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U.S. Short-term Rental Occupancy
AirDNA Market Review | U.S. September 2021
- Demand for U.S. short-term rentals was back over 2019 levels, after dropping slightly in August.
- Myrtle Beach was the top markets for new investment over the past 2 years
- Demand for Thanksgiving is up 31% vs 2019, only up 4% for Christmas
Short-term rental demand growth was positive in September after declining slightly in August. Demand for trips in September was 4.7% higher than in 2019 and 33.7% higher than the same time last year.
Occupancy dropped in September to 59.0% from 66.7% in August, which is a typical drop in occupancy for the month. This represented a 4.6% gain from last year and a 12.8% increase from 2019 and these growth rates were essentially unchanged from August. The 59% occupancy extends a year of records representing the highest occupancy ever recorded for the month of September.
Demand stayed unusually strong in both coastal and mountain destinations where about 20% more guests are continuing to travel than normal. This matches similar gains seen in the spring and supports the theory that the newfound flexibility that comes with remote work for many will continue to support short-term rental demand. Markets benefiting from the extended summer season include Cape Cod, MA, Myrtle Beach, SC, and Hilton Head, SC, where occupancy remains about 30% higher than 2019 levels.
Even with strong demand, occupancy has dropped below 2020 levels in mountain/lake destination locations based on a surge of new short-term rental supply being added into these markets. These gains bring the number of available listings back to 2019 levels after they dropped by close to 20% in 2020.
Demand change dropped in urban locations for a second consecutive month and is now down 36.1% when compared to 2019. Demand remains down by more than 50% in New York, NY, (-57.6%), Jersey City/Newark, NJ, (-55.6%) and San Jose/Palo Alto, CA, (-51.1%) even worse in each of these cities in September than August.
Average daily rates (ADRs) continue to be well above 2019 levels, up 24.6% in September. ADRs averaged $253, which was 8.2% higher than in 2020. Elevated demand throughout the country heading into this fall/winter is expected to keep prices high and ADRs are pacing 10-15% higher than 2020 levels for the rest of 2021.
High Earnings Lead to New Investment in Short-term Rentals
September ends what was a record quarter for short-term rental owners and investors. Revenue earned in short-term rentals totaled $14.5 billion just in the U.S. for Q3 2021, which was 24% higher than in 2019 and 37% higher than 2020. Those gains are even more impressive considering that revenue in urban locations was down by more than 20%.
The record earnings have sparked interest for investors looking to enter the sector, especially in destination markets. Top markets for new short-term rental listings include Myrtle Beach, SC (+2,754), Gatlinburg/Pigeon Forge, TN, (+2,126), and the Ozark Mountains, MO (+1,931). Given the relatively smaller size of the market, growth was highest in the Ozark Mountains which now have 62.5% more listings than in 2019.
In Q3 2021, the number of unique listings on Airbnb and Vrbo reached over 1.4 million. While still 2% lower than the peak of 2019, there has been a significant recovery in supply since 2020, with listings increasing to 11% higher than Q3 2020.
There were about 150k new listings added to Airbnb and/or Vrbo in Q3 2021 which averages out to about 1,620 per day. Unfortunately, there were also 125k listings that left the platforms, which leaves a net gain of just 25k listings. The gains and losses in listings generally aren’t in the same areas and have broadly followed demand trends. Listings were up 23.6% in small city/rural areas while they were down 19% in urban areas.