do as far as scaling and things that way.
02:21:53
And lastly, rDNA wraps up this report with a very bright, optimistic view saying the bright future for short-term rentals and that the pandemic has actually accelerated short-term rentals into the mainstream demand is already 10% higher than during the pandemic. And the industry is generating 40% more revenue with all with 10%, fewer listings, 40% more revenue with 10%, fewer listings as more investors and supply to capture the growing demand of the industry. It will evolve and adapt to the changing consumer trends. rDNA says expect to see more unique properties in off the beaten path locations, providing one of the kinds of experiences that will accommodate guests, seeking an alternative travel to launching options. While many aspects of the short-term rental market have yet to recover. The whole industry should continue to outperform as we head into 2022. So, John, any, any final closing thoughts with this rapport and how does that change from the previous video that we talked about with some of our strategy moving forward? Or does this just reconfirm that? Because this report is something that we looked at after we had already kind of came to our decision, which was towards the end of 2021.
02:23:06
It definitely still kind of confirms our direction. It also means that we possibly should add in a mix of greater experiences spaces don’t have to be as big anymore. So possibly even doing an experience in the city, which could even mean a micro apartment, which are definitely not that popular in the past, but it could provide just something very unique for people to kind of go to if it’s not something like that, still something where the experience is definitely going to be better than just going to a regular hotel. No, I don’t think this report changes much about our direction or anything. I think if anything, we want to start to include some more unique stays, but us purchasing buildings and increasing our co-hosting. That doesn’t mean that we can’t get into some of these popular destinations, like the tiny homes and grow in some of those categories.
02:24:11
But overall, what we’re seeing is still a confident trend towards short-term rentals, along the, with possibly aligning ourselves more with the hotels, allowing for us to really kind of capitalize on the new audience with the decreased projections and people actually bringing on new properties that does mean more profit for us hosts, especially the ones that have been doing this for a little while and have a good foundation of as far as reviews go. Yeah. I mean, I think this outlook is right on and I I’m, I’m not surprised at any of the data that’s here.
02:24:54
Yeah. I think, I think this report just makes me feel like a wizard because a, I think a lot of the stuff that we were talking about in 2021 and even 2020, while we were going through the pandemic, you know, we were coming up with some ideas of what it could potentially turn out to be. And I’m just glad that the, the data supports my confirmation bias. So moving forward, I’m really excited for the short-term rental space. And, you know, we’d love to know in the comment section down below what you think of this report and how does this potentially change your strategy? Moving forward into 2022, I’d love to be able to know in the comment section down below, and until next time, host nation keep on hosting. Hey, hello.
02:25:33
Would you like to work directly with Julian and I to help you start and scale your own short-term rental business, go to Short Term Sage dot com forward slash coaching to attend our step-by-step training and learn how we can work together. Looking forward to talking to you soon.
yt5s.com-The Vacation Rental Outlook for 2022(360p)
00:00:00
In this video, we’re talking about air DNAs, 2022 Vacation Rental outlook report. So stay tuned.
00:00:16
Hey, welcome back. Host nation to another episode of Vacation Rental Machine I’m Julian Sage with John Bell. And in this video, we’re going to be reviewing together air DNA’s Vacation, Rental outlook. In this video, we’re going to be talking about the Vacation Rental report, which they have collected a lot of really valuable data for us. And as well as information on over 10 million vacation rentals in 120,000 different global markets. rDNA if you don’t know, they are the leading tool in the short-term mental space for data, a lot of investors use them for being able to help analyze properties and find out how much a property could potentially make in a specific market. If you haven’t already checked out some of our videos about rDNA as well as being able to analyze markets, you can check the videos down in the description box, where we have talked about that, but in this video, we just wanted to go over together and highlight some of the things that John and I noticed inside of the report and help share that with you in case you are not aware.
00:01:19
So rDNA starts their report basically recapping 20, 21 and also wrapping up the year. So on the demand side, rDNA says that even while demand has been strong, there has been delayed recovery for larger cities and their demand increase that they forecast is, is actually down 22.4%. So really what they’re trying to say there is that, you know, cities haven’t been as strong, but in previous reports that rDNA has put out more of those staycation outside of the city locations. I’ve actually seen a drastic increase since the previous years in the supply side, rDNA says that their current expectations of is 2.6% increase in available listings, which is which falls short of their original forecast of 9.4%. So they were actually expecting a 9.4% increase while the number of listings that have been coming onto the platforms is only 2.6%. While rDNA also says here is that the run-up of single family home prices.
00:02:30
So the increase in the prices of homes, in addition to the week supply trends in more of those urban markets, a lot of the markets that we operate in have hindered new investments into the sector. So again, there is a very, very little supply because a lot of places are getting purchased up right now, as well as the prices of single family homes has just been through the roof. So the number of properties that have been coming online in these urban markets has been a lot slower, but due to the low supply, it’s actually increased the occupancy. So we’ve actually been able to see higher than average occupancy levels for short-term rentals, their revised forecast now calls for the us occupancy to average 60.3%, which is slightly higher than the 58.9% forecast that they had back in may because of the low supply and high occupancy that has allowed hosts to be able to increase their rental rates.
00:03:33
So like what we were talking about previously in our own portfolio, we’ve been actually, we’ve actually been able to increase a lot of the prices. And 2021 was actually not a bad year for a lot of operators, because a lot more people were looking to start traveling. They felt a lot more confident, but because there was a lot less supply and a much higher demand and just not as many operators, operators were able to increase their prices and capture that, that gap. And that’s basically what this report is saying here is that ADR should end up, should end the year up 11.6% higher than the 9.1% growth rate for 2020. And then obviously just to kind of take all of those into account revenue is higher due to the low supply, high occupancy, higher ATRs. And on average listings are expected to earn 26.4% more revenue in 2021 compared to 2020. And this is on top of the annual growth of 8.6% in 2020,
00:04:39
Right on this next slide. We’re talking about the promise economic outlook lays the groundwork for short-term rentals in 2022 overall employment levels are just 2.6% lower than February, 2020. So prior to COVID and for the category of professionals where employers typically work in the office, which is just 1% lower, that is labeled in the blue line. All right. So the next line right here that you see on this chart is overall customer spending, which surpasses 2019. This is definitely due to stimulus funds that everybody received as well as just the general inflation of 7%, which of course is in the news more and more now than ever before. All right. So this next line is talking about overall GDP and how customer outlooks and spending moving forward has decreased just a little bit, of course, through the different variants. And of course the notable variants here are Delta and Alma crime, but predictions still show that within the next couple of quarters, we’re going to be above our pre pandemic trend back in 2019 quarter for
00:06:08
All right. So those numbers we’re really wrapping up 2021. So what about 2022 and the Vacation Rental industry outlook? So in this next slide here, you can see a graph in the bottom right hand corner that shares some of air DNA’s industry, leading predictions based on over 10 million vacation rentals and 120,000 different markets along with third-party data on economic performance. And they share some of their key takeaways for us. So first is while the stage is set for demand to fully recover by the end of 20 21, 2 0.6% higher than in 2019, they expect a man to grow another 14.1% in 2022, over 2021 levels next with the number of available listings, still 9% below 2019 levels and existing properties, essentially full during peak travel periods. The man growth will hinge on more on supply coming online to accommodate more travelers or higher occupancy of existing listings.
00:07:08
So we’re either going to see more, more supply come into the market or a higher occupancy. Next occupancy is set to continue its strong trend in 2021 with an average rate of 59.8% in 2022 average daily rates will decrease by 4% due to changing seasonality patterns and increase supply. And then revenue per available listing will settle down due to the influx of new operators and decreased nightly rates. So in the operator seat, you could see that 20, 21 kind of like we were talking about what we predicted during the beginning of the pandemic, after we had had time to recover and try to calm down when we started to come up with, you know, what would the future of travel look like? What we believed would that we would see people want to start getting, you know, having that real pent up demand to want to go travel.
00:08:04
And we did see that in 2021, we saw an increase across the board even more than probably what we even anticipated or expected because we knew that with the, the initial round of COVID, that it did shift the seasonality because we were supposed to be going into our peak season, but the peak seeks and because the variant or COVID came at around the March timeframe, which would be the peak season for most markets really wiped out that that initial revenue or that growth that we would expect. So we were anticipating maybe during the slower season. So during the winter months, there could be that potentiality for people looking to travel. And I believe that we did see some of that. Some of that come true, some more people did start to travel, but it really was 2020. It was more so of a wash. And you can see here on the graph, you know, the listings dropped down by around 11.5% demand dropped by 16.2 occupancy was down to 53.2, but it honestly wasn’t too, too bad after the initial scare.
00:09:15
And after people stayed inside towards the end of the year, we actually did see that winter boost. But then that continued on through 2021. And we did see those really great numbers, an increase of 2.5% of, of listings coming onto the market, which again, wasn’t, wasn’t a crazy amount. We didn’t see a lot of new listings, which did increase the demand. The occupancy rates, the average daily rates went up from around 2 33 in 2020 to two 60 and 2021. And then the ADR increased by 11.6%. So we were able to see a rev par of 1 56 in 2021 versus in 2020 of 1 24. So 2021 was actually a pretty strong year, which I know a lot of people were maybe suspicious when we were talking about, Hey, you know, 20, 21 is not a bad time to get into the short-term rental market. And it really wasn’t because there just wasn’t as much supply. A lot of people were taking their properties off out of fear, but we are seeing that leveling in 2022, as more people start to come in, that’ll decrease the, the occupancy as more supply comes onto the market.
01:10:26
All right, on this slide, air DNA is declaring the demand back for urban areas over the past two years, some of your scenic or a roll stays, or you’re definitely a unique stage. They definitely seen a boost and bookings as people continue to social distance, but 2022, it looks like people are coming back to the major cities. This also could come back for the business traveler businesses, just getting back to work and travel, just kind of getting back to normal. This also could mean just people visiting some of their family and things that they might not have seen over the last few years, but this definitely shows that there’s an uptick of about 33% that has started to kind of come in around the end of the year, last year. And lastly, they do predict that we won’t see the full recovery in these areas until 2023. These are areas like New York, Boston, San Francisco, of course, with the big swings back to the cities, we need to talk about some of the urban areas. This slide really just talks about the impact that they could sustain, just because travel patterns kind of shifting on them. It’s basically saying that the biggest end packed here could mean that some of those destinations might go down and bookings, but our overall demand for properties and coastal destinations is still going to grow by 3%.
01:12:07
All right, page five is the nightly rate. Frenzy is coming to an end. Us ATRs or average daily rates are expected to fall by 4% in 2022 with most of the drop caused by changing of mixes of properties being rented in 2022, compared to 2021. For example, demand growth will be strongest in urban markets where ATRs are lower, a 180 5 ADR in 2021 compared to the us average of two 60 other factors that may negatively impact EDRs are changing seasonal patterns where peak season extended into the shoulder seasons may have to reduce pricing as seasonality adjust the future demand trends, and then also new supply. So the increase revenue potential should bring the new should bring new people into the market. And this additional supply could reduce pricing power, especially during peak seasons. The next page here says that supply will capture shifting demand over the past two years, hosts and investors have adapted to the changing demand by removing listings where travelers have yet to return and investing into new homes where demand is greatest, the return of demand to small cities and destination resort markets throughout the U S has led to significant gains and new supply in these specific areas.
01:13:19
So like we were talking about in some of the other reports from rDNA, or they said that more of those urban or more of those rural getaway type of staycation destinations, that definitely saw a significant increase where there are urban markets started to bleed a little bit more. They’re saying that this should start to level out. As more people will be investing back into the urban markets yet in the same way that supply chain problems have hindered the global economy short-term rental supply has been unable to keep up with demand, even with the new additions. This is resulted in record occupancy levels throughout 2021 factors that negatively impacted supply growth in 2021 include owner use of second homes to work remotely strong demand for longterm housing, home price appreciation and reducing of investment. In 2022, we expect many of these factors that change and investor’s interest to surge as demand continues to grow in many areas throughout the U S overall rDNA expects a 15% increase in the U S listings in 2022, over 2021 with gain spread across large cities, destinations and resort markets.
01:14:27
Supply growth is expected to be strongest in areas such as Coachella valley in California and in the green mountains in Vermont, where occupancy has jumped more than 30% in 2021. So then you can see at the bottom, right, there is a little chart that shows some of the different markets and where the total number of listings versus the demand is. So you could see down at the bottom of the chart, large city urban that the total number of listings decreased nearly 20%, but the demand for those listings had decreased almost to 40% in the large city areas where areas such as small city rural have actually seen an increase of only 20, about 25%, where the demand has gone up nearly 60% versus 2019. And that demand has increased across the board pretty significantly around 20% for a destination resort areas such as mountain lakes, coastal and mid-sized cities has also gone up, but the largest demand has been those small city, rural destinations.
01:15:34
All right. So flex work is the next big flex. Definitely this title says it all. This is definitely the newest target probably from here forward. Since about 60% of the employers expect to have some type of hybrid approach for returning back to the office. This means digital nomads are definitely who we should add into our list of people that we want to serve. All right, with that discharge shows that unfortunately not everyone will want to stay in the U S as they continue to, to work, and they can work from anywhere. This shows that people are looking to go elsewhere. Other countries like south America, Brazil, Columbia, Peru, Chile, some of the cheaper countries where they could definitely take those American dollars and live like a king, but there is a good mix of people that want to go over to Europe, but people are expecting to stay longer. So booking 28 days or more in some of those areas, we did see this already within the us, which is why I think this report is possibly true, that we won’t see as many mid-term or long-term stays as we did within the U S is related to COVID stays. However, outside of the U S as borders, somewhat start to open, and as people are getting vaccinated, we can travel abroad and spend significant time elsewhere, which is unlike, just travel in general. For most
01:17:18
Page 12 here says that revenue potential of short-term rentals has continues to rise. The average annual revenue earned by short-term rentals, listed a full-time grew to $56,000. That’s the highest level ever at the end of 2021. This is a full 35% higher than at the start of the pandemic. One key thing to note here is this growth has outpaced even the meteoric rise in housing prices, which has gone up by 24.8% over the same period. According to Zillow, Zillow also expects the U S demand to EAD the supply of available homes in 2022. But for home value appreciation to slow down with 6.4 million existing homes to close in 2022, there’ll be many opportunities to invest them into high potential short-term rental markets. The combination of increased supply and weakening ADR growth will lower the overall revenue potential of the U S in 2022, with an expected decline of 4.8%.
01:18:15
It’s expected to stabilize and increase again, starting in 2023, page 13 says travel in 2022 is that big stays and unique experiences are on the rise. One of the defining trends of the pandemic is the appeal of short-term rentals that accommodate groups and families in 2021, the average number of rooms for booked properties was around 2.5 rooms. This figure has grown consistently over the past five years and has, and has really jumped in 2020 as guests avoid smaller urban properties in favor of larger homes and destination locations. And then in the graph on the right here, you can see that there is a definite change in the way that people are traveling in 2017. The average number of rooms booked per reservation was around 2.3 rooms. And now in 20 21, 20 22, you can see that has jumped up quite significantly, where it’s around 2.5 rooms that people are looking to book. What this tells us is that there is a much larger demand for those larger properties. So maybe when you are looking at a potential property, don’t be so fearful of renting or purchasing something that is a little bit larger, because there is a trend that we can clearly see of people looking to book larger properties.
01:19:35
Speaking of trends, let’s talk about one of the fastest growth property types. And to me, it’s definitely not a surprise. If we look down the list of one through 10, they are all small space category homes with the exception of the dome house, which is probably more economical and just definitely unique. These are all experienced stays. And that seems to be what’s. People are looking to book at this moment. So in a similar vein guests today are looking for unique experiences when they book either for an annual family trip or for a weekend, get away, definitely take a look at all of these categories. You can see from that, that there is no mention of homes or apartments. That category actually decreased 5% over the past year. So I would say if you got some space, if you have, you know, maybe some, some land somewhere, you might be able to consider building a tiny home, possibly even you’re renting and moving an RV and creating your RV rental arbitrage portfolio, kind of capitalizing on this, that would be definitely very cutting edge.
02:20:56
But also remember earlier in this report, it did say that people are looking to go back to more urban areas. So there’s a unique blend that’s here that we also need to kind of keep keeping our planning envisioned for this coming year with all of that. One of the things that I do think COVID for is definitely people booking in advance. This chart simply shows that people are booking for weeks in advance. This is great because this gets us booking. If you’re doing everything, how we talk about it, doing a new VRF program, you book for more money, the further people book out. So this definitely does affect the ADR rate at the same time. Being able to book ahead in most markets allows us some more comfort in just being able to plan out what we’re going to do as far as scaling and things that way.
02:21:53
And lastly, rDNA wraps up this report with a very bright, optimistic view saying the bright future for short-term rentals and that the pandemic has actually accelerated short-term rentals into the mainstream demand is already 10% higher than during the pandemic. And the industry is generating 40% more revenue with all with 10%, fewer listings, 40% more revenue with 10%, fewer listings as more investors and supply to capture the growing demand of the industry. It will evolve and adapt to the changing consumer trends. rDNA says expect to see more unique properties in off the beaten path locations, providing one of the kinds of experiences that will accommodate guests, seeking an alternative travel to launching options. While many aspects of the short-term rental market have yet to recover. The whole industry should continue to outperform as we head into 2022. So, John, any, any final closing thoughts with this rapport and how does that change from the previous video that we talked about with some of our strategy moving forward? Or does this just reconfirm that? Because this report is something that we looked at after we had already kind of came to our decision, which was towards the end of 2021.
02:23:06
It definitely still kind of confirms our direction. It also means that we possibly should add in a mix of greater experiences spaces don’t have to be as big anymore. So possibly even doing an experience in the city, which could even mean a micro apartment, which are definitely not that popular in the past, but it could provide just something very unique for people to kind of go to if it’s not something like that, still something where the experience is definitely going to be better than just going to a regular hotel. No, I don’t think this report changes much about our direction or anything. I think if anything, we want to start to include some more unique stays, but us purchasing buildings and increasing our co-hosting. That doesn’t mean that we can’t get into some of these popular destinations, like the tiny homes and grow in some of those categories.
02:24:11
But overall, what we’re seeing is still a confident trend towards short-term rentals, along the, with possibly aligning ourselves more with the hotels, allowing for us to really kind of capitalize on the new audience with the decreased projections and people actually bringing on new properties that does mean more profit for us hosts, especially the ones that have been doing this for a little while and have a good foundation of as far as reviews go. Yeah. I mean, I think this outlook is right on and I I’m, I’m not surprised at any of the data that’s here.
02:24:54
Yeah. I think, I think this report just makes me feel like a wizard because a, I think a lot of the stuff that we were talking about in 2021 and even 2020, while we were going through the pandemic, you know, we were coming up with some ideas of what it could potentially turn out to be. And I’m just glad that the, the data supports my confirmation bias. So moving forward, I’m really excited for the short-term rental space. And, you know, we’d love to know in the comment section down below what you think of this report and how does this potentially change your strategy? Moving forward into 2022, I’d love to be able to know in the comment section down below, and until next time, host nation keep on hosting. Hey, hello.
02:25:33
Would you like to work directly with Julian and I to help you start and scale your own short-term rental business, go to Short Term Sage dot com forward slash coaching to attend our step-by-step training and learn how we can work together. Looking forward to talking to you soon.
