Findings
Key Data found that occupancy is being driven down due to decreased demand after the peak years of 2021 and 2022, coupled with increased supply. The average daily rate (ADR) dropped by $14 compared to April 2022, signaling more competition and lower pricing power for property managers and hosts. RevPAR also suffered, with a decrease of $18 from the previous year. However, net reservations per active property are on the rise, coming closer to 2022 levels.
AirDNA’s research supports this finding, stating that demand in April 2023 increased by an impressive 12.6% year over year. This surge in demand, combined with higher booking growth rates, suggests that the 2023 summer travel season will remain strong for the vacation rental market. However, they found supply growth has slowed down for the second consecutive month and occupancy levels declined by 4.9% year over year but remained ahead of pre-pandemic levels.
Both AirDNA and KeyData suggest that broader economic factors are likely influencing the market. The Key Data article notes that the inflation rate in the United States slowed to 4.9%, the lowest since October 2021, but this still means Americans are paying about 5% more for goods and services compared to the previous year. AirDNA also mentions that interest rate increases have affected affordability and made borrowing more costly, potentially impacting the construction of new housing and new supply in the vacation rental market.
Despite these challenges, the articles emphasize Americans’ ongoing excitement for travel. According to Key Data, 85% of surveyed individuals have a trip planned, and almost “80% reported planning or dreaming of travel in the last week”. AirDNA notes that “forward pacing suggests that there will be strong demand to meet whatever new supply might develop this year.”
Conclusion
In conclusion, the US vacation rental market experienced its ups and downs in April 2023. While occupancy rates declined and pricing power faced challenges, net reservations are picking up, and Americans are eager to travel. The summer season holds great promise for the vacation rental industry, with strong demand and there is potential for industry performance gains throughout the year.