Analyzing data of any kind on a macro level can be dizzying. At AirDNA, we analyze a heaping 1 billion new data points on the global short-term holiday rental industry every day. We’re always on the lookout for fresh ways to use and present it for the thousands of destination marketing organizations, local municipalities, real estate investors, hosts and property managers who depend on us for answers.
Country-wide analysis gives us a high-level health check on the state of the short-term rental industry and provides a benchmark for diving deeper into market-specific research.
Let’s take a look at Australia’s overall performance for entire home short-term holiday rentals over the past year.
Australia in the Spotlight
In December 2018, Australia surpassed its previous record for holiday rental supply. The following month, it also broke its previous record for demand, renting out 1.9 million nights during the month of January.
Over the past twelve months (March 2018 through February 2019), Australia’s short-term holiday rental supply grew 47%, adding nearly 30,000 entire home rentals. Across the continent, these types of holiday rentals earned AUD $3 billion in revenue.
It’s no surprise that Australia’s high season coincides with its summer season. In summertime, Australia truly is the lucky country where visitors can expect spectacular festivals in Melbourne and Sydney, cloudless days on the Sunshine Coast, and vibrant coral blooms on the Great Barrier Reef.
Supply fluctuated 80% from the lowest month (May) to the highest month (December), as many part-time hosts activated their listings specifically to capitalize on the high-demand times.
Similarly, Average Daily Rate (ADR) swung 40% between these months, from $219 AUD to $307 AUD, resulting in an 80% higher Revenue Per Available Rental (RevPAR) for December ($166 AUD).
While most of the demand came from major cities, short-term rentals also provided opportunities for visitors to explore more rural regions of the country, such as Ballarat, Mount Alexander, Albury, Broome, Bathurst, and Bendigo. Together, holiday lets in these six areas rented out 290,000 unique night stays, including from 3,200 international guests.
Holiday Rental Channel Breakdown
In 2013, HomeAway acquired Australia-based holiday rental platform, Stayz. Despite HomeAway’s attempt to gain market share, Airbnb has a clear lead across the country, with 75% of all rentals being listed on Airbnb and not HomeAway. Just 17% of rentals are loyal to HomeAway, and 8% are dual-listed on both Airbnb and HomeAway.
Some traditional holiday markets have higher counts of dual-listed properties, such as Blue Mountains and Busselton, which have about 15% overlap (almost double Australia’s country-wide 8% overlap). This is because holiday rentals in these areas are more likely to be managed professionally. Property managers usually operate across multiple distribution channels as part of their overall revenue management strategy.
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Where Guests are Coming From
Australia’s holiday rental industry relies heavily on domestic tourism. Spikes in domestic guests coincide with public school’s Term 1, Term 2, Term 3, and Term 4 holidays, which fall during the months of April, July, October, and December/January, respectively.
On the other hand, international guests are most likely to book short-term rentals in Australia during the months of March, November, December, and January.
Localized Variances in Guest Origins
Like many major gateway cities where guests often book the night after they arrive to a new country or the night before their departure, Melbourne hosts a much higher percentage of international guests than the national average. In fact, it sees more international guests than any other place in Australia. Let’s take a look:
Using MarketMinder’s Guest Tab, we can drill down further to see where domestic and international guests are coming from. Over the past year, holiday rentals in Melbourne hosted more guests (34,945) from Singapore than from any other country in the world.
This type of market-specific data helps hosts, property managers, and destination marketing organizations optimize their marketing strategies toward a target audience.
Combining guest origin data with booking lead time information — how far in advance guests book their holiday rentals — means better insight into delivering the right messaging to the right people at the right time.
Shifts in Holiday Rental Performance
Overall, hosts and property managers across Australia did a good job of pushing rates relative to month-over-month occupancy change during the month of December. However, they were quick to drop their rates substantially — 21% — from January to February, even though occupancy rates only fell 9%, to a country-wide rate of 54% occupancy.
This could be due to inexperienced hosts panicking at the steep month-over-month decline in demand from December to January, which indeed appears dismal. However, savvy hosts and property managers know that this drop in demand is accompanied by a drop in supply, softening the impact on occupancy.
Getting More Granular
Historically, real estate investors wanting to answer the questions like, “where is the best place to purchase a short-term holiday let?” would have to request information from multiple sources and pore through data that’s been delivered in various formats.
The same was true for country-level destination marketing organizations and local municipalities looking to predict future trends in tourism for their cities.
AirDNA has helped simplify the process of discovery and due diligence by generating Market Grades for over 80,000 markets worldwide. Each month, we calculate a total score based on weighted averages of rental demand, revenue growth, seasonality, and local regulations.
Market Grades are assigned a letter score (A, B, C, D, or F) that is based on an overall score between 1 and 100, 100 being the highest and best score possible. Analyzing Market Scores across hundreds of cities makes it easy to quickly identify the top performing areas.
Above is the Market Grade for Sydney (as of February 2019). Although demand for short-term holiday rentals remains strong, recent regulations that limit the number of days an owner can rent out their property as a holiday let and a new “two strikes and you’re out” policy for conduct have had a noticeable impact on overall growth.
Australia’s Emerging Markets
Although Australia as a whole is on an upward trend with regards to short-term rental demand and performance, not all markets are equal. Of locations with at least five hundred holiday rentals, Hobart, Cairns, Airlie Beach, Perth, and Canberra, have seen the strongest growth in supply and demand.
Hobart is the largest city and state capital on the island of Tasmania and is also Australia’s top emerging holiday rental market. Hobart is a picturesque city that benefits from its own airport and ferry service that runs direct to the island of Tasmania from Melbourne. This has helped boost its local tourism, including from nearly 20,000 guests who hopped over from Melbourne last year.
RevPAR for the Top Five
Revenue Per Available Rental (RevPAR), represents a holiday rental’s total revenue distributed across every day it was available for reservation — not just the days it was actually booked. It’s a valuable metric that essentially combines ADR and occupancy into one measure. For reference, the average RevPAR for all of Australia over the past twelve months is $130 AUD.
Whitsunday (Airlie Beach) has a clear RevPAR premium over the other emerging markets. It’s a popular holiday destination with a fairly even mix of domestic and international guests, and has plenty of larger high-end holiday homes to choose from.
Like many cities around the world, Hobart has faced challenges with how to fully capitalize and grow with residential holiday letting. Before investing in any property for the purpose of short-term letting, it’s critical to understand the local rules and regulations, and make sure you’re in compliance at all times.
Starting on a macro level helps identify areas of risk and opportunity to research further. As demonstrated above, it can also provide a valuable benchmark and context for more granular analysis.
AirDNA offers many tools for country, market, and neighborhood-level investigations, including our dynamic online MarketMinder tool, complete with automatic monthly updates to historic charts, and daily updates to forward-looking pricing charts. We also offer offline Market Summary Reports (MSRs), typically used by destination marketing organizations, hotel associations, and local municipalities.