Live From VRMA: Hurricanes Impact, Urban Challenges, and Q4 Outlook

In episode 103 of The STR Data Lab, Jamie Lane, Chief Economist at AirDNA, and Scott Sage, VP of Marketing and Customer Experience at AirDNA, broadcast live from the vacation rental management association (VRMA) conference in Phoenix, Arizona. This episode dives into the effects of recent hurricanes on the short-term rental industry and presents a comprehensive Airbnb market analysis as operators look ahead to Q4.

Here’s what you can expect from this episode:

A deep dive into Airbnb and hurricanes, particularly the impact of storms like Helena and Milton on Airbnb markets in Florida and North Carolina.
Insights on how rising insurance premiums and property devaluation in hurricane-affected areas will affect the market for STR operators.
A breakdown of September's Airbnb market data, with an analysis of slowing supply growth and the challenges urban markets face due to regulatory crackdowns and competition from hotels.
The Q4 outlook, covering holiday booking trends for Thanksgiving, Christmas, and New Year’s.

Episode Highlights

Hurricanes and STRs: The Long-Term Impact
Jamie and Scott outline the significant, lasting effects that hurricanes can have on the STR industry. One major concern is property devaluation in areas prone to natural disasters, especially as more buyers and investors begin to avoid these high-risk areas.

Jamie explains how this phenomenon, coupled with skyrocketing insurance premiums, could reshape the entire market for short-term rentals in coastal and hurricane-impacted regions. According to Jamie, the total economic impact of hurricanes in Florida alone is expected to reach $50 billion, a staggering figure that will inevitably lead to further insurance rate hikes across the state. This means that even operators who weren’t directly affected by a hurricane may still see their costs rise.

While some markets may experience a downturn in demand, others could see an influx of guests displaced by hurricanes or looking for alternative accommodations during the rebuilding phase. Airbnb operators should familiarize themselves with the Airbnb hurricane policy.

Airbnb Market Analysis: September Performance
Shifting focus, Jamie and Scott dive into the latest Airbnb market data, with an analysis of September's performance. While nights booked were up by 2.9%, the growth rate was below expectations, largely due to a calendar shift that moved Labor Day into August. The summer’s earlier strength wasn’t replicated in September, but the hosts who benefited from the Labor Day surge in August were already well-positioned to capitalize.

Another important point in the market analysis is the slowing growth in Airbnb supply, particularly in urban markets. Scott and Jamie discuss how supply in major cities has dropped by 3.1%, driven by regulatory crackdowns and weak demand.

The urban STR market faces increasing competition from hotels, which have aggressively priced their offerings to lure back short-term travelers. This trend is exacerbated by large urban operators like Frontdesk, which have struggled and even closed due to these market pressures.

Despite these challenges, Average Daily Rates (ADR) were up 2.7% in September, signaling that STR operators have been able to hold or even slightly increase pricing. The hosts who’ve managed to adapt to these challenging market conditions have done so by carefully managing both their occupancy rates and pricing strategies.

The Q4 Outlook: What Operators Should Expect
Looking ahead, Jamie and Scott provide a detailed Q4 outlook for the Airbnb market, focusing on upcoming holiday periods like Thanksgiving and Christmas. Jamie mentions that while October bookings were boosted by events like Halloween and leaf-peeping in regions like the Appalachian Mountains, November and December may see a slight dip in occupancy. However, Christmas and New Year’s bookings—historically one of the busiest times of the year for short-term rentals—are expected to remain comparable to 2023.

Jamie advises operators to review their market's performance and ensure that their properties are priced correctly to maximize bookings during these high-demand periods. Scott echoes this sentiment, reminding operators that AirDNA’s performance dashboard can help hosts track near-term booking trends and optimize pricing.

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Connect with Jamie on LinkedIn and Twitter:

LinkedIn: https://www.linkedin.com/in/jamiehlane/

Twitter: https://twitter.com/Jamie_Lane

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Connect with Scott on LinkedIn:

LinkedIn: https://www.linkedin.com/in/sagescott

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