Europe Market Review: European Short-Term Rentals Beat the Heat in Record-Breaking August | AirDNA

Breaking records seems to be the theme for this year’s blockbuster summer in Europe! Short-term rentals (STRs) on the continent saw unprecedented demand in June and July, but August achieved a new record of 53.6 million demand nights, the most nights stayed in one month on record.

Last year, supply reached its peak in July, but this year, riding the momentum of demand, hosts continued to add new listings in August. Available listings increased 11.8% year over year (YOY) in August, a sizable jump up from the 8.3% YOY listing growth seen in July. Supply growth exceeded YOY demand growth of 4% and occupancy fell 5.9% YOY in August.

The occupancy dip led to less pricing power for hosts, and August RevPAR (+5.3% YOY) growth was more modest than July RevPAR (+11.8% YOY) growth.

In all, European travel achieved monumental totals this summer: From June to August, 223.1 million nights were available for rental (+8.9% YOY), 141.7 million nights were stayed (+5.7% YOY), and European rentals brought in $26.6 billion in revenue (+19.2% YOY).

At a Glance: August STR Performance in Europe

• Available listings were up 11.8%% YOY and up 2% from 2019 
• Demand was up 4% YOY, 0.8% vs. 2019 
• Average daily rates (ADRs) were up 12% YOY and 31.2% vs. 2019 
• Revenue was up 16.4% YOY and 32.2% from 2019 
• Occupancy was down 5.9% YOY and up 0.3% vs. 2019 
• Revenue per available rental (RevPAR) grew 5.3% YOY and was up 31.6% from 2019

High Occupancy and ADRs Meant Generous RevPARs for European Hosts this Summer

STR hosts reaped the benefits of a record summer for demand in 2023 as they saw strong occupancy and greater pricing power. Occupancy across the European continent was 63.5%% (-3% YOY) this summer, while average daily rates (ADRs) averaged €170 across the continent, up an impressive 12.8% YOY. Strong occupancy and the ability to charge more per night led hosts to see greater revenues and revenue per available rental (RevPAR) averaged €108 across the European continent this summer, a 9.4% YOY increase from last year.

RevPARs across our top 20 European countries this summer ranged from as low as €59 to as high as €139. Leading Europe in highest RevPARs this summer were  Greece (€139), the United Kingdom (€138), Croatia (€135), and Switzerland (€123). In all four countries, strong RevPARs were fueled by hosts being able to charge high ADRs. With ADRs over €200 a night, Switzerland, the United Kingdom, Croatia, and Greece were the four most expensive countries for STR stays this summer.

Other notable countries that demonstrated strong RevPAR performance include the Netherlands (€122) and Portugal (€123). In both countries, occupancy played a large role in driving strong RevPAR performance. Both Portugal and the Netherlands had occupancy rates exceeding 70% this summer. The combination of more guest stays and high ADRs enabled hosts to see greater revenues per available listing night.

Occupancy and ADR growth often go hand in hand. When occupancy is high, there are fewer options available for guests, and hosts are able to charge more. When occupancy declines, guests have more choices, and hosts lose pricing power. In Norway, Finland, Sweden, and Poland, we’ve seen weak occupancy lead to low ADRs this summer. Available listings exceeding demand led to occupancy rates below 60% in  Finland (52%), Norway (53%), Sweden (58%), and Poland (58%) this summer. As guests have more options for places to stay, hosts have very little room to raise rates, and revenues also suffer. RevPARs this summer were below €80, and YOY RevPAR growth was minimal or negative in Norway (-3% YOY), Poland (-3% YOY), Finland (-1% YOY), and Sweden (+6% YOY).

International Travel to Europe is Back — and so are Americans

This was the summer of record demand for Europe, but who exactly was driving demand?

For France and Italy, the two most-visited countries in Europe by STR demand, we used our data on Airbnb guest reviews to get an idea of where travelers were coming from this summer.

Despite both seeing huge crowds this summer, France and Italy differ greatly in the travelers they attract. In France, a large majority of Airbnb stays were made by domestic travelers within France — 62% of Airbnb stays this summer. The remaining 38% of stays were made by travelers from outside the country. US and UK travelers each made up 6% of all Airbnb stays in France this summer, while their German neighbors made up another 4%. 

While many parts of France remain well-kept secrets for domestic travelers, Italy saw huge numbers of foreign guests this summer. A huge 85% of Airbnb stays in Italy this summer were made by travelers from outside the country. Americans searching for la dolce vita made up the largest percentage of travelers at 18% of Airbnb stays this summer. Meanwhile, travelers from France (13%), the United Kingdom (9%), and Germany (8%) made up another 30% of Airbnb stays in Italy this summer. 

If 2023 may have seemed like the year of the “Euro Trip” on your social media, you’re right. While pandemic restrictions and travel lockdowns caused a large dip in American travel to Europe in 2020 and 2021, demand began returning in 2022 and has since made a full recovery. Americans historically have made up anywhere from 10-15% of Airbnb stays in Europe.

After three years of COVID-19 travel protocols, this summer was the first summer Americans could travel to Europe without any restrictions, and they did so en masse. Pent-up travel demand led Americans to flock to Europe in unprecedented numbers, and U.S. share of European Airbnb stays this summer was 17% greater than it was in 2019. The impact of Americans opting to travel to Europe instead of going to traditional summer mainstays in their own country can be seen among US coastal destinations that have experienced significant demand, occupancy, and ADR declines this summer. 

Western European Countries Made the Euro Trip Checklist this Summer

This summer, Americans favored Western European countries like Ireland, Switzerland, and Italy, where Americans made up 23%, 20%, and 18% of Airbnb stays, respectively. Countries where Americans made up the lowest percentage of stays this summer were Sweden (7%), Finland (6%), and France (6%).

Oktoberfest Brings Boost to Munich

Another stein and a pretzel, anyone? Originating from a royal wedding celebration in 1810, Oktoberfest has since become Germany’s largest and most famous annual beer festival that brings more than 6 million people from all over the world to Munich every year for traditional Bavarian beer, food, and entertainment. 

Last year’s Oktoberfest took place from September 17th to October 3rd and was the first after two years of cancellation due to COVID-19. No COVID restrictions were in place last year, but attendance suffered from rainy and cold weather and hesitant participation from visitors from neighboring countries. 

This year’s Oktoberfest is pacing to be bigger and pricier. Demand for STR stays for this year’s Oktoberfest is pacing 31% higher than last year, with about 5% of the growth being attributed to Oktoberfest being a day longer this year. ADRs for STR stays are pacing 21% higher than last year. 

This year’s Oktoberfest will take place from September 16th to October 3rd — that’s 18 days of beer and fun! Current demand pacing for Munich shows demand for STR stays spiking on Fridays and Saturdays throughout the event, with the second week of Oktoberfest the most popular week for guest stays. Compared to demand for the week leading up to Oktoberfest (Friday, September 8th - Thursday, September 14th), demand for the first week of Oktoberfest (Friday, September 15th - Thursday, September 21st) is 38% higher while demand for the second week of Oktoberfest (Friday, September 22nd - Thursday, September 28th) is 43% higher. Demand for the final weekend of Oktoberfest (Friday, September 29th - Sunday, October 1st) is comparable to the first weekend of Oktoberfest and then drops steeply after the weekend.

Rates for Oktoberfest are seeing more significant gains than demand. Compared to ADRs for the week leading up to Oktoberfest, prices for the first and second weeks of Oktoberfest are up 55% and 63%, respectively. ADRs for the final weekend of Oktoberfest align closely with ADRs from the weekend prior.

Cheaper European Countries Seeing Increased Demand this Autumn

For the rest of the year, we’re seeing continued growth in demand for European STRs. As of September 11th, there are 19% more nights on the books through December than at the same time last year. The shoulder months of September and October are both seeing 20% growth in demand compared to the same time last year, while November and December are seeing 16% and 14% YOY growth, respectively.

Looking to the next few months, Norway (+39% YOY) and Poland (+32% YOY) are leading in YOY demand growth, fueled by their lower prices compared to the rest of Europe. ADRs in Norway for September through November are pacing just 5% higher than last year, while ADRs for Poland are pacing 4% lower than last year.  

Growth in ADR pacing is comparatively high for the Netherlands (+18% YOY), Switzerland (+21% YOY), and Croatia (+32% YOY), and the three countries are seeing the weakest demand pacing growth for the next three months as we enter the off-season and international travel demand slows down. 

With inflation in Europe still at 5.3% as of last month and ADRs for STRs at record highs in Europe, price seems to be on travelers’ minds this fall as they are making vacation plans. If you’re looking to travel around Europe and searching for budget-friendly destinations, don’t miss our newly released list of the cheapest places to travel to in Europe. 

As part of our ongoing commitment to accuracy, we continuously implement data methodology improvements, leading to updates to some of the information in this report as of December 12, 2023. For further questions, please contact us.