COVID-19 Impact on Hotels and Short-Term Rentals

Wednesday, 12 August 2020: Short-term rentals are weathering the pandemic better than hotels in 27 markets, according to a joint report by leading accommodation data providers. STR and AirDNA compared the impact of the coronavirus crisis on hotels and short-term rentals from January 2019 through June 27, 2020. 

The report found that while both accommodation types were badly affected during the worst weeks of the pandemic, the features that differentiate short-term rentals from hotels - such as full-service amenities, living space, larger properties, and inventory in more remote destinations  - have proven to be vital assets during the pandemic. Guests were looking for accommodation where they could safely socially distance and comfortably stay for longer periods of time, as data from AirDNA shows that length of stay increased by 58% during the pandemic. 

The research shows that two proponents that have traditionally benefited hotels have also caused this sector to be unevenly affected by the crisis. The first is their reliance on business and group travel, which the pandemic has brought to a temporary halt. The second is the fact that for economic reasons, many travelers have migrated toward Midscale and Economy class options as leisure travel fueled early recovery.



The hotel industry saw greater drops in both Occupancy and Average Daily Rates (ADR) than the short-term rental industry, which experienced more stable ADR throughout the crisis. 

For the short-term rental industry, Average Daily Rates were actually reported as higher in July 2020 than in July 2019 in the US, Spain, Italy, France and China.

As of June 21, 2020, short-term rental RevPAR was down just 4.5% while Hotel RevPAR was still 64.8% lower than the previous year.

Hotel ADR increased 31.9% during that same period, while ADR for 1 bedroom or studio rentals increased by 23.2%. 

Performance appears to be trending upward for both sectors, but things are not back to normal in most cases. Prior to the pandemic, hotels historically had the upper hand in performance compared to their short-term rental counterparts. Hotel performance fell much further, so gains have been more pronounced. Short-term rentals have shown more resilience and stronger performance amid the crisis but the recovery has not been identical across all types of rentals - larger properties like four-bedroom homes near leisure destinations have performed strongest throughout the crisis.

The report concludes that, comparing lodging declines since the outbreak of coronavirus to the US hotel sector experience during the Great Recession, it will likely take years to rebuild performance to pre-coronavirus levels. While it may be too soon to call this swathe of new bookings a rebound, recent improvements to the lodging industry have been encouraging. As countries, providers, and guests continue to adapt to the changing landscape of the pandemic, we expect that rates will slowly return to levels of normalcy. Click below to read the full report. 

We teamed up with Smith Travel Research to conduct a joint report on how COVID-19 has impacted hotels and short-term rentals around the world.