October STR Market Performance and Election Impact Analysis

In this episode of STR Data Lab, Jamie Lane, Chief Economist at AirDNA, is joined by Scott Sage, AirDNA’s Vice President of Marketing, to analyze the performance of the short-term rental (STR) market in October.

Together, they delve into key metrics, including occupancy rates, rental market analysis, and vacation rental industry trends, while discussing broader economic factors and their impact on STR operators.

The episode highlights the importance of data-driven decision-making for hosts and investors as they navigate a shifting market landscape. With demand remaining stable and supply growth slowing, Jamie and Scott provide actionable insights to help operators capitalize on current trends and plan for the future.

Here’s What You Can Expect from This Episode:

A deep dive into October’s performance metrics, including RevPAR and occupancy rates
The impact of slowing supply growth on the STR market
Insights into holiday demand patterns and how to optimize your nightly rate
A preview of vacation rental industry trends for 2025

Episode Highlights

October’s STR Market Performance: Key Metrics

The discussion begins with an overview of short-term rental market performance for October in the U.S., which showed positive growth across critical metrics. Jamie reports that demand for short-term rentals has grown steadily throughout the year, especially in October with 7.5% year-over-year growth. This marks a turnaround from earlier in the year when occupancy rates were declining due to oversupply in some markets.

Scott points out that the current growth in occupancy is largely due to a slowdown in new supply. High mortgage rates and regulatory pressures have made it more challenging for new operators to enter the market. In contrast, demand has remained stable, with year-to-date booking growth of over 12%, which creates a favorable environment for existing hosts.

RevPAR (revenue per available rental) also saw a year-over-year increase, reflecting hosts’ ability to adjust rates effectively in response to market conditions. Jamie highlights that this growth is being driven by both higher occupancy and strategic rate adjustments by hosts.

Understanding the Impact of Slowing Supply Growth

Jamie explains that rental market analysis often reveals a close relationship between supply growth and occupancy trends. In recent years, the rapid addition of new listings in many markets created downward pressure on occupancy rates. However, October’s data shows that this trend is reversing, as the pace of new supply entering the market has slowed significantly.

Scott provides context, noting that regulatory factors are playing a major role in slowing supply growth, particularly in Urban and Coastal markets. For example, cities like New York and San Francisco have implemented strict regulations that limit the number of short-term rental properties. In some cases, these rules are leading property owners to convert STRs into long-term rentals or sell their properties entirely.

At the same time, Rural/Small City markets continue to grow, driven by lower barriers to entry and strong demand from travelers seeking unique experiences. Scott emphasizes that operators in these markets have an opportunity to capture demand by offering high-quality amenities and competitive pricing.

The Role of Occupancy Rates in Pricing Strategy

Occupancy rates are a critical performance metric for STR operators, as they directly influence revenue and pricing strategies. Jamie and Scott discuss how hosts can use occupancy data to optimize their pricing throughout the year. For October, the rebound in occupancy rates provided a clear indication that demand is outpacing new supply in many markets, allowing hosts to increase their rates without sacrificing bookings.

Jamie advises hosts to pay special attention to seasonal trends, particularly during high-demand periods like the holiday season. With Christmas and New Year’s Day both falling mid-week this year, the result has been an extended two-week period of peak demand. This unique calendar alignment has created opportunities for hosts to capitalize on elevated demand by optimizing their rates for late December and early January.

Scott suggests that hosts use dynamic pricing tools to adjust rates in real-time, ensuring they remain competitive while maximizing revenue. He also recommends monitoring local events and travel patterns to identify additional opportunities for rate adjustments.

Vacation Rental Industry Trends: Looking Ahead to 2025

The episode concludes with a discussion of vacation rental industry trends that are likely to shape the market in 2025. Jamie and Scott identify several key themes:

Supply Growth Will Continue to Slow
High mortgage rates and regulatory pressures are expected to keep supply growth subdued, particularly in Urban and Coastal markets. However, Small City/Rural markets are likely to remain strong performers due to favorable market conditions.
Demand Stability Will Support Growth
Despite economic uncertainties, demand for short-term rentals remains strong, driven by stable employment rates and rising disposable incomes. Jamie predicts that this trend will continue into 2025, creating opportunities for hosts to capture more bookings.
Rate Optimization Will Be Key
With occupancy rates rebounding, hosts are regaining pricing power. Jamie highlights that strategic rate adjustments, informed by data, will be critical for maximizing revenue in the coming year.
Increased Focus on Unique Guest Experiences
Travelers are increasingly seeking properties that offer unique amenities and experiences. Scott advises operators to differentiate their listings by investing in high-quality furnishings, curated decor, and local partnerships that enhance the guest experience.

Actionable Takeaways for Hosts and Operators

Monitor occupancy rates: Use occupancy data to adjust pricing and identify opportunities for revenue growth.
Leverage data for decision-making: Tools like AirDNA’s Performance Dashboard can help operators track key metrics and make informed decisions.
Optimize rates for seasonal trends: Capitalize on holiday demand surges by setting rates that reflect the unique calendar dynamics.
Focus on amenities and guest experience: Invest in features that set your property apart and attract repeat bookings.

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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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