What You’ll Learn from this Post:
- How the pandemic impacted both active and available listing supply
- How divergent trends spread among market types globally
- How demand in destination markets fueled listing growth
- Which property types maintained positive year-over-year listing growth
Globally, there are more than 5.4 million active listings on Airbnb, with more units available for rent than the combined total of 3.3 million affiliated with Marriott, Hilton, and IHG. Airbnb’s supply has more than doubled over the past four years, up from just 2.3 million at the beginning of 2017.
These growth rates came to an abrupt halt in March 2020 with the onset of the global COVID-19 pandemic, as demand for all forms of lodging contracted and guests canceled their travel plans. From January through June 2020, Airbnb lost 5% of its total listings but has since recovered and grown 2.5% off of pre-pandemic levels.
The relative appeal for short-term rentals — with larger living space, more bedrooms, and inventory in more remote destinations — has proven to be a vital asset during the pandemic and allowed for better performance when compared to more traditional forms of lodging.
What counts as a relevant listing can vary, but for this analysis we follow two definitions:
Active Listings: Number of listings viewable on Airbnb with at least one prior booked night.
Available Listings: Number of active listings that have calendar availability or at least one booked day in the month.
The available listing count reflects the number of units actively competing for guests during the month. It can also show seasonal patterns as some units are only available for rent during peak seasons and are unavailable during off-peak periods.
By looking at differences in active and available listings since the onset of COVID-19, we can better tell if hosts are just temporarily adjusting their availability while demand is low or permanently removing a property from the website.
In both cases, these figures may overstate the loss of Airbnb’s supply, as owners could easily relist their properties once travel begins to pick up again. To isolate trends in the short-term rental sector, all figures exclude listings for hotels and hostels.
Diverging Trends in the Global Supply of Short-term Rental Units
Global active listings have increased by 2.5% over the past year, but with mixed results for Airbnb’s 10 largest countries. To account for the seasonality of supply for short-term rentals, we are looking at listing counts from February 2021 and comparing them to February 2020, which also allows us to benchmark current levels to those prior to the major onset of the pandemic.
Active listings have decreased the most in Canada where 40% units were concentrated in just three cities (Toronto, Montreal, and Vancouver) at the start of 2020. Collectively, these markets have lost 22% of their active supply over the past year compared to a decline of just 3.5% throughout the rest of Canada.
Active unit counts grew the most in France, where almost all areas of the country have seen a growth in active units, especially around the Loire Valley and north to Brittany where small towns and beach resorts have continued to attract guests.
The real striking differences can be seen at the market level, where an absence of demand has caused many short-term rental operators to either temporarily stop renting units or remove them entirely. Of the top 25 largest global short-term markets, Amsterdam has lost the most available listings, -45% as of February 2021.
From these results, we can divide markets into two groups, with one where it appears that the supply declines are temporary, e.g. Amsterdam, Copenhagen, and Oahu, which all have steep declines in available listings but relatively low changes in the number of active listings.
The pace of decline has also varied throughout the past year as markets moved in and out of lockdown and demand temporarily recovered, if only briefly during the summer of 2020. The interactive chart below shows the cumulative change in available listings by month relative to February 2020.
Specifically, the UK’s April lockdowns and subsequent travel restrictions through June seriously limited the number of available listings. However, these listings quickly reappeared once travel bans were lifted.
Stateside, Orlando was one of only two top-25 markets that actually gained available listings throughout the pandemic as restrictions in Florida eased before most other U.S. states.
Pandemic-related Demand in Destination/Resort Markets led to Listing Growth in Many Areas
Meanwhile, markets that remained attractive to guests throughout the pandemic, mainly small cities, rural areas and destination/resort areas managed to attract new listings over the year. As of February 2021 a mix of mountain and coastal locations gained the most number of new available listings.
Coastal markets such as Myrtle Beach, Tampa, Morehead City/Emerald Isle, and the U.S. Virgin Islands all experienced significant gains since the start of the pandemic. Likewise, inland areas like the Ozark Mtns, Gatlinburg/Pigeon Forge, and Fredericksburg, TX, were also able to increase their supply of available listings.
Growing supply in destination/resort areas has benefited many of the larger property managers who tend to manage a high percentage of units in these locations. Globally, large operators (those with 21+ units) increased both their available unit counts by more than 14% over the past year, while available listings declined by 9% over the year for hosts with just one unit. These single-unit hosts are much more likely to be located in large urban markets which explains most of the decline in availability given the lack of demand.
Mirroring the declines in the top global cities, there was a decline in available listings in both large and mid-size cities in the U.S., while urban areas were the only location type to also register decline in active listings.
The loss of supply in the largest U.S. cities accelerated an already-established trend of Airbnb’s supply diversifying away from urban areas, which made up 40% of supply in 2016 to just 20% of U.S. supply in 2021.
Expanding Demand Should Accelerate New Investment in Short-term Rentals
As new units are being added — and others lost — the types of units available for rent are becoming more unique. Of the major property types, unique stays (consisting of lighthouses, yurts, tiny homes, and farm stays) were the only types to maintain positive year-over-year growth in available listings throughout the pandemic.
These listings thrived as guests looked for distinctive experiences in isolated areas and should continue to attract above average occupancy as travelers look for new things to do in their home country.
Demand for short-term rentals is expected to show a significant recovery in 2021 as vaccines continue to roll out and pent-up demand accelerates bookings globally. In the near future, those types of markets that performed best in 2020 will continue to shine in 2021 and investors should be positioning now to add new supply ahead of the upcoming peak seasons.
For the most part, the available supply in large and mid-sized cities correlates strongly with the changes in demand for the same market. Markets realizing weak demand have seen a subsequent decline in the available supply of units and vice versa.
In destination markets the trend doesn’t hold as strong with many markets realizing strong demand have actually seen declines in available listings. Some large destination/resort markets, circled in red, like Coachella Valley, Lake Tahoe, Joshua Tree, Breckenridge, and the Lower Hudson Valley, have all seen declines in available listings over the past year.
A combination of a strong housing market pulling supply away for STRs and hosts using their homes for personal use has contributed to the declining availability of units. Units available for rent in these markets have seen very strong occupancy and ADR growth over the past year and should continue to outperform other markets in 2021.
Markets circled in green have generally been able to expand their supply to accommodate all the new demand and represent some of the fastest growing markets for new Airbnb revenue in the U.S. In yellow are markets where demand has been extremely weak, but where supply has generally held stable.
These are generally fly-to markets in Hawaii, Puerto Rico, and the Caribbean which are poised for a healthy recovery once people again feel comfortable flying to popular vacation destinations. Most of these markets are already pacing at or near 2019 levels as Americans plan their spring and summer travel.
Urban locations will more than likely underperform again in the first half of the year. But as guests venture back into cities, short-term rentals should benefit over other lodging options by offering more home-like amenities, appealing to guests that may want to travel with their families, and stay longer when they travel.
For those markets that have been able to hold onto their active supply, the recovery of overall market demand should be more swift. However, markets that have lost units may need to find ways to attract new hosts to their market.