Booking activity slowed during November - is it cause for alarm?

Reservation activity has been one of the most important indicators to watch this year. It has represented traveler confidence and given a much-needed glimpse into future vacation rental performance. Between mid-March and May, new reservation activity all but stopped as shutdowns were announced. Then, during the early summer months, it returned in some places at rates even higher than last year as destinations reopened and vacationers rushed to book last-minute trips. Booking activity remained high during the fall, but began to slow during November, even dropping below 2019 for the last two weeks of the month. Understandably, the speculation began: was travel slowing again? What would this mean for the winter season? A deeper dive into November booking trends helped us form answers to those questions: there’s no reason to be concerned, at least not yet. Especially in California, Colorado, Florida, and Tennessee - four of the country’s largest travel states.

First, one important data point to consider is the number of reservations that come in during a certain month. Just as occupancy fluctuates based on season, so does booking activity. If reservations were booked at a consistent pace during the year, about 8.3% of annual reservations would be made every month. Of these four states, Colorado was the only one to surpass that number in 2019 with 8.4%; it is a larger winter destination than the others and ski season was just around the corner. Florida, a beach destination, received just 4.7% of its 2019 bookings during November. By this measure, since reservation activity did not stop entirely, a slightly slower November should not prove catastrophic.

To truly appreciate the impact of November bookings, we need to understand when those renters typically arrive. For these states, many reservations made during November 2019 had arrivals for the Thanksgiving and Christmas holidays. Renters who booked in November usually arrived between mid-November and late December in Florida and Tennessee, from late November through January in California, and from late November through February in Colorado. If the slowdown in booking activity during November 2020 were an issue, those markets would be pacing behind last year during those months. Instead, as seen on the graph below of year-over-year change in Revenue Per Available Unit, they are pacing ahead.

RevPAR is one of the best indicators of vacation rental performance because it accounts for both rate and occupancy. Tennessee is doing especially well with regard to both rate and occupancy, contributing to the large increase in RevPAR through the winter season. The state’s average daily rate is $130 higher than last year at Christmas and paid occupancy is 20% ahead for much of the season. The other three states are also pacing higher than last year through mid-January for both occupancy and average daily rate. 

Throughout most of the summer and fall, the average booking window was much shorter (people booked closer to their stay) than in previous years, possibly due to increased work and school flexibility combined with the uncertainty about the future state of travel. However, rentals were actually booked earlier than last year for the winter season. By November, the booking window had shifted again. The booking window was longer than last year in California and Tennessee while remaining shorter in Colorado and Florida. An important consideration for winter travel is that it’s much more difficult for many travelers to plan a last-minute trip due to holiday rates and busier personal calendars. If summer booking trends continue, we can expect to see last-minute reservations resume again after the holiday season.

Finally, despite the slight slowdown in booking activity during November, the average number of guest reservations made per active unit for the year to date is higher than last year in these four states. The increased reservation activity during the summer and fall provided a little bit of cushion for the winter.

Of course, this does not mean that there is zero cause for concern. As COVID-19 cases continue to rise and local governments begin to re-introduce restrictions, strong vacation rental performance during the winter season is not a given. Losing an entire month would mean trouble, especially for mountain rentals in Tennessee and ski rentals in Colorado and California. The final state of the winter season will depend on continued reservation activity and sustained confidence in vacation rental safety.