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If the last few years have taught us anything, it’s that the short term rental market is continually fluctuating. It’s, therefore, imperative for those looking to get ahead of competitors to consider real-time market activity and trends, so informed decisions about investment and pricing can be made. Trustworthy data analysis provides property managers, investors, and hosts with the insight they need to maximize opportunities, guest appeal, and revenue.
Short term rental market data can be pulled directly from property managers (direct source) or from online booking marketplaces such as Airbnb (scraped). If these methods are combined, the resulting data reflects the vacation rental market as a whole. For example, at Key Data, our data is sourced from over 220 different countries, territories, and regions. This sector-wide performance outlook is invaluable for predicting trends and is perfect for those looking for specific insights to determine new investment destinations.
Not convinced? Here are five ways short term rental data supports business growth…
Determines Investment Destinations
Market data analysis helps real estate investors and property managers make smarter investments. Performance reports plus supply and demand data can determine up-and-coming locations for those planning to expand their inventory and supercharge their business.
How does it work? Destination data allows you to identify how properties are operating in different markets, as well as observe what’s going on around you in terms of rental size and listings (for example, if properties near you are listed via Airbnb or Vrbo). This information is vital when setting up a new rental, making investment decisions, and carrying out competitor analysis. With it, you can build informed strategies that accelerate the success of your short term rental business.
For example, our data from last summer highlights Hawaii as a key location, with 34% of vacation rentals out-performing previous years in both ADR and occupancy. This information suggests an increased potential for the destination for peak seasons to come.
Benchmarking
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The short term rental market is becoming increasingly competitive as supply surges. As of October, active Airbnb listings in the U.S. reached 1.22 million (a 15% increase year-over-year), Vrbo listings also rose by 10%. Even small-scale homeowners want a stake in this lucrative industry and are renting out second homes or purchasing properties to become first-time owners. While it’s great news that the short term rental sector is thriving, for those already in the industry, it makes standing out and maintaining occupancy levels all the more difficult.
How can you overcome this? Using benchmarking, property managers can ensure their rentals remain appealing and competitive. By monitoring the market, they can align average daily rates (ADR) to current market pricing. You’ll be able to hone in on specific property types and filter according to the number of bedrooms, how many people the property sleeps, location, and amenities for a detailed overview of how you should be pricing your property. Such research allows you to set competitive prices whilst still maximizing revenue potential — creating a win-win situation.
Having your finger on the pulse also helps you optimize revenue during fluctuating levels of demand. For example, identifying peak holidays, such as Spring Break, or large-scale local events by looking at historical data, allows you to increase prices and maximize revenue. Conversely, decreasing your rates during periods of low demand can boost occupancy.
Improves Appeal
The key to succeeding in property management is keeping on top of what short term rental guests are looking for. Market data allows you to not only see what’s trending but also enables you to better predict consumer behavior, so you can tailor your offering for optimized occupancy.
For example, ski season pacing trends indicate how this type of travel is returning to normal as peaks in demand even out, booking windows lengthen, and ADR increases. Armed with this knowledge, property managers and investors may choose to expand their inventory in these regions to make the most of the high demand.
Predicts Property Potential
Data trends can indicate areas with greater return on investment (ROI) potential, as well as destinations that have appreciated in value, so real estate investors can make well-informed decisions when purchasing in new locations. An easy way to compare these trends is through a custom dashboard.
For property managers, being able to compare this year’s performance to previous years can provide a greater understanding of what’s going on within the organization. Whether you want to know how your units are performing in terms of occupancy or revenue — data is the key. Pacing data can also help companies figure out their niche, allowing them to focus on what guests want so they can improve occupancy across their portfolio. Interestingly, pacing data can also highlight an inventory’s least successful units, giving you the chance to evaluate and improve those properties or cut your losses and invest elsewhere.
Backs Stakeholder Conversations
Stakeholders, such as homeowners, will be looking to you for detailed information on how their property is going to perform. Essentially, they want to know how you’ll make them money and why it’s worth going into business with you.
Likewise, potential investors will expect backed-up growth analytics to justify their investments. Providing in-depth market knowledge and data reports shows both investors and stakeholders that you’re professional and that your business plans are strategic and set up for success.
As competition remains strong in the short term rental industry, it becomes even more necessary for real estate investors, property managers, and even small-scale hosts to back informed decisions and stakeholder conversations with historical and real-time data. Armed with in-depth market insight, you’ll have the power to make smarter decisions and grow your business responsibly.
If you’re ready to energize your business strategy using short term rental market data, get in touch with us for a personalized demo of our data platform.