AirDNA Market Review | U.S. February 2021

Jamie Lane | March 10, 2021

A Winter Chill for U.S. Short-term Rentals Settles in for February

Demand for U.S. short-term rentals fell by 27.5%, compared to the same time in 2020, marking the worst month’s performance since the start of the pandemic. The absence of demand for travel to large U.S. cities, which normally accounts for 45% of units sold in February, accounted for most of the decline in demand. 

Demand was down 55.0%, year-over-year, in the 50 largest U.S. cities, by population, with urban areas realizing steeper declines (-60%) than the more suburban parts of the city (-50%). 

AirDNA Monthly Market Review - March 2021

Among these large cities, San Jose/Palo Alto, CA (-76%), New York, NY (-75%), and San Francisco (-70%) saw the greatest decline in demand as business travelers still largely avoided these markets. The Super Bowl and the start of break helped many Florida markets with Tampa (-20%) St. Petersburg (-25%, and Jacksonville (-28%) being the least impacted cities. 

Winter storms and power outages in Texas also led to new demand for short-term accommodations as Houston (-29%) and Oklahoma City, OK (-30%) rounded out the top 5 best performing cities for February.

AirDNA Monthly Market Review - March 2021

Most large cities followed the national trend of suburban areas of these markets outperforming the urban areas for February 2021 demand change.  The largest divergence in performance was in Riverside, CA demand fell by 69.7% in urban areas compared to only down  38.7% in the suburban areas, a difference of more than 31%.  Significant differences were also found in Austin, Boston, San Diego, and New York where urban demand fell by 20% more than suburban demand. There were a number of markets that bucked this trend, like Richmond, New Orleans, and Miami, with most of them in the South East or Midwest regions. 

Overall Average Daily Rates (ADRs) were up 9.3% in February 2021 over the same period last year which was an improvement over the 5.3% from January. ADR gains were highest in small city/rural and mid-size city locations which were able to capitalize on increased demand for larger single-family homes and can accommodate travelers with more flexibility to work remotely. 

Year-Over-Year ADR Change in Short-term Rentals- February 2021

ADR change trended positive for hosts in large cities (+2.3%) in February as both urban and suburban properties increased their performance over January’s figures. While the gains in overall ADRs are encouraging, the underlying data shows continued declines in ADR for smaller units. 

One bedroom/studio, two bedroom, and shared room units saw their ADRs decline by more than 5% during the month of February. STR units with 3 or more bedrooms have now increased in ADR in every month since July as guests demonstrate a willingness to pay higher rates to get a unit with more space when they travel.

ear-Over-Year ADR Change in Short-term Rentals in Large U.S. Cities - February 2021

Outlook Improves as Short-term Rental Industry Hits Another Record for New Bookings in February

New U.S. bookings made in February 2021 surpassed last month’s record of new bookings bodes well for performance for the rest of 2021. With vaccines now being distributed and new COVID-19 cases falling, guests are now planning for future travel.  

This trend highlights the growing disconnect between today’s dismal performance and indications of a strong spring and summer travel season.

Short-term rental new bookings (revenue) Vs. Monthly Revenue indexed to 2019 Average Monthly Revenue

Figure 5 demonstrates this disconnect by showing the monthly revenue booked and earned over the past year indexed to 2019 average revenue. Starting in May 2020, new bookings started accelerating as people started booking summer trips. 

Demand peaked in 2020 in July and August and had fallen consistently each month since July.  Throughout the fall new bookings and stays were roughly in line with each other as the lead time for making a reservation to when the trip happened was shortened. 

As new COVID-19 cases rose throughout the winter, new bookings slowed and uncertainty around the COVID-19 pandemic led travelers to wait as long as possible to book their travel.

U.S. Historical and Forward Demand Pacing Relative to 2019

Based on reservations made as of the beginning of March 2021, March is already 43% occupied and has only 9% fewer bookings than as of March 2019, a significant improvement from January and February. 

Looking out to the summer, U.S. short-term rentals are roughly 13% occupied and are pacing at just 11% fewer nights booked for June and July today than they did as of March 2019.  

The short-term rental sector is poised for a strong recovery in 2021. With continued stimulus from the U.S. government and recovering employment levels, consumer spending has recovered. 

We expect pent-up demand for travel will shift expenditures away from goods and back to experiences like travel. Short-term rentals should benefit from this demand by offering more home-like amenities and appealing to guests that may want to stay longer when they travel. 


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