The summer of 2022 saw a full recovery from the pandemic in Europe, with 3.5% more nights stayed in a short-term rental in June, July, and August than in 2019.

Europe Market Review: Summer Continues to Set Demand and Occupancy Records

Summer travel in Europe was back in full swing this year, with June, July, and August each reaching new record highs for aggregate demand and average daily rates (ADRs). These crucial peak months have cemented the industry’s recovery since the depths of the pandemic in 2020. 

Overall nights stayed in short-term rentals (STRs) during this period were up 3.5% vs. 2019 levels, and nearly 36% year-over-year.

While the continent saw a modest 0.2% increase in demand nights during August relative to the prior peak in 2019, this nominal growth speaks to the strength of STRs across Europe—even as macro pressures from inflation and from COVID linger globally.

Demand nights up 35.9% YoY, +0.2% vs. 2019

Average Daily Rates (ADRs) up 1.2% YOY, +16.5% vs. 2019

Available listings up 13.8% from 2021 but 10.8% below 2019 

Total Revenue up +30.1% YoY, and up 16.7% from 2019 levels, due to higher ADRs and demand increases.

Years of pent-up demand and relaxed COVID restrictions have created a strong backdrop for summer travel, as consumers have shown a willingness to pay higher rates for accommodation and more overall on their travel experience in 2022.

During the historically peak tourism month of August, Europe gained 16.7% more revenue than in the prior peak of 2019, and rose 30.1% year-over-year. This was assisted by a continued climb in ADRs which tallied 1.2% higher in the month compared to last year (+16.5% vs. 2019). 

Short-term rental guests have been largely undeterred by growing economic uncertainty, high gas prices, geopolitical tensions, and a record heatwave suffered across much of the continent this summer. The continued growth of total demand nights as more supply comes online across the continent is a good indicator for the entire alternative accommodation space.

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Occupancy continued a trend of record highs throughout the summer, notching 4.3% higher year-over-year in August, and approximately 5.8% higher this summer over last. Occupancy has reached new peaks in each month since October 2021, as demand pull and lagging supply continue to be the most dominant trend in the STR economy. 

In the second half of 2021, pent-up demand for short-term rentals began flooding the market and exceeding the STR market’s broad expectations. Available supply lagged, which led to unprecedented occupancy levels. Occupancy has remained strong despite double-digit supply gains throughout most of 2022, an encouraging signal for hosts to continue investing in and ramping up efforts to onboard more supply. Overall in August, Europe saw 13.8% more short-term rental listings year-over-year, but total listing supply is still down by more than 10% from 2019 levels. 

Supply Continues to Grow Over 2021, But Lags 2019

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Summer Demand Falls Short of 2019—Though Strong Year-Over-Year

All of the top 20 European nations saw higher demand this year than last for summer stays. The rates of recovery are uneven, however, as the rising tide has not lifted all countries equally. Norway, Hungary and Greece saw 71.2%, 65.8%, and 61.8% year-over-year increases respectively in their total summer demand. Slower growth was seen during the period across the Netherlands (+15.6%), Finland (+25.6%), and the United Kingdom (+28.0%), but the overall trend lines all point in the right direction. 

Nine of the 20 largest countries for short-term rental in Europe were able to grow nights booked this summer relative to the prior peak period of 2019. The strongest results in the continent relative to 2019 came from power markets Germany (24.8%), Greece (24.1%), and France (21.9%).

With the biggest year-over-year jump in summer demand, Norway also boasted the greatest year-over-year gain in available listings, with 39.4% more available listings in 2022. Possibly as a respite from the scorching heat in the popular coastal southern cities across Europe, coastal destinations in Norway were the preferred spot for renters. The strongest year-over-year summer demand performers were coastal cities Bærum (202.0%), Tromsø (135.3%), and Oslo (135.0%). 

Not wanting to be left behind, Lillehammer—a popular mountain destination—also landed within the top-ten performers this summer.

In terms of national market share, these top ten destinations made up approximately 27% of total Norwegian demand, up from 21% in 2021. The destinations also increased their market share to 25.9% total available summer listings in Norway, up 3.9% from last year.

42 of Top 50 Cities See Year-Over-Year Increase in Occupancy

Amid occupancy increases across the continent, over 80% of the largest 50 markets saw an occupancy rise in August. The largest year-over-year increase in occupancy was in Amsterdam (28.2%), while the steepest decline was in Madrid (-4.3%). 

The extreme weather in Spain caused by some of the highest temperatures in history may have detracted from the tourism recovery in August. Hosts in Madrid experienced a record high occupancy rate in August of 2021, and this year the Spanish capital has added nearly 27% more available units. Demand in Madrid has indeed been strong, up 50% in the past two years, and despite not being able to completely absorb the new supply without denting occupancy, occupancy was still 3.2% higher than 2019 levels.

Listings supply in Amsterdam had decreased by 10.7% year-over-year in August, while demand surged 27%. Last August, while Amsterdam was still having trouble with demand recovery, the city had the second-lowest historical occupancy rate aside from the pandemic lows in 2020. Amsterdam has some of the strictest STR regulations in all of Europe, limiting the number of days per year that any property can be rented out, so it is unlikely that supply will go back to its prior levels. Dublin, with the second-highest occupancy growth in August, is also attempting to limit STR supply growth in 2022 by restricting new listings to only primary residences. This could lead to sustained high occupancy rates in both regions, through government intervention rather than market forces. 

Occupancy Levels Increase in 42 of Top 50 Markets

European Demand Pacing Strong Until Year-End

On average, guests booked August stays 72.9 days in advance. This tracks 6.3% shorter than in 2019 but represents a 11.3% year-over-year increase in lead times. The uptick has been driven in part by increased certainty surrounding travel rules, at both the domestic and international level. 

And on the international front, while the APAC and Middle East regions were slower to vaccinate and reopen to the world, the regions have caught up and could contribute more to the international component of travel into Europe in the coming months. The impact of foreign travellers on overall demand and host occupancy levels will depend heavily on the prevalence of COVID-19 this winter, and whether inflation continues to rise.

Overall, travellers are showing no signs of hesitation in solidifying their autumn and winter holiday reservations. As of the first week of September, the continent was seeing 6.6% more bookings than at the same point in 2019 and a 36.6% increase year over year.

As we look to the closing months of 2022, southern Europe is seeing strong pacing gains over last year, with six of the top-10 destinations for demand growth located in Italy, in popular city-break destinations. We expect to see continued growth in the rest of the year.

The strongest demand growth heading into the fourth quarter comes from Munich, Germany, with 164% more nights on the books than last year, which is a sight for sore eyes after a cancelled Oktoberfest for the past two years. Portuguese destinations Porto and Lisbon, and Athens, Greece, were all popular destinations throughout the first nine months of 2022, and that trend looks to continue until the year’s end.

Ironically, the declining Euro—which is down approximately 20% in the past year vs. a basket of currencies— may actually be a positive factor, as this will make it comparatively cheaper for travellers from international markets into Europe over the coming months. 

Strong demand across the continent should bolster hosts’ efforts to add more supply and raise rates to keep pace with inflation, which is still running hot and figures to be the dominant factor affecting the STR industry in the months ahead.

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In July, Europe reached 48.9 million nights stayed, 7.9% higher than July 2019, with record occupancy but still reduced supply

Europe Market Review: Summer Continues to Set Demand and Occupancy Records

Supply Continues to Grow Over 2021, But Lags 2019

Occupancy Levels Increase in 42 of Top 50 Markets

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