Europe Market Review: Strong October Softens Shoulder Season

At a Glance: Key European Short-Term Rental Performance Metrics for October 2022:

• Available listings up 14.6% in October on a year-over-year basis, -8.9% below 2019
• Total demand hit a record high for October, up 22.8% YoY and 9.6% higher vs. 2019
• Occupancy 3.7% higher than last year (+17.7% vs. 2019)
• Average daily rates fell 0.8% year over year (+25.2% vs. 2019)
• RevPAR grew by 2.8% (+47.4% vs. 2019)

Demand in Europe rose to a record high for the month of October, with 9.6% more nights stayed in the period over 2019 (+22.8% vs. 2021). As was typical prior to the pandemic, the number of nights stayed in a month dropped significantly between September and October. In 2019, for instance, the number of nights stayed in October was 31.2% less than in September. While this may be a notable drop, it was to be expected as summer holidays conclude and travel volume dampens. However, the rate of decline between the two months has slowed precipitously in the last three years, in 2020, the decline was -21.7%, -16.1% in 2021, and most recently, just -14.5% in 2022.

Bucking the trend of pre-pandemic seasonality, the decline in nights stayed from September to October has become much less stark relative to 2019 figures. In 2022, 19 of the top 20 European countries saw attenuated demand nights between September and October when compared to the same period in 2019. The exception was Belgium, which actually experienced a 5.5% increase in the number of nights stayed in October 2022 over September 2022.

The supply of available short-term rentals in Europe rose by 14.6% in October on a year-over-year basis, though remained 8.9% below the 2019 watermark. That said, with supply making strides over last year, the acceleration of occupancy levels has begun to subside. 

The year-over-year growth rate in occupancy reached a peak of 25.9% in January, while in October, the occupancy rate was just 3.7% higher than last year (+17.7% vs. 2019). As average daily rates (ADR) fell by 0.8% year over year (+25.2% vs. 2019), revenue per available listing (RevPAR) grew by 2.8% (+47.4% vs. 2019). Largely attributable to continued occupancy growth year over year, RevPAR has been able to reside in growth territory throughout 2022. However, the year-over-year ADR, occupancy, and RevPAR growth rates have slowed as the volume of supply has created a more competitive market environment relative to last year.  

Nights booked for future stays in Europe totalled over 30 million in October, which was up 29.4% vs. last year and 16.0% vs. 2019. Bookings for future stays relative to 2019 grew the strongest in France, which saw 47.9% more nights booked in the month. Greece followed France with 43.5% more bookings made in the period than three years earlier. The third-highest growth in nights booked was in Austria (31.7%).

Seasonal Swings Becoming Less Pronounced During Fall Months

European demand growth in October was predominantly driven by stays outside of the continent’s top 50 markets, which saw 21.9% more nights stayed in the period relative to three years prior, whereas the 50 largest markets in aggregate saw 24.4% less demand.

The pandemic accelerated a systematic change in travel patterns, opening a new ways of travelling. Guests are empowered more than ever before as consumers to select from a vast array of properties, location types, and timeframes. And notably, certain location types are benefitting from the current market landscape and the shift in traveler behaviour more than others. 

Mountain/lake destinations have become increasingly popular during the autumn months. Among this location category, October demand has begun to outperform September in many markets. Comparing the growth rates of demand from September to October 2019 relative to the growth rates between the same months in 2022 reveals that French and Swiss Alps-based markets have experienced the greatest changes in demand seasonality in the period. Allos, France, saw 21.4% more nights stayed this October than in the preceding month, followed closely by Monthey, Switzerland, with 21.3%. Between 2019 and 2022, the seasonal demand pattern in each of the markets listed in the chart below flipped, resulting in October becoming the more popular month to visit among travellers.

Moreover, demand momentum is pacing toward continuing in most of these mountain communities through the ski season. Nights on the books as of November 13th for November through April stays were pacing higher than 2019 in nine of these Alps destination markets. The one outlier that was trending toward underperformance was Bagnes, Switzerland, with 9.3% fewer demand nights booked. Alternatively, the southern French Alps locations of Vars (157.2%) and Le Dévoluy (156.4%) were pacing toward triple-digit demand gains over 2019, while remaining destinations were notching in double-digits.

Winter Outlook

As the holiday travel season approaches, European nights booked as of November 13th were on pace to surpass 2019 and 2021 demand by 6.2% and 28.3%, respectively. Looking into 2023, travellers continue to stray from 2019 booking patterns as demand pacing points 6.2% lower relative to 2019, though notably more optimistic than this time last year, with 11.3% more nights on the books.

The top demand-pacing destinations in Europe for the 2022 holiday season were within mountain and coastal areas. Markets in the Alps, Pyrenees, and coastal areas of France and Poland led the European continent in nights booked relative to 2019 with notable triple-digit gains. Of the Alps markets, Schladming, Austria, was a clear standout, with 394.3% more nights booked as of November 13th for November and December stays over the same period in 2019. While becoming an increasingly popular mountain destination, in Q3 2022, the volume of available listings in Schladming had more than tripled (323.4%) that of the year prior. Vars and Mont-Dore, both in France's Auvergne-Rhône-Alpes region, were the next two leading demand-pacing destinations, with 208.1% and 204.9% more nights booked, respectively.