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Short term rental booking windows might have returned to pre-covid norms but that doesn’t mean property managers can take their eye off the ball.
Average Booking Window (ABW) data tells us how far out guests are booking for particular stay dates, and it fluctuates constantly. There are also seasonal patterns to watch out for because certain times of the year attract more advanced bookings. This will typically be dictated by peak season or large events.
However, when booking windows increase or decrease significantly on an annual basis, this can be a sign that demand is changing. We see this to a degree every summer and 2023 was no different.
Booking windows this summer were either flat or falling across many major markets. While average booking windows in the U.S. matched the global average at 60 days, they had come down in the United States by a relatively high 11.4%. This is enough for property managers to sit up and take notice, while the UK and Europe were still sporting booking windows of more than 70 days with little change (-2.8% and +0.6% respectively).
Deeper variations are often seen when we look at more granular data and we’ve picked out some classic vacation markets to illustrate the point. As you can see, Greater Sedona in Arizona has seen the ABW fall by 21%, while Charleston, South Carolina, has seen a decline of 20.1%. However, these are still very different markets — Greater Sedona’s ABW is just 44 days compared with Charleston’s 74 days.
Significant declines in booking window happen for two main reasons — travelers can delay booking because they are confident there’s plenty of choice, or because financial stress and a lack of consumer confidence weighs on demand.
What Should Property Managers Do With Booking Window Data?
STR data on booking windows is more useful when paired with occupancy statistics. That’s because, when travelers book later, it doesn’t mean they don’t book at all. While softer consumer spending can explain shrinking booking windows, it is important not to jump to the conclusion that occupancy in your vacation rentals will automatically decline year-on-year for the relevant stay period.
When occupancy is lower year-on-year and booking windows have shortened, there is a greater chance that occupancy will recover the closer you get to the stay date. Creating custom comp sets that leverage localized data is particularly important in this scenario, because you will discover whether your competitors are seeing stronger occupancy than you are at this stage in the booking cycle.
If they are, the next thing to check is whether they are achieving superior occupancy by discounting early. Look at the average daily rate (ADR) that they are achieving. This will help you judge whether they are marketing their properties better than you are, or simply surrendering revenue in order to secure guests.
Depending on the length of time left to the stay date, property managers may choose to wait to see if pickup increases in line with a shorter booking window. Subsequently looking at pickup reporting will help you understand the pace of bookings and what booking windows are most popular. This is how property managers can avoid falling into the trap of discounting too early, and accepting nightly rates that are significantly lower than what the market was prepared to pay.
Alternative Scenarios
Property managers can also make strategic business decisions when occupancy is higher than expected. When occupancy climbs earlier than usual against a backdrop of lengthening booking windows, this could signify higher demand and there could be an opportunity to increase nightly rates. Conversely, if occupancy has fallen but booking windows have grown, this is the biggest red flag that property managers need to act on. Demand could have softened, leaving short term rentals vulnerable to lower revenue per available rental (RevPAR), and a change in pricing and marketing strategy might be needed.
Key Takeaways
- Be wary of discounting when occupancy is falling year-on-year if you haven’t first checked booking window trends in your area.
- Copying other property managers’ strategy of reducing nightly rates to boost occupancy could mean you sacrifice valuable revenue if they acted too early.
- Don’t miss the chance to meet higher demand with higher ADRs if occupancy is rising alongside ABW.
If you’re interested in learning how to improve your short term rental strategy with data insights, ask for a demo of our Key Data Dashboard.
