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Short term rental data never stands still and sometimes significant variation emerges in the performance of different territories.
That’s exactly what has happened over the summer of 2023, with a marked difference appearing between the experiences of property managers in the US compared with those on the other side of the Atlantic.
While occupancy has fallen across the board, and revenue has fallen in real terms across Europe, the UK, and the U.S, STRs have witnessed a weaker performance in the States.
The data shows that U.S. RevPAR declined more than twice as fast as Europe and the U.K. for stays in June, July and August, meaning property managers in the U.S. are under more pressure to defend revenues.
Revenue per available rental (RevPAR) in the U.S. fell 14.1% to $115 — a 16.8% decline when adjusted for inflation. ADR fell 8.1% year-over-year, dropping from $328 to $302 (a real-terms fall of 11%), and paid occupancy fell by 6.5%, settling at 38%.
While signs of a similar dip could be seen in Europe, the U.K., and globally, the U.S. saw sharper declines in Revenue Per Available Rental (RevPAR) and was the only country to see Average Daily Rates (ADR) fall in raw terms.
In Europe, ADRs rose 0.3% in real terms to $182, which helped offset an 8.2% drop in occupancy this summer. This meant European RevPAR only fell 8% in real terms to $71. The United Kingdom saw RevPAR fall 6% in real terms to $86. Occupancy fell 2.4% in the UK, not helped by ADRs that fell 3.6% in real terms to $213.
Globally, RevPAR was down 9.8% in real terms to $70. Aided by a 4.9% real-term decline in ADR over June, July and August while occupancy also helped to drag revenues down, falling 5.1% annually.
But What Could Be Behind This Trend?
What property managers are seeing is a faster return to pre-covid norms in the U.S compared with the UK and Europe. This means short term rental performance in America is ahead of the curve in one sense and more likely to level off sooner.
But these annual declines in performance will still be a problem for anyone who has made a short term rental investment more recently, and based their yield projections and short term rental business strategy on stronger nightly rates and occupancy figures. These property managers will need to be highly agile in their use of STR DestinationData when bookings are low.
Outlook For The Rest Of The Year
(September to December 2023)
Our pacing data, which like the summer data above was pulled on 23rd August each year, comes with a bit more of a health warning. Pacing data is less reliable the further out you are from the stay date but it can still provide crucial early indications of changes in demand.
So what follows is a very early stage picture based on bookings as they stood at the end of August — and do remember that this forward looking data has not been adjusted for inflation.
Looking at ‘on the books’ (OTB) data for September through December in the U.S., RevPAR shows a $20 drop, year over year, while occupancy is down by 6 percentage points over the same period to 14%. ADRs currently show a rise of 0.9%.
However, the data also shows that booking windows in the U.S. have shrunk 11.4% year-on-year for this period – from 68 days to 60 days – which potentially leaves room for property managers to make up ground.
U.K. RevPAR is pacing 22.9% behind for stays in September through December, and ADRs are currently up 6.7% to $220. Occupancy is currently down 28% year-over-year. Europe is currently seeing a softer drop in RevPAR (-11.8%), with ADRs up 15.9%, though occupancy is lagging behind last year, down 24%.
As it stands, Global occupancy is also down 31% from the same period last year, but ADRs have increased by 9.9%, pushing RevPAR down 24.1%.
Key Takeaways
- A falling back to Earth after the short term rental boom makes the YoY figures for the US appear worse than they are.
- However, the rest of 2023 remains challenging in all markets and forward looking data should be monitored constantly for signs your short term rental business strategy needs to change.
Learn how to use data insights to improve your short term rental strategy with a demo of our Key Data Dashboard.
