Throughout the COVID-19 pandemic, booking activity has been the most crucial trend to follow because it is a measure of consumer confidence and a leading indicator of future performance. Changes in booking activity were the first sign that the next few months would be hard on the vacation rental industry, but also the first sign that many destinations could and would have a strong summer season. These trends have been highly visible in the Southeast United States due to the popularity of many of its markets for spring break summer travel and because Southeastern states reopened sooner than others. Looking back over the last few months, three clear stages of COVID-19 booking activity can be seen: the onset, the bottom, and the recovery. For vacation rentals in the Southeast, each stage had distinct trends in the number of reservations made and the arrival windows for those reservations.
February 2020 was a strong month for rentals in the Southeast. The booking window was slightly higher than 2019 and reservations per rental were similar to 2019. Most stays were booked 60+ days before arrival as travelers planned spring and summer vacations. At the beginning of March, the Coronavirus began to spread in some parts of the United States. Potential travelers showed some hesitation and reservations per rental gradually began to fall below last year’s rate. During the second week of March, booking activity slowed abruptly when the WHO declared a pandemic and President Trump recommended travel restrictions. Reservations for arrivals within 30 days remained high and brought the average booking window below 2019 as some travelers were determined to rescue their spring breaks after the European Travel Ban and cruises were canceled. Other renters rushed to cancel their existing reservations.
Property managers on the Florida Panhandle experienced a whirlwind of activity during the middle of March. For 360 Blue, a vacation rental company based in 30A, March 14th and 15th were “two days of craziness” as their phone rang constantly with both cancellations and new reservations. This company went from 60% occupancy for Spring Break to almost 100% in just two days. Cancellations were also high, but as soon as someone canceled, another called to book a new stay - often at a higher rate and usually for a quick arrival. However, bookings tanked as soon as the Florida vacation rental ban went into effect.
The last-minute Spring Break bookings were not ubiquitous across the Southeast. According to Jon Dixon, the Strategy and Revenue Manager at Cabins for You, a management company in the Tennessee Smoky Mountains, “Towards the tail end of February and into March, we saw new reservations steadily start to slide in pacing and overall count per day.” They did not receive the relief of a few good weeks before the pandemic escalated.
With the third week of March came the second stage of the pandemic, which heavily affected U.S. vacation rentals. Even before states in the Southeast began to implement stay-at-home orders at the end of March or early April, travelers all but stopped booking rentals. From mid-March to mid-April, reservation activity was only 10-20% of the same period in 2019. Most reservations were for more arrivals in 60 days, creating a much longer booking window than in 2019. This was a quiet period for many management companies as the initial onslaught of cancellations was over, but booking activity was negligible.
The lack of new reservations during this stage severely impacted the financial situation of property management companies and it was unclear exactly how long the pandemic and travel restrictions would last. Isaac Baker of Treasure Realty on Topsail Island was worried because they, like many companies in that region, “...are always running in the red before we start getting decent-sized checks in June.” During this stage of the pandemic, not only were they not receiving new reservations, they were receiving many cancellations for their larger homes for the coming summer season. Their decent-sized June checks were no longer a given.
Some markets, like the Smokies, benefitted from mountain seclusion and looser travel restrictions. “It was more famine than feast, but we were still getting some reservations,” wrote Jon Dixon at Cabins for You. Those reservations were usually for last-minute stays at lower rates. The ratio of cancellations to new reservations was alarming, according to Dixon, but “...we did our best to be agile and find areas of opportunity to fill what we could.”
Property managers on the Outer Banks of North Carolina were less alarmed by slow booking activity during March and April. The long average booking window means that many summer 2020 reservations had been booked well before March. In addition, due to cool weather, the region is not very popular for spring break. This is in stark contrast to areas like Destin and Panama City Beach that have a short booking window and depend on Spring Break revenue.
During the last two weeks of April, guests became more optimistic about traveling and booking activity rose slightly even though many destinations remained closed. Many industry experts predicted that pent up demand would lead to a wave of bookings as soon as travel was allowed.
Stage three, the rebound, began in late April when travel restrictions began to loosen and renters regained confidence. Several Southeast beach destinations opened in early May. The experts’ predictions were accurate; people were eager to travel after the stay-at-home orders and wanted to escape to a vacation rental. The number of guest reservations made per rental immediately surpassed 2019. Most of these bookings were for arrivals within 30 days and the average booking window dropped below 2019.
For the Florida Panhandle, “The flood gates opened,” according to Meaghan Moylan, the Director of Revenue at 360 Blue. They were booking $8,000 in revenue per day during the vacation rental ban but booked $1.45 million on May 20th. Everyone in their company was answering the phones but they still had thousands of voicemails to work through. Other partners in the area simply turned off their phones because they could not handle the volume. Most of the reservations were for summer, many for the next weekend. Eight weeks ago, many companies were considering closing their doors as they hemorrhaged cash due to refunding or crediting stays. They made it through and some companies have even surpassed last year’s revenue; 360 Blue’s revenue per available rental is up 18% over 2019.
In the Smokies and at Cabins for You, reservations were steadily increasing even before the official re-opening. “It was the start of the ‘light at the end of the tunnel’ moment for us”, said Dixon. Upon reopening, calls for new reservations increased significantly and at a higher volume than during their normal booking season. Their booking window is still a lot shorter than normal, which combined with higher-than-normal demand, puts them at a good pace for the rest of the year.
On Topsail Island, Treasure Realty will make it out of the red in June, just as they hoped. Baker, the Marketing Director at Treasure said, ”No one expected the bounce-back that we are experiencing now. It is far beyond anything I ever hoped or imagined could happen. And it continues to happen.” Many of the prime reservations that were canceled between mid-March and May were rebooked and they are pacing ahead of their best year by 2%.
Now, a few weeks after most states in the Southeast reopened, reservations made per rental have slowed slightly and the average booking window has begun to track closer to 2019. In some areas, reservations are slowing because there are no rentals left to book; inquiries remain high but property management companies are having to turn people away. Arrivals within 30 days remain the most popular, but arrivals between 30 and 60 days are also numerous. Some renters who were too late to book a summer trip are instead booking for later in August or fall break after the peak travel season usually ends.
While the increased reservations have brought the occupancy rates of some destinations to at or above last summer, others continue to lag behind. Differences between travel markets are sharper and more important than ever. These trends are for the Southeast United States as a whole and may or may not reflect what occurred in your area.
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