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April vacation rental performance mirrored the same trends we saw in March; decreasing occupancy rates compared to previous years, the decline of pricing power and RevPAR, and stay lengths and booking windows consistent with last year. How do these high-level trends break down? Let’s take a closer look.
U.S. Vacation Rental Performance for the Last Six Months
Vacation Rental demand continues to cool as 2023 occupancy underperforms 2022 and 2021.
Calendar Occupancy %
Calendar Occupancy % = (Nights Sold + Owner Nights + Hold Nights) / (Total Nights)
In April, calendar occupancy was 5% lower than in 2022 and 7% lower than in 2021. Demand is starting to wane after peaks in 2021 and 2022, and combined with increased supply, occupancy is being driven down.
Daily Rates are softening but still higher than in 2021.
Average Daily Rate
ADR = Total Unit Revenue / Nights Sold
The average daily rate in the United States decreased by $14 over April 2022; marking the second month of year-over-year decreases in 2023. With increased supply, property managers are facing more competition, and pricing power has declined in the face of lower occupancy rates. With more options and high inflation, consumers may be more price sensitive than they used to be. Additionally, when adjusted for inflation, rates are much lower than last year.
April RevPAR is lower than last year and in 2021.
RevPAR
RevPAR = Occupancy x ADR or Total Unit Revenue / Total Nights in a given period
RevPAR suffered because occupancy decreased and rates did not increase enough to offset the difference. At $88 per active property per night, revenue decreased by $18 from April 2022. This trend began in Q4 of 2022 when RevPAR was $7 lower than in 2021 and continues through Q1 2023 with RevPAR figures averaging $10 lower than in 2022.
U.S. Regional Vacation Rental Performance
All regions saw a decrease in year-over-year calendar occupancy for March 2023. However, with their peak winter season coming to an end, the Rocky Mountains saw only a 2% decrease in occupancy, which was much slighter than the other regions above. The Midwest U.S. saw the steepest decline in occupancy (-11%), though most regions' decreases were only slightly better at -10%. A return to normal occupancy trends is partially responsible here, as shoulder season occupancy has decreased from previous years.
All regions above saw lower year-over-year nightly rates in April 2023, but the Mid-Atlantic States (-10%) and Southwest U.S. (-13%) saw the largest decreases. This signifies that these two regions have the weakest pricing power. The Hawaiian Islands and Rocky Mountain States saw the smallest decreases compared to last year, at -1%.
With only a slight (-2%) decrease in occupancy and a -1% decrease in nightly rates, the Rocky Mountain States RevPAR fell only 4%. This was significantly better than the remainder of the regions above, with most regions experiencing a 12%-16% decrease, while the Midwest U.S. and Southwest U.S. saw -28% and -30% decreases, respectively. A majority of these markets don't rely on Q1 revenue, so while the decreases aren’t beneficial, they’re not necessarily detrimental to overall annual performance.
U.S. Vacation Rental Performance; Booking Activity
Net reservations are picking up and coming closer to 2022 levels.
Net Reservations per active property
Net reservations per property = (bookings made - cancellations) / active properties
In the first fourteen weeks of 2023, net reservations resembled the seasonal patterns of 2022, suggesting we can expect booking activity that follows a normal pre-pandemic annual trend. However, in volume, it resembles 2019 trends. There was a slight dip in net reservations in Q1, but inflated supply is likely influencing this decrease. In the beginning of Q2, net reservations started to climb up past 2019 levels, and have continued through week 18.
Average Length of Stay and Booking Window
The average length of stay has stayed very consistent throughout the past four years.
Average Length of Stay
Average Length of Stay = Total Nights Sold / # of Guest Check-ins
Typically, the length of stay during winter is slightly longer due to snowbird stays, as evidenced by a two-day spike in January. This trend has not deviated much through the years, except in Q1 of 2020, where ALOS was roughly one day longer than in the last three years. At the beginning of Spring, stay lengths shorten slightly, and so far in 2023 are on par with both 2022 and 2021 at 4 days long.
Booking windows are still shorter than in 2019 but have increased from lows only seen in 2020-2021.
Average Booking Window
Average Booking Window = (Arrival Date - Booked Date) / # of Guest Check-ins
In the past six months, booking windows have been extremely similar to the previous year’s, with April’s average booking window being 56 days. The United States 2022 average booking window was 58 days, or about two months long. This was an increase of 17 days over 2021, but still 12 days shorter than in 2019.
State of the U.S. Economy
The inflation rate in the United States slowed again during April, from 5% in March to 4.9%. This marked the tenth consecutive month where the year-over-year inflation rate decreased and it is at the lowest level since October 2021. In short, Americans are paying an average of 5% more for goods and services than in March of last year.
Gasoline costs decreased by 12.2% compared to April 2022 but increased by 3% from March 2023 to April 2023. Airfare increased 2.7% over the month, with April being the third consecutive month of increases.
Trends to Keep an Eye On
Americans feel the value of their vacations is declining
Destination Analysts surveyed 4,000 Americans in April 2023, asking them to think back to pre-pandemic travel and compare it to recent travel experiences. Although 25% say it is more enjoyable, 34% say it is less enjoyable. Of the responses, notable points were that 45% believe air travel has worsened, 50% say the behavior of other travelers has declined, and over half (51%) believe the value they receive for their money is worse. In a separate survey, respondents were asked about their top travel pet peeves, and among the highest responses were flight delays (#1), price gouging (#2), and dirty hotel rooms (#4).
American’s excitement for travel remains near record levels as Summer approaches
Despite Americans’ frustrations with the travel industry, excitement for travel scored 8.1 on a 10-point scale, and nearly 85% of those surveyed have a trip planned. And with summer approaching, 80% of respondents reported planning or dreaming of travel in the last week. Top sources of inspiration for travel continue to be websites found through searches, email campaigns, Facebook, Instagram, and other blog content. So, make sure your marketing strategies are ironed out to capture those last-minute summer bookings!
