2023 brought about a resurgence of trends that we had expected 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 and 2022.
Calendar Occupancy % = (Nights Sold + Owner Nights + Hold Nights) / (Total Nights)
In May, calendar occupancy was only 1% lower than in 2023, and 6% lower than in 2022. According to our same-store property managers’ direct data from 2022 to 2023, guest nights 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 July, calendar occupancy is only pacing slightly behind last year; by 3% in June and 1% in July. However, August calendar occupancy is pacing 2% ahead of last year. This is an optimistic outlook, as vacation rental professionals have been awaiting stabilization post-pandemic. This suggests we may finally be returning to pre-pandemic trends. As we head into the peak summer season, ensure your marketing and rate strategies are in line to optimize RevPAR!
Average Daily Rate
Rates are trending upward for the summer season.
ADR = Total Unit Revenue / Nights Sold
In May 2024, daily rates were $276, $3 higher than last year but $17 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 June through August, rates are 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 summer vacation stay period, to encourage longer booking windows, drop rates earlier instead of at the last minute.
RevPAR
Varied occupancy and rate performance lead to decreased RevPARs.
RevPAR = Occupancy x ADR or Total Unit Revenue / Total Nights in a given period
RevPAR has been declining because occupancy decreases have outweighed rate increases, though May RevPAR was even with last year. At $89 per active property per night in May 2024, revenue decreased by $15 from April 2022. Looking forward, RevPAR is pacing $9 behind last year in June, and by $11 in July. In August, RevPAR is pacing only $2 behind 2023. Moving forward, to help maximize revenue, use your Key Data Feeder Market reports. These reports show users where their guests are coming from, as well as KPIs like daily rates, RevPAR, guest stay value, and more.
U.S. Regional Vacation Rental Performance
Q2 2024 Calendar Occupancy %
In Q2 2024, most regions are pacing behind last year’s occupancy rates. The Southwest U.S. (+0%) is the only region pacing alongside last year. The Midwest U.S. (-1%), Western U.S. and Rocky Mountain States are experiencing the smallest decreases, -3%, while the Mid-Atlantic States are seeing the largest decreases (-7%) outside of the Hawaiian Islands (-13%), who are dealing with rental regulations and damage from the wildfires in 2023. We only have about a week half left in Q2, so it is unlikely property managers will be able to exceed last year's performance. However, they can still focus on their short-term booking strategies, by targeting guests on OTAs who book with shorter booking windows or offering a discount to stay.
Q2 2024 Average Daily Rates
Regional rates have mostly increased over the last year so far in Q2 2024. Southwest U.S. property managers are booking rates with the largest increase over last year (+6%), while the Rocky Mountain States, Southeast U.S., and Western U.S. are all booking similarly to last year. The Hawaiian Islands are the only region booking rates 11% lower than last year.
Q2 2024 RevPAR
Even with increased rates, most regions saw decreases in year-over-year RevPAR, though mostly slight. The Rocky Mountain States (-9%), Southeast U.S. (-6%), and Western U.S. (-5%) are seeing the largest year-over-year decreases in RevPAR. The Southwest U.S. (-1%), Mid-Atlantic States (-2%), and New England (-2%) regions are all pacing only slightly behind last year, while the Midwest U.S. (+0%) is seeing RevPAR pacing alongside last year.
State of the U.S. Economy
The inflation rate in the United States declined to 3.3% during May; after finishing at 3.4% in April. In short, Americans are paying an average of 3.3% more for goods and services than in February of last year.
Gasoline costs decreased by 3.6% from April to May 2024, and Airfare also decreased by 3.6% from last month, following a 0.8% decrease in April.
Trends to Keep an Eye On
Destination Analysts is responsible for independent research that is not sponsored, conducted, or influenced by any advertising or marketing agency. The key findings below represent data from over 4,000 Americana travelers collected in May 2024.
Travel sentiment for American travelers remains stable, though the cost of gasoline is a rising concern.
Travel sentiment among American travelers has not changed significantly in the past few months. Perceptions of whether now is a good or very good time to spend on travel saw a slight uptick compared to last month (+2%), while the next 12-month expectations for travel volume have held steady (27.9%). One exception is growing concerns about the cost of gasoline, which has been trending upwards as a travel deterrent since February. However, at 28.9 percent, this level of concern is still well below levels seen in 2022.
However, as we approach the summer travel season, leisure travel as a spending priority is on an upward trend. This month, over six in ten American travelers said leisure travel will be a high priority for spending in the next three months (62.0%). This is an increase from last month, and a +9.9-percentage increase compared to January 2024, indicating that Americans are gearing up to spend on leisure travel in the summer months.
The Summer Travel Season Looks Promising
The majority (62.0%) of American travelers are prioritizing leisure travel in the next three months. Similarly, most American travelers (73.5%) said they are likely to take at least one leisure trip during this period. A majority of American travelers are also likely to travel to visit friends or relatives for the summer, with 61.7 percent saying they will take at least one of those trips in the next three months. Interestingly, there is little difference between parents of school-aged children (69.8%) and other travelers (63.6%), suggesting that it is not just parents looking to take their kids on a summer trip planning to hit the road for leisure travel this summer.
Nearly two-thirds of respondents (65.2%) said they have a leisure trip currently planned for June, July, or August. Of these travelers whose summer travel plans are coming up, these are more likely to be higher income travelers, with 77.8 percent who have an income of over $200k saying they have a leisure trip planned in the next three months, compared to 56.4 percent of travelers with an income below $50k. Do you know where to market your properties? Do you know who your target guest demographic is? Not all guest's budgets are created equal, so optimize your marketing budget by targeting your highest-paying guests.
July Fourth is shaping up to be a lucrative weekend for the Vacation Rental Industry
Looking at the upcoming holiday weekends for the summer season, Americans are most likely to have a trip planned for the Fourth of July, with 29.1 percent reporting they are currently looking to celebrate Independence Day away from home. Data between May 16-25, leading right up to the Memorial Day weekend, reported that only 16.7 percent of American travelers had a trip planned for the unofficial first weekend of summer. In comparison, even fewer (14.6%) said they have a trip planned for Labor Day weekend. Pricing for major events and holidays is a delicate balance but can be highly lucrative if done correctly. During high-demand periods, rates should be increased to help drive RevPAR.
