AirDNA Market Review | Europe August 2021

Jamie Lane | September 29, 2021

Holidays are Hot! European Travel Returns to Highest levels since beginning of the Pandemic

 

Record high occupancy for summer travel leads to higher rental rates, but will supply be able to keep up?

In August, demand for European short-term rentals typically peaks, and 2021 did not disappoint. AirDNA tracked more than 42.3 million nights sold in August 2021, which was the highest number of listing nights sold since the start of the pandemic. Still though, it was 21.0% lower than 2019 levels, but 16.5% higher than August 2020. The decrease is a significant improvement from the -45.5% loss registered back in April 2021.

Change in European STR Demand

 

The recovery in demand has varied substantially over the past 18 months.  While cross border traffic has remained at a fraction of 2019 levels, those countries that were able to generate significant domestic demand have performed significantly better than those countries that have traditionally relied on international demand.

Domestic share of STR demand

 

Domestic Tourism Driving Recovery

The chart above shows each European country’s share of short-term rental demand that was domestic, i.e. a stay in France by someone from France, compared to that country’s year-to-date recovery in demand. Countries like Russia, France, and the United Kingdom all had more than 50% of their short-term rental demand generated by domestic travellers and have performed relatively well during the first half of 2021. In contrast, cross-border traffic accounted for more than 90% of total demand in Portugal, Hungary, and the Czech Republic and those countries have struggled to generate anywhere close to the demand levels they saw in 2019.

In August 2021, only Russia was able generate enough demand to surpass 2019 levels while Germany and France were less than 10% below 2019 levels. While countries like Hungary, the Czech Republic and Ireland have some of the lowest demand growth figures for the month, each has improved significantly since earlier in the year when their demand was down more than 70%.

Change in short-term rental demand by country

 

Supply Losses After Low Demand

Low demand highly correlates with listings leaving the market, as owners choose not to offer their properties for rental even in the traditional high season. As of August, Europe had lost as much as 20% of its active listings on Airbnb and/or Vrbo compared to the same time in 2019. The total number of available listings in Europe reached 2.7 million in August which was roughly the same level as was listed in 2020.  

Change in European STR supply

 

The loss of listings has been principally concentrated in the largest European cities.  Of the 20 largest cities for short-term rentals in Europe, five cities have lost more than 50% of their available supply including Prague (-58%), Edinburgh (-56%), Budapest (-55%), Amsterdam (-55%) and Moscow (-53%). Saint Petersburg, RU (-14%) has retained the highest percentage of its supply of the major cities largely because of the strong levels of demand in Russia throughout the recovery period. Cannes in the south of France has also performed relatively well, as a coastal resort destination, and only lost about 24% of its available listings.

Loss of Active listings by city

 

Occupancy Reaches Record Highs

The lack of supply and high demand in many destination markets meant that occupancy rates were high, as what little supply there was got booked up quickly. This led European short-term rental occupancy to an all-time record high of 73.6% in August 2021. This was 6.1% higher than 2019 and 13.6% higher than 2020. Six of the 20 largest countries in Europe reached an occupancy of greater than 75% including Germany (79.1%), Croatia (79.1%), Netherlands (77.6%), United Kingdom (75.7%), France (75.4%) and Portugal (75.3%).

Europe Occupancy Rates

 

The average daily rate (ADR) that a guest paid for a short-term rental in August 2021 increased to 15.5% higher than August 2019 and 9.2% higher than August 2020. The higher rates come from a variety of factors including stronger demand for larger and luxury units in higher-priced destination markets in addition to slightly higher prices being charged by hosts in high demand markets. 

These factors were strong enough to push the average rate higher in all countries in August.  The highest ADR growth was in the United Kingdom (+32.6%) while the lowest gains were in Russia at 5.6%. 

 

Autumn/Winter Outlook

Forward bookings by country

 

While booked short-term rental demand, as of September, for stays in September – November is still about 19% lower than at the same point in 2019, it’s significantly better than in 2020 and trending in a positive direction. With new COVID-19 cases declining and non-urban domestic demand extending further into the autumn shoulder season, demand for both Germany and the United Kingdom is projected to come in well above 2019 levels over the next few months. 

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