AirDNA Market Review | Europe April 2022

Pushed by a revitalized confidence in travel, demand in April rose 3% higher than in 2019 (97.4% year-over-year), with more than 27.7 million nights stayed in the month. This marks the fourth consecutive month of positive demand relative to 2019, continuing the trend of positive demand throughout 2022 thus far. The Easter holiday weekend (Friday to Sunday) in April of this year saw 1.5% more demand over the same time period in 2019 and 119% over 2021. Though, it should be noted that this month was the lowest level of positive demand relative to 2019 yet, having trended downward month-over-month since the February high of 19.7%.

While still 8.2% below April 2019 levels, the supply of available listings in the month was up 6.1% year-over-year as hosts capitalized on the opportunity to service growing demand by adding listings to the market. Supply growth on a year-over-year (YOY) basis has been realized in every month of 2022 thus far, with January, February, and March seeing gains of 3.9%, 3.9%, and 5%, respectively.

The strength of demand on lower supply levels allowed European occupancy to hit a record high in the month of April (55.4%), following a trend of monthly record highs since October 2021. Occupancy in April gained 2.3 percentage points above the previous peak in April 2019 and 11.1 percentage points over April 2021.

Similar to occupancy, European revenue has seen gains over 2019 since October 2021. Revenue in the month of April ascended to 28.4% above April 2019 levels (95.6% YOY), marking the seventh consecutive month of positive revenue relative to 2019 for the continent. The continued strength of revenue growth over the period has been driven by a combination of robust demand and the acceleration of average daily rates (ADR) over 2019.

ADRs for stays in European short-term rentals were 1.3% lower in April than in the same month last year (+24.2% vs. 2019). Compared with the same months last year, ADRs in February, March, and April were +1.4%, -1.4%, and -1.3%, respectively.

Top-20 European Countries

In April, each of the top-20 European countries made positive strides in year-over-year demand. The strongest gains relative to April 2021 were seen in Hungary (188%), Portugal (182.2%), and Greece (172.7%), while the lowest YOY gains were in Belgium (41.9%), Switzerland (28.9%), and Finland (16.3%).

When compared with April 2019, nine of the top-20 European countries saw positive demand levels in the same month this year. France, Germany, and Greece each held the highest gains in the comparison period, reaching 26.4%, 23.4%, and 19.4%, respectively, over April 2019. On the other hand, the countries seeing the lowest declines relative to April 2019 were Czech Republic (-47.1%), Hungary (-35.2%), and Ireland (-27.5%). Having been slow to recover, Czech Republic, Hungary, and Ireland have consistently remained at least 20% below 2019 monthly demand levels since the onset of the COVID-19 pandemic. 

Despite each country seeing positive levels of demand in April compared with last year, there were five countries that saw declines in the supply of available listings over the same comparison period. Finland (-9.1%), Netherlands (-5.1%), and Croatia (-3.2%) had the greatest levels of decline over the period, while Denmark (18%), Norway (17.4%), and France (16.6%) saw the greatest gains.

Relative to April 2019, eight of the 20 countries experienced supply growth in the month. Germany, France, Sweden, and Belgium, respectively, had 15.1%, 13.2%, 9.2%, and 9.2% more available listings in April 2022 relative to the same month three years prior. Czech Republic (-38.2%), Ireland (-32%), and Hungary (-29.6%) held the lowest degrees of supply beneath that of April 2019. 

Each of the top-20 European countries saw increases in occupancy in the month over April 2021. The strongest YOY increases in occupancy were seen in Portugal (54.7%), Hungary (47.5%), and Czech Republic (39.4%). The countries to see the lowest increases in occupancy over the period were Croatia (8.1%), United Kingdom (7.9%), and Switzerland (8%).

Changes in ADR for the month of April varied across the top-20 European countries, as 13 saw declines from last year, while rates in seven of the countries continued to increase. Austria (-21.5%), Finland (-20.5%), Greece (-12.2%), and Switzerland (-11.8%) each declined by more than 10% from last year. Alternatively, Denmark saw the largest YOY increase with 13.6% higher ADR in April, while Poland (+8.8%) and Germany (4.4%) followed.

ADR Down Year-Over-Year Due to Changes in Demand Mix

When broken out by listing room type, private and shared rooms across Europe have experienced a greater change in YOY demand than entire homes/apartments for the past two months. In April, private and shared rooms saw demand reach 121.5% and 112.7% over last year, while entire homes/apartments had risen 94.4% in the same period.

Additionally, change in YOY demand within the top-50 markets in Europe has continued to outperform all other markets since August 2021. In April, the 50 largest markets saw 169.1% more demand than in the same month last year, while all other markets gained 87.4% over the same period. 

The differences in demand are even more stark when comparing the performance of the top-50 largest markets to everywhere else in Europe, broken out by their respective listing room types. The YOY change in demand was strongest within the top-50 largest markets’ private rooms at 208% in April, while the largest markets also saw stronger gains than all other markets in both entire homes/apartments (159.2%) and shared rooms (168.7.%).

The acts that countries have taken to ease pandemic-related restrictions have reduced the friction associated with travel, which has laid the foundation for a restored sense of confidence among consumers. As seen in demand figures, the result in recent months has been a pickup in travel to larger markets and guests booking more shared and private rooms than last year. 

With these factors in consideration, average daily rates in the aggregate have declined in the past two months relative to last year because the mix of supply being booked by guests in March and April of this year changed from the same months last year. YOY ADRs declined in the aggregate as a result of changes in demand mix, but rates in individual markets across room types are unlikely to ebb without significant changes in the volume of comparable supply in their respective areas.

Recharged Consumer Confidence Enlivens Summer Travel

The context of the COVID pandemic across the European continent during 2021 must be considered when comparing the pacing figures over the period relative to 2022. At this time in the prior year, guests were largely apprehensive toward the notion of long-haul travel, given the roadblocks presented by pandemic-related restrictions. 

However, consumer confidence in travel has advanced in recent months despite the uncertainties presented by the war in Ukraine. Pent-up demand is now being relinquished into the market as guests are eager to resume exploring and experiencing distant destinations.

As of May 9, 2022, the European continent as a whole was pacing 82% higher for the summer months (June to September) relative to the same point in 2021 and 2.6% higher compared with 2019. Each of the top-20 European countries was seeing positive demand pacing relative to 2021 as of May 9 for the summer. Greece continued to lead summer demand pacing, up by 237.3% YOY, while Croatia (209%) and Portugal (200%) closely followed.

Importantly, summer demand pacing as of May 9 for each of Europe’s 50 largest short-term rental (STR) markets was positive relative to the same time last year and up 227.4% on average. This illustrates how demand is beginning to return to large markets as confidence in travel has gained momentum. Demand pacing figures as of May 9 designated Italy's Venice (414.8%) and Florence (410.4%), along with Portugal's Porto (532.3%), as the strongest pacing summer destinations of Europe’s 50 largest STR markets when compared to last year.

Current ADR pacing indicates that rates for the summer could be comparable to those seen in the summer of 2021 in the aggregate. As of May 9, average daily rates for the summer period were trending 0.1% higher across the European continent. Denmark (15.2%), Germany (8.2%), and Poland (8.2%) led the climbs in rate pacing, while Finland (-24.7%), Austria (-11.4%), and Norway (-8.3%) are trending toward the steepest declines over last year. 

Rates in the 50 largest STR markets were pacing 3.6% lower vs. 2021 on average over the summer timeframe as of May 9. Munich (27.4%), Barcelona, Spain (33.0%), and Belgrade, Serbia (30.5%), were pacing toward the highest ADR gains over last summer. Additionally, Dublin (-35.5%), Brussels (-22.2%), and Bologna, Italy (-30.2%), were posting the greatest decreases.

At this time, the travel rebound is being felt disparately across Europe. As of May 9, 10 of the top-20 European countries were pacing higher for the peak summer months than at the same time in 2019. Germany (39.7%), Greece (21.4%), Finland (16.6%), and Denmark (15.4.%) were experiencing the strongest demand for the period, while Czech Republic (-39.7%), Hungary (-31.2%), Ireland (-22.4%), and Netherlands (-17.3%) were seeing the lowest demand levels.

While we're seeing stronger pacing data for this summer versus last year, demand is still predominantly lower at this time for large markets when compared to 2019. Though as the sentiment toward travel builds upon the reduction of restrictions, it’s likely that bookings relative to 2021 will continue to accelerate in the summer months, supported by incremental growth in international demand.