We compiled AirDNA Outlook data and teamed up with our partners at High Rocky Homes to put together a helpful list of eight tips to manage your vacation rental business during an economic downturn. 

8 Tips For Managing Your Vacation Rental Business During an Economic Downturn | AirDNA

In a recent AirDNA survey, we asked vacation rental managers what their top concerns are for 2023.

“Generating revenue during a potential recession.”

“Dealing with increased competition from other property managers and individual hosts.”

From that same survey, nearly half (47%) of property managers expect their portfolio size to increase by more than 20%. Another 18% expect their portfolio to grow by less than 20%. 

So what does this mean? What we essentially have is a situation where everyone is concerned about the future, and yet a majority of managers expect to continue aggressively growing.

While the current economic climate may be challenging, it also presents an opportunity for vacation rental businesses to innovate and adapt. By leveraging the right data and insights, you can take control of your business and position it for success.

We compiled AirDNA Outlook data and teamed up with our partners at High Rocky Homes to put together a helpful list of eight tips to manage your business during an economic downturn. 

In case you missed it, our team at AirDNA just released the latest installment of our bi-annual Outlook report.

The big takeaway is this: With demand growth slowing, growth in nightly rates slowing, and occupancy decreasing, we’re predicting vacation rental managers will see RevPAR decrease by 1.6% in 2023—which is significantly lower than growth from previous years. 

In fact, it’s the first negative year-on-year revenue projection we’ve ever predicted. It’s marginal—and probably expected after unsustainable growth in recent years—but it’s a downturn nonetheless. 

Demand: 2023 will continue along a more mature path, growing demand 5.5% year-over-year. Much lower than any previous year.


Supply: The number of nights supplied will increase even more, at 25.3% as existing and new listings broaden their availability. A big takeaway is that U.S. short-term rental (STR) supply hit record levels in 2022—there’s more competition than ever. 


Occupancy: Strong supply growth will create a second year of declining occupancy, although the 2023 forecast of 56.4% is still significantly higher than pre-pandemic levels.


Average Daily Rate (ADR): Economic pressures and inflation-weary consumers will lead to small ADR gains of 1.7% in 2023.


RevPAR: The small gains in ADR won’t be enough to offset occupancy losses, and RevPAR will suffer a small decrease in 2023 of -1.6%.

What can property managers do in light of the economy? One step is to support longer-term stays. Market them, increase their discounts, and put them front and center. 

Data shows that having at least a baseline revenue stream with less turnover is a great way to keep the lights on during a downturn. 

Tip #2: Introduce at least three cancellation variants for your property.

Although most of us begrudgingly do this, it’s necessary: Listings that offer more flexible (and more expensive) booking options rank higher in search results and are essential for increasing bookings while covering the risk of higher cancellation rates. 

Nadim Tannous, co-founder of High Rocky Homes, operates properties throughout Colorado and California and recommends the following when it comes to operating a VRM during a downturn:

Use a yield management software (whether fixed price or variable, it makes a difference) like Smart Rates™. Don't just use Airbnb pricing!

Talk to owners about being more aggressive with floor pricing. Use data from a benchmarking tool like the Property Performance Dashboard to show them how the top-performing properties are setting their rates. 

Upsell local business offerings. Things like ATV tours, city tours, and other activities provide other revenue streams in addition to nightly stays. 

Tip #4: Be more meticulous with your acquisitions.

Our team at AirDNA has been preaching this for far too long. The number of VRMs we see onboarding properties that don’t meet baseline criteria is still too high. 

Rather than onboarding any owner that knocks on your door, use data to heavily vet their revenue potential, run comps, analyze their amenities, and get to a realistic revenue number. 

Tip #5: Consider trimming your portfolio.

We all know about the 80/20 rule: 20% of owners take up 80% of your time. Are there some listings and owners that occupy lots of time and attention but aren’t carrying their weight in revenue? 

Nadim also recommends using data to show the real impact of owners who frequently use their properties. Put owner stays in monthly owner reports to showcase the value of days they’re blocking (and help them reconsider). 

Tip #6: Get creative with your marketing and branding.

Branding and marketing are channels that can really improve your business during a recession. Nadim recommends all property managers consider some of the following: 

Partner with local events to be listed as a “preferred lodging partner.”

Focus on the in-house experiences: branded soap dispensers, customized welcome signs, laminated QR codes to access house guide, and discount codes for future bookings.

Ask for referrals: When seeking a review, ask guests to send you referrals if they had a good stay and offer them a bottle of wine or a future stay discount.

Update and rotate photographs on a seasonal basis to reflect the season's colors (snow, trees changing colors, flowers in summer, etc).

During a downturn, there will still be limited international travel. And potentially just like during the pandemic, travelers will seek out local, drive-to destinations. 

Leverage your marketing to target local markets (think staycations), and highlight the fact that they’ll save when compared to traveling elsewhere.

Tip #8: Use data to back your homeowner conversations.

Inquiries from homeowners are likely going to increase in 2023 with inflation, tighter margins, and higher interest rates.

One of the smartest things managers can do is use data to comfort them and show them how the rest of the market is performing. When homeowners realize that other comps and the wider market is performing on par with their property, they’ll be much less likely to churn. 

Conclusion: Meet the only data tool you’ll need in 2023.

Our latest tool for vacation rental managers—the Property Performance Dashboard—is the industry-leading tool for managing your business intelligently during a recession. Use it to keep a gauge on the competition, improve portfolio performance, discover the best markets for expansion, and onboard the right properties. 

About the author: Julio Hansoul, Global Inside Sales Director

Julio Hansoul leads the Inside Sales team at AirDNA, providing clients with best-in-class short-term rental data to help them make informed decisions for their vacation rental businesses. With experience at some of the world's largest tech companies, including LinkedIn, IBM, and Google, Julio has a proven track record of scaling and maximizing value for customers. In addition to his work at AirDNA, he also advises tech startups and invests in STRs. Julio can be reached anytime at julio.hansoul@airdna.co.

8 Tips For Managing Your Vacation Rental Business During an Economic Downturn | AirDNA

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