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Last year Airbnb recorded stays of 28 days and over as their fastest-growing short term rental category. In Q2 alone, longer stays on the online booking tool increased by 25% year-over-year, and 90% on 2019 levels. But has this trend continued into 2023? We’re diving into the data to find out if mid-term rentals should be a priority for property managers’ rental strategies in the months ahead.
What Are Mid-Term Rentals?
A mid-term rental (also known as a medium term rental) usually refers to stays longer than 28 days and up to 12 months. Most commonly, the term is used for guest bookings of 3 to 9 months. Because mid-term rental guest stays are longer, accommodations tend to come fully furnished, including kitchen facilities and other utilities.
Property managers implementing a mid-term rental strategy can reap a higher yield for monetary stability. Nightly rates are often lower than short term rentals — U.S. average daily rates (ADR) are around 27% lower for stays over 30 days than the average for all short term rental stays, Europe’s are 3% lower, and global rates are 19% lower. However, it’s much easier to achieve maximum occupancy during off-peak seasons with medium length stays. Other benefits of this strategy include reduced turnovers required for each property and the fact that higher paying guests are more likely to treat your property with care.
However, because of the decrease in nightly rates for mid-term stays, if you were to achieve the same occupancy levels with short term bookings during the same period, you’d make higher profits. Other disadvantages include the initial investment of equipping properties with the amenities long stay guests expect.
Who Is The Mid-Term Rental Target Market?
The lack of mid-term rental stays pre-pandemic suggests that new markets are the primary contributors to this rise in demand. For example, trends such as remote working and digital nomadism, which have been powered by a more flexible approach to the work-life balance during a time when office work was restricted, are likely the travelers driving medium length stays in vacation rentals.
Other factors at play include global mobility, including families relocating as the result of new career opportunities, and corporate travelers.
Are Mid-Term Stays Continuing on an Upward Trend?
Despite fluctuations in demand for mid-term rentals throughout 2022, for the U.S. and Europe the year ended with a strong mid-term rental performance. Year-over-year records of nights sold in Q4 of 2021 vs. 2022 show a 29% increase in U.S. stays over 30 days and a 31% increase within Europe. However, on a global scale, the overall number of mid-term stays dropped by 1.4% year-over-year for Q4, showing how demand for stays over 30 days slowed in other regions of the world.
Looking ahead into this year, pacing data for Q2 2022 vs. 2023 as of March 26 suggests mid-term rentals are here to stay. Europe remains a strong driver of this trend, with 10,732,555 nights sold so far Q2— showing a 16% year-over-year increase. The average length of stay in this region has also risen by 2 days.
In the U.S., popularity is growing at pace for 30+ day bookings. Nights sold for this time period are up 94% year-over-year (from 3,566,813 to 6,927,532), and the average length of stay has increased from 42 days to 55 days— showing how the market has adopted the same booking habits as its European counterparts.
Global figures are looking strong, too— scraped data highlights a 34% incline in Q2 nights sold and a 6 day increase in the average length of stay.
Mid-term rentals are positioned to gain further traction in 2023, suggesting great potential for investors and property managers/hosts who incorporate a long-stay strategy into 2023 plans. While Europe remains the largest contributor to mid-term stays, longer stays are continually increasing in the U.S. The return of traveler confidence is likely a big contributor to this upward uptrend, as well as the rebound of corporate travel. For example, companies are combining business trips to cut operational costs in a bid to combat inflation, meaning those who are traveling for work are staying longer.
Short Term Rental Demand Remains Higher Than Longer Stays
While mid-term rentals are growing, market data from 2022 shows that 98% of total U.S., Europe, and global stays fell into the 1-29 night category, with the average length of stay across all regions being 3-4 nights. The 30-120 night category claimed around 2% of total stays worldwide, with stays over 120 nights barely exceeding 0.1%. Therefore, for investors and property managers/hosts to make the most of the market, it’s important to not put all their eggs in one basket (or a single strategy).
Investing in a mid-term rental strategy in 2023 could provide a profitable ROI, as the demand across Europe remains strong and increases are witnessed in the U.S. and on a global scale. Investors, property managers, and hosts who are able to capture this demand will benefit from increased monetary stability, especially during the off-season when occupancy rates are low.
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