Temporary Changes In Travel Result In Increased Demand For Short-Term Rentals
Kellie Rastegar is Co-Founder and Creative Director at Rastegar Property Group.
A surge of Americans taking road trips this summer and fall is affecting the hospitality industry’s real estate. The trend is growing as people look for ways to enjoy time off during the pandemic in remote locations, where it is easier to distance from others.
For example, the RV Industry Association reported 46 million Americans plan to go on a trip in an RV this year. Whether they already own an RV or needed to purchase or rent one, this enables a family to potentially camp in the RV while on vacation, rather than reserve a hotel room or a short-term rental. Look to the National Park Service for evidence of this surge in popularity: Reservations to enter or camp in parks are booked almost immediately upon being opened to the public.
Overall, long-term vacation planning isn’t something that’s typically happening this year. GasBuddy.com reports that 24% of people planned to take shorter trips that don’t involve flying. People appear more inclined toward a somewhat spontaneous trip that’s closer to home, which opens up possibilities for last-minute hotel bookings.
Part of the demand comes from parents who want to be able to get outside with their kids. Young, unmarried professionals are looking for something outside of their daily routine during time off from work. More time outdoors also opens the opportunity for a lake house or beach condo rentals. Renting a single-family home for vacation is especially appealing in the pandemic environment because it minimizes your chance of exposure from others. Often, renting a single-family home allows for virtual check-ins, rather than entering a lobby full of people.
After a dramatic drop when the pandemic began in March, since the start of summer, Airbnb has reported an increase in demand for rentals. The company “saw more nights booked for U.S. listings between May 17 and June 3 than the same period in 2019.”
It’s also worth noting that some changes in vacation rental trends were well on their way before the Covid-19 pandemic began. For example, for years now, pet owners have opted for vacation rentals that allow them to bring a dog, as opposed to traditional hotels with no-pet policies. It’s a worldwide trend, with 42% of people surveyed reporting they prefer to bring their pets with them on vacation.
Quirkiness in vacation rentals is also another trend among millennials. A recent report by Vrbo shows 71% of millennials would rather stay in a nontraditional rental. Teepees, igloos, travel boats and tiny houses are just some of the unique options appealing to one of America’s most youthful generations.
One of the strongest trends this year, though, is the increase in long-term vacation rentals. For the first time in modern history, a vast majority of Americans can work from anywhere. As a result, Zillow reports listings for rentals with terms less than six months increased by 23% from March 1 to May 21. The arrangement creates a win for both the tenant and the property owner. Because people are traveling less this year, more vacation homeowners are looking to secure longer-term tenants within their properties.
Changes within the vacation rental industry are something savvy investors and rental property operators should continue to keep an eye on going into the early months of 2021. A spike in travel activity is anticipated when the pandemic ends. The U.S. Travel Association released new forecasts in June of this year, and while a 45% decline in travel is still expected through 2020, a 38% increase is forecasted for 2021.
Even looking to years after the pandemic, it is reasonable to believe that cleanliness will continue to play a more significant factor in tenants’ decisions on vacation rentals. There will likely be a greater emphasis on cleaning services and easy computer check-ins, which are convenient and often save time. In larger buildings, amenities like copper elevator buttons, which are resistant to bacteria, will be great assets for marketing to potential clients.
Overall, only time will tell whether there will be any noticeable long-term effects for hospitality industry real estate once the pandemic is over. The surge of Airbnb rentals started before the pandemic began, with the short-term rental company beating Hilton in U.S consumer spending in 2018 and accounting for 20% of the consumer lodging market in 2018-19. Short-term rental homes will likely continue to increase, but as the pandemic lifts, traditional lodging will see spikes as well in a move to navigate back toward pre-pandemic sales and travel.
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