2023 brought about a resurgence of trends that we had come to expect pre-COVID. However, in returning to “normal”, we saw year-over-year declines in occupancy, RevPAR, booking windows, and stay lengths. So far, we anticipate that 2024 will follow similar trends. How do these high-level trends break down? Let’s take a closer look.
U.S. Vacation Rental Performance for the Last Three/Next Three Months
Calendar Occupancy %
Vacation Rental occupancy continues to decline from 2023, 2022.
Calendar Occupancy % = (Nights Sold + Owner Nights + Hold Nights) / (Total Nights)
In February, calendar occupancy was 4% lower than in 2023, and 8% lower than in 2022. According to our same-store property manager direct data from 2022 to 2023, guest nights booked increased by 2% while supply increased by 11%. When supply growth outpaces demand growth, occupancy decreases, though our data indicates that supply increases are starting to slow down slightly.
Looking forward through March-May, calendar occupancy is mostly pacing behind last year. March and April are pacing 3% and 4% behind, respectively, while May is pacing alongside 2023. March and April kick off-peak season for many beach destinations, so ensure your marketing and rate strategies are optimized to capture bookings for this time!
Average Daily Rate
Daily Rates are softening, but still similar to last year.
ADR = Total Unit Revenue / Nights Sold
In February 2024, daily rates were $284, $6 lower than last year and $7 lower than in 2022. During 2023, increased supply caused property managers to face more competition, and pricing power declined in the face of lower occupancy rates. With more options and high inflation, consumers are more price-sensitive than they used to be.
For March and May, rates are pacing higher than last year, however, expect to see average rates decrease as you move through the booking window. Bookings made earlier tend to be for larger units at higher prices. As we move into the spring break and summer vacation booking period, make sure to hold rates high during this high-demand period.
RevPAR
Lower occupancy and daily rates lead to lower RevPARs.
RevPAR = Occupancy x ADR or Total Unit Revenue / Total Nights in a given period
RevPAR declined because occupancy and rates decreased. At $93 per active property per night in February 2024, revenue decreased by $11 from February 2023, and $19 from February 2022. Looking forward, RevPAR is pacing behind last year until May, when RevPAR is pacing alongside 2023. Moving forward, to help maximize revenue, use your Key Data Feeder Market reports. These reports show users the markets that their guests are coming from, as well as KPIs like daily rates, RevPAR, guest stay value, and more. And remember, not all guest budgets are created equal. For example, if you have guests coming from Maryland, they spend roughly double what guests from West Virginia spend on vacation. So, you can try to aim your marketing efforts toward guests with larger budgets.
U.S. Regional Vacation Rental Performance
Q1 2024 Calendar Occupancy %
In Q1 2024, all regions are seeing year-over-year declines in occupancy. The Rocky Mountain States are experiencing the smallest decrease, -4%, likely because they are in the middle of their peak winter season. The remaining regions are all pacing 7-8% behind. There are still a few weeks left in Q1, so property managers can still focus on their short-term booking strategies, by targeting guests who book on OTAs who book with shorter booking windows or offering a discount to stay.
Q1 2024 Average Daily Rates
Regional rate performance is mixed so far in Q1 2024. The Midwest U.S. (+2%), Southeast U.S. (+2%), and New England (+11%) regions are all booking higher rates than in Q1 2023, during an off-season. The Rocky Mountain States and Western U.S. are not seeing a change in year-over-year rates, while The Southwest U.S. and Mid-Atlantic States are seeing slight decreases in booked rates of 1% and 3%, respectively.
Q1 2024 RevPAR
Even with varied performance in rates, most regions saw decreases in year-over-year RevPAR. The Southeast U.S. (-4%) and Rocky Mountain States are seeing RevPAR pacing closest to last year, but still lower. The Mid-Atlantic States and Midwest U.S. are seeing moderate decreases in RevPAR of 7% and 8%, respectively. The remaining regions are experiencing Q1 2024 decreases ranging from 11%, like the Western U.S., to 18%, like the Hawaiian Islands.
State of the U.S. Economy
The inflation rate in the United States rose to 3.2% during February; up 0.4% from the month prior, and 3.2% higher than last February. In short, Americans are paying an average of 3.2% more for goods and services than in February of last year.
Gasoline costs increased by 3.8% from January to February 2024, and Airfare increased by 3.6% from last month, following a 1.4% increase in January.
Key Data’s Q1 2024 Insights
Segment your inventory!
Does it surprise you that in the United States during Q1 2024, condos have the longest average stay lengths (6.6 days) and booking windows (75 days)? Or that two-bedroom properties have longer stay lengths than six-bedroom properties (5.9 days vs. 4.8 days, respectively)? Segmenting your properties by type, size, and location is a crucial step in tracking performance across similar properties both in your inventory and in the market. Understanding the differences in stay lengths, booking windows, and other KPIs will help you set prices and optimize your occupancy.
*Pro Tip: Key Data’s Comp Sets can help you benchmark property segments across both your inventory and the market!
Monitor your booking sources
In Q1 2024, 30% of bookings in the United States were made directly, up 0.6% from Q1 2023. Airbnb saw an increase of 1.6%, up to 42%, while Vrbo saw a 2.5% decrease that dropped their percentage of bookings to 22%. Bookings made on Vrbo and Directly tend to command higher rates, book further in advance, and have longer stay lengths. Understand and take advantage of the strengths of each booking source to attract the different types of travelers using them
*Pro Tip: Use Key Data’s Marketing Source report to help determine where your bookings come from!