AirDNA Market Review | U.S. June 2021

Jamie Lane | July 16, 2021

Out of Office: Summer Travel Begins

Record High Occupancy Levels as Vacation Rentals are in High Demand

The U.S. short-term rental industry posted another strong month as occupancy rose to an all-time high of 70.2% in June 2021, a full 20% higher than June 2019. This is the first time the U.S. has exceeded an average occupancy of 70%.

These occupancy gains are attributed to both an increase in demand — a 9.2% increase over 2019 levels (+33.8% vs 2020) — and an overall lower level of available listings which were down 11.3% in June vs 2019. Available listings are growing, though, and are up 3.8% vs June 2020 levels.

U.S. Monthly short-term rental occupancy levels

Occupancy was highest in coastal destination markets, averaging 76.9% for the month, followed by mid-sized cities at 71.6%. Surprisingly, mountain destinations had the lowest occupancy in June of the six location types, averaging 65.2%.  While technically the lowest, it was more than 32% higher than June 2019, as June is not typically a high occupancy month for mountain destinations.  

Of the top 50 largest short-term rental markets, six coastal destinations achieved an occupancy of more than 80%: 

On the other end, only two of the 50 largest markets had an occupancy level of under 50%: Breckenridge, CO (49.7%) and Big Bear, CA (48.9%), both mountain destinations.

Guests are Booking Short-term Rentals Far in Advance

Lead time, or the time between when the guest makes a reservation and when their stay begins, is typically around 30-90 days and peaks in the summer in coastal destinations. During summer, guests usually have to book their rentals months in advance to secure the best homes in popular markets. In May 2020, at the peak of the COVID-19 lockdowns, the median lead time dropped to as little as 18 days as the uncertainty around the pandemic and where the virus might spike next led guests to delay booking trips as long as possible.  

Since then, booking behavior has almost returned to normal. The median lead time was 59 days in June 2021, only slightly lower than the 62 days in June 2019. Lead times have fully recovered in coastal destination/resort markets reaching beyond 80 days. However, urban markets’ lead times lag at only 26 days, where demand is still 37% lower than 2019 levels.

June U.S. monthly short-term rental median lead times by location type

Lead times should continue to grow and give vacation rental managers and owners greater confidence in pricing their units more aggressively. In figure 3, we plot monthly short-term rental demand and break out the demand by the month that it was booked. The dark purple shows demand that was booked more than 6 months in advance of the month of stay, while the blue bars show demand that was booked in the reporting month.

U.S. Short-term rental demand by month of booking

As of early July, demand for each remaining month of 2021 is pacing higher than in both 2019 and 2020. Last-minute bookings should easily push July and August to achieve record levels of demand. For July, booked demand is 14% higher than at the same time in 2019 and 36% higher than in 2020. 

The July 4th holiday weekend is historically one of the highest demand weekends, if not the highest, for travel. Demand for the weekend was up 19% YoY but still down 7% relative to 2019.  Major cities generally see strong demand over the 4th of July weekend, but demand was off over 50% in most large urban cities like Los Angeles (-56%) Boston (-54%), and New York (-52%).  

The biggest winners in 2021 relative to 2020 were markets in the Hawaiian Islands, where demand more than doubled for the weekend. In Maui, demand was up over 230% vs the same weekend in 2020. Resort cities in the U.S. saw the biggest gains over 2019 for the Fourth of July weekend where Fort Lauderdale (+36%), Phoenix/Scottsdale (+35%), and Cape Coral/Fort Myers (+32%), each had more than 30% growth in demand for the weekend. 

The high occupancy levels and shift in demand towards larger units have kept average daily rates (ADRs) elevated. June’s ADR reached $274.87, an increase of 21.7% over June 2019, and 10.3% higher than June 2020. In coastal destination markets, where demand is the strongest — but also where there is the most consistency over time in the type of units being rented — ADRs reached $338.87 in June, which was 8.5% more than in 2019 and only 1.6% greater than in 2020.

June 2021 percent change vs 2019 in entire home/apartment ADR in destination/resort coastal markets

The growth in ADRs varied from up over 13% for 1-bedroom/studio units ($199 per night) to up only 4.7% in 5+ bedroom units ($858 per night) and represents only a modest increase over the past two years given the strong levels of demand in these areas.  

A Hot Summer for Short-Term Rentals

New short-term rental unit additions reached 55k in June and are now at the highest level since the start of the pandemic. The U.S. is just shy of the average of 60k new units per month that were being added between 2017 and 2019. With a strong summer on the books and the fall looking positive, many industry participants are setting their sights on 2022. We expect continued strong investment in the sector given the positive returns that hosts are realizing by investing in short-term rentals. With booking trends back to normal, demand at record highs, and investment picking up, the future looks bright for this growing sector of the lodging industry.

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