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Predict the Success of Your Airbnb Business with Key Economic Indicators | Episode 16 | STR Data Lab™ by AirDNA

Today we're back with Mariah Kamei and Jamie Lane and they’re diving into the latest economic report and what it means for the future. As we all know, inflation has been a hot topic in the past year, and the latest report shows that it went down by 0.1% MoM. This is the first time we've seen a negative read in a long time, but it's still up 6.5% YoY. The Federal Reserve is closely watching inflation, and this report is a positive sign. If we continue to see this trend, it means inflation will be right where the Fed wants it to be, which could lead to a pause in the rising of interest rates.

The short-term rental market is thriving, with STRs earning over $62 billion in the US, an increase of 25% YoY. Globally, the industry exceeded all expectations with $141 billion earned. We also saw a strong demand for nights booked, up 24% YoY, and a 20% increase in the number of nights stayed in December. Additionally, December saw the most new listings added, with a 23% increase. Occupancy only declined 1.2%. However, it's important to note that ADRs (average daily rate) were only up 3.5%, and we expect that trend to continue to decline.

Lastly, it's important to note the difference between recovered and unrecovered areas. Recovered areas are those where demand has gotten back to 2019 levels, while unrecovered areas are those where demand has not yet returned to pre-pandemic levels. For more analysis and a closer look at the data, be sure to check out the link to the EU review in the description below. Thanks for watching and I'll see you in the next video!

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https://www.airdna.co/vacation-rental-data/app/register

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Read the Full Outlook Report:

https://www.airdna.co/blog/2023-us-short-term-rental-outlook-report

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Read the “U.S. Market Review”:

https://www.airdna.co/blog/airdna-market-review-us-december-2022

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Read “Europe Market Review”:

https://www.airdna.co/blog/airdna-market-review-europe-december-2022

Listen On:

Transcript

00:00:14:04 - 00:00:24:29

Speaker 1

Hello, my best friend, Jamie Lane, VP of Research at AirDNA. It is I Mariah Kamei, your sidekick, your best friend. Are we best friends?

00:00:25:16 - 00:00:27:27

Speaker 2

And the marketing master. Yes, we're best friends.

00:00:28:03 - 00:00:52:07

Speaker 1

Thank you for making that an alliteration. And you know, knowing that I needed my ego stroked at the same time. So appreciate that. Thank you. Thank you. Well, this is, of course, the STR Data Lab brought to you by AirDNA. Shameless plug, shameless plug. Today, Jamie Lane, We are going to talk about– we're going to go back in time a little bit.

00:00:52:07 - 00:01:15:14

Speaker 1

We're going to look at what happened in December. We do that because we want to give everyone context to what's happening in the future. And of course, looking at those trends over time, month over month helps you understand what growth may look like for the future and we want to bring all that context to our audience today. Today was a pretty big day.

00:01:15:15 - 00:01:43:10

Speaker 1

You told me earlier that your phone was blowing up with alerts and I realized that maybe my alerts, which are like for People magazine, weren't as relevant as your alerts. But the the new inflation report came out today. It's like, you know, a gift in your inbox. I'm sure it actually had some pretty good news in it. We've been talking a lot lately on the podcast about those macro trends and what they may mean for our business.

00:01:43:15 - 00:02:05:07

Speaker 1

So I thought maybe that was a good place to start before we get into December. So since I again, my alert was for People magazine, it was probably something Kim Kardashian did. Can you help me understand and maybe anybody else who didn't get the new inflation report in their inbox either. What's the news? What's the what's the news on the street Jamie Lane.

00:02:05:11 - 00:02:35:27

Speaker 2

Yeah, so I'll get into that. And then afterwards ask me why my phone was blowing up yesterday, too. Because entirely different thing in my mind equally as exciting. But the inflation report first we got it this morning it was it was great news. Inflation went down 0.1 percent month over month. It's the first time we've seen a negative read in a long time.

00:02:36:13 - 00:03:00:14

Speaker 2

And while it was still up six and a half percent year over year, that's down really significantly from what we were seeing over the summer, even from just last month when it was up 7.1% year over year. Right. So that's what the Fed is watching. That's what they want to see. And in my mind, this was a Goldilocks report for us.

00:03:02:07 - 00:03:36:03

Speaker 2

And if we continue to see this and either flat declining, even only up 0.1%, like that's putting inflation square sort of in the bull's eye of what the Fed's looking at is the confidence that they can stop raising interest rates. Now, we do expect two more increases when they meet, but then that they can pause as long as sort of that we keep getting these good news.

00:03:36:03 - 00:03:42:02

Speaker 2

But I couldn't have written a better script for what this report came out today, as.

00:03:42:15 - 00:04:05:03

Speaker 1

I love that and I love the Goldilocks reference right, which does not mean that we break into people's houses and steal their porridge and sleep in their beds. It means that it's like sort of the best of both worlds, right? Remember when Goldilocks found the little bear's porridge and it was delicious? That's what was in this inflation report, is that it is that decently accurate depiction of Goldilocks from your perspective.

00:04:05:15 - 00:04:17:03

Speaker 2

Yeah. This is my first time thinking about that story and the relation of short term rentals. And what was the bear? Just like looking. I thought they rented the place on Airbnb and yeah.

00:04:17:19 - 00:04:41:11

Speaker 1

Like maybe, yeah, that was what it was. It was just confusing. Goldilocks is like, no, like Vacasa gave me this house and they're like, No, Airbnb said I was in it, but we've heard those horror stories before. Thank you for making it relatable for our audience. So that inflation report, of course, is one of several. I don't have the number, but let's get there of what I would say are the Jaime Lane indicators.

00:04:41:11 - 00:04:57:21

Speaker 1

These are the things that obviously either make your day or make your day not so great that you are looking at on the economy. So just for for my own knowledge and the rest of the folks that are listening to us, what are those indicators of inflation? Obviously, one of them.

00:04:58:06 - 00:05:40:22

Speaker 2

And the other big one for me and I literally start to sweat the morning of because I get so clammy like waiting for the number. Anyone else out there just clicking and clicking the the BLS site. You know you have a problem. The December payroll numbers. Another great report new jobs up 223,000 in December. And and you think back at the beginning of the year we were adding over 500,000 jobs per month, 223,000 is still really significant.

00:05:40:22 - 00:06:10:21

Speaker 2

It's probably a bit more than the Fed would like to be adding. Yeah. The other components of that report, wage growth was coming down. So the sort of wage growth spiral that we could get into of wages going up, companies having to charge more for their goods and then employees then wanting more money because they're having to pay more for their goods.

00:06:11:23 - 00:06:12:16

Speaker 1

Vicious cycle.

00:06:12:16 - 00:06:52:18

Speaker 2

There is the vicious, vicious cycle. It looks to be one that we're going to be able to avoid those numbers keep coming down. Unemployment at 3.5%, the lowest number it's been in 50 years. Right. So in terms of just an indicator of the overall health of the economy, still very strong and that with the caveat of there's so many aspects of the economy now that are seeing weakness in parts of the economy that are impacted most directly by the Fed.

00:06:52:29 - 00:07:28:19

Speaker 2

So the housing market, clearly in a recession. We're seeing new home sales drop 30, 40%. That is a metric I watch very closely. How many homes are being sold, how many new homes are coming to the market? What the price of those homes is? Are we seeing home values come down? And that for me is going to be the indicator, especially if our metrics continue to maintain sort of strong, that it may be a good time to sort of pull back into investing in short term rentals.

00:07:29:02 - 00:07:29:18

Speaker 1

Gotcha.

00:07:30:08 - 00:07:59:02

Speaker 2

And then and the other big one we get is from the BEA, the Bureau of Economic Analysis on GDP and consumer spending. So how much sort of overall growth is there in the economy and how much are consumers actually spending and what are they spending on? And that's where we're seeing the big sort of dichotomy between goods spending and consumer spending.

00:08:00:05 - 00:08:07:14

Speaker 2

And I was, I was doing a presentation yesterday. I sort of had the image of an Amazon box versus the image of a plane.

00:08:07:23 - 00:08:08:10

Speaker 1

Right, right.

00:08:09:11 - 00:08:37:00

Speaker 2

What are consumers going to spend on and where we went so many months. And it felt like continual in the travel industry that consumers kept spending on goods they were reluctant to travel because of the pandemic. Right now we're sort of over-indexing people are wanting to travel, they're pulling back on goods, spending, putting it in our sector.

00:08:38:11 - 00:09:06:18

Speaker 2

And I don't see that as something that necessarily over-indexing towards travel. But part of we're getting our catch up and then and it's part of a long term trend that we see of these new generations, Gen Z, millennials, Gen X sort of wanting to spend more on experiences and less on material things, which is one of those long term trends that I see is benefiting our industry.

00:09:07:08 - 00:09:30:18

Speaker 1

Yeah, it seems like although it may not be called revenge travel forever, revenge travel is still very much here to stay. It is it is a lifestyle choice, right? And people may opt for less Amazon boxes and more airplane trips. I love that. Okay, so inflation, that's a key metric. BLS, Bureau of Labor, something.

00:09:32:08 - 00:09:32:21

Speaker 2

Yes.

00:09:34:14 - 00:09:51:28

Speaker 1

We'll put it in the show notes, guys. I'm clearly not the economist, but essentially what's happening in the job market, what is what's going on with payroll, how that may relate to some other things, housing market. And then the fourth metric is the BEA data, which is GDP spending and what people are spending on. So I love that.

00:09:51:28 - 00:10:10:25

Speaker 1

So those are some good places for folks to look. If they are as curious as we are, if they get sweaty palms also about what's happening in the economy. All right. Well, that's what's happening there. But let's talk about what's happening in our neck of the woods. And I cannot, for the life of me, remember what radio announcer used that line.

00:10:10:25 - 00:10:12:21

Speaker 1

But we'll put it in the show notes too.

00:10:14:17 - 00:10:19:07

Speaker 2

“In our neck of the woods?” That's Al Roker. Today Show. Yeah.

00:10:19:09 - 00:10:30:10

Speaker 1

Thank you. Go. Oh, God. All right, guys. Dating myself and Jamie Lane in the process, I saw him once jogging in Central Park. Fun fact, it's like, Hi.

00:10:31:06 - 00:10:36:10

Speaker 2

So. So first, before we get into the industry trends, I want to share why my phone was blowing up.

00:10:36:18 - 00:10:40:04

Speaker 1

Oh, yeah, Yeah, Let's do that. What? What happened?

00:10:41:17 - 00:10:58:19

Speaker 2

And that was the podcast I had done with Bigger Pockets went live. And for and for someone that's been sort of following the housing market, sort of housing investing, short term rental investing, and you can't get any bigger.

00:10:59:27 - 00:11:03:04

Speaker 1

Than Bigger Pockets.

00:11:03:04 - 00:11:42:19

Speaker 2

And so it was a true honor to be a guest on that. I loved talking with Rob about the industry and that is one of the podcasts, that sort of extends beyond our industry and we get a lot more reach. And just the comments that people have been sharing and little things like I was on the fence about where my planning was for 2023 and that that interview really helps solidify those plans.

00:11:43:01 - 00:12:09:07

Speaker 2

And so in bringing data to the debate and Rob had a lot of really good questions and we walked through advocacy, why people should care. Especially a lot of the new hosts getting into this industry that maybe didn't know that they should care about advocacy and that new laws could potentially put them out of business.

00:12:09:29 - 00:12:17:15

Speaker 2

We talked about the best amenities, best types of markets to invest in today. So hit on some of my favorite topics.

00:12:18:04 - 00:12:38:26

Speaker 1

Oh my gosh. Well and I did, I listen to that. I did get that alert and I listened to it on my commute into the office and equally enjoyed it. One, Rob of Robuilt and then Tony Robinson of the Robinsons. Both were great. I think just it was probably a really great dialog for you because these guys are serial investors.

00:12:39:04 - 00:13:00:23

Speaker 1

They're operating in some of these major markets. They had really smart questions for you. I think we again, you provided a lot of clarity for folks out there as well. So, yeah, definitely worth a listen. Put that in the show notes as well. And then for advocacy, right, we are partnering with VRMB Matt Landau and Dana Lubner.

00:13:01:07 - 00:13:23:13

Speaker 1

Other great podcasts reference. Just again shout out for the podcast. You're also a frequent guest on that one. But if you're interested in learning more about advocacy and how you can get involved, highly recommend How to Save Your Vacation Rental Business podcast. I love that. All right. Okay. All right. Now let's get into it, Jamie. Let's talk about some of the high notes of 2022.

00:13:23:19 - 00:13:47:10

Speaker 1

How did we end? How do we book end 2022 in December as it relates? I know that there's one number or maybe two numbers that sort of bookend the year. They're pretty big numbers. I'm not going to I'm not going to say them. I’m going to let you say them. But I think it really for me is a sobering moment of the magnitude of our business.

00:13:47:10 - 00:13:51:08

Speaker 1

So let's talk about where we ended the year in terms of revenue.

00:13:51:15 - 00:14:25:00

Speaker 2

Yeah, we'll talk about where we ended the year and then get into some of the December figures. Overall in 2022, US short term rentals earned over $62 billion Billion with a B and that was Capital B, that was up 25% year over year. So massive growth for industry and we say it all the time last year was the best year ever and this year exceeded, I think, all expectations.

00:14:25:15 - 00:14:37:15

Speaker 2

It definitely exceeded the forecasts. I think the forecasts I talked about at DARM earlier this summer had it getting to 61 billion. So we did get.

00:14:37:25 - 00:14:39:05

Speaker 1

Pretty close, pretty close.

00:14:39:24 - 00:15:11:02

Speaker 2

Exceed those numbers. Occupancy came in 58.7%, which we had been forecasting think low 58, 58.4 or 58.2, something like that. So it came in above and that was really on the strength of a very strong December in terms of nights booked. But then so 62 billion in the U.S. globally, that number was 141 billion.

00:15:11:12 - 00:15:12:28

Speaker 1

Wow. Wow.

00:15:13:06 - 00:15:13:17

Speaker 2

Yeah.

00:15:13:26 - 00:15:17:25

Speaker 1

So capital B, their capital B.

00:15:18:15 - 00:16:10:18

Speaker 2

So love to see see the growth there. And that was really on the backs of a really strong recovery in Europe this year. It was really and vaccines rolled out and last year and it really and after Omicron dissipated in January sort of global travel got back and it was a on fire year for Europe and a shout out to Blake on my team who puts together a European review every month definitely look at that one I was just going through it and it really highlights what a great year it was for Europe and I think it saves a massive recession in Europe.

00:16:10:18 - 00:16:19:17

Speaker 2

There's so many opportunities right now to invest in sort of pick up on sort of the growth that's happening out there.

00:16:20:08 - 00:16:42:21

Speaker 1

I love that. Yeah, it's super, super important to understand where some of that global revenue is coming from. All right. So that's I think that's those are big numbers. I think that really shows the magnitude of the business and I'd say like the health of it. Right. All right. So now let's now let's talk about December. I've been teasing the audience for the last 15 minutes about it.

00:16:42:21 - 00:16:49:05

Speaker 1

So usually we talk about these things in terms of supply and demand. Jamie Lane, where do you want to where do you want to start?

00:16:49:18 - 00:16:55:20

Speaker 2

Now, I'll start with my favorite indicator. Yeah, you know, I have my favorites.

00:16:56:15 - 00:16:58:29

Speaker 1

We want to know what your favorites are.

00:16:59:11 - 00:17:00:12

Speaker 2

Don't tell the others.

00:17:00:26 - 00:17:01:04

Speaker 1

Yes.

00:17:02:18 - 00:17:37:08

Speaker 2

My favorite one is nights booked and it's the most real time indicator how many nights were booked in December. And then we compare that to December last year and previous Decembers. And that gives us what is actually happening, what's coming through your inbox? How many dings are you getting on your phone as reservations come in over that month and in December nights booked were up 24% year over year, which that number had been sort of slowing.

00:17:37:19 - 00:18:01:04

Speaker 2

I am through through November, sort of peak during the summer. And and it sort of really accelerated again in November or in December where it had been only up about 15% and it sort of skyrocketed up to 24% growth. That's with a huge caveat.

00:18:01:04 - 00:18:03:25

Speaker 1

I like a caveat. Asterisks.

00:18:04:01 - 00:18:09:03

Speaker 2

Yeah. Last December, if you remember that time between Thanksgiving and Christmas.

00:18:09:03 - 00:18:09:15

Speaker 1

Yeah.

00:18:09:21 - 00:18:26:28

Speaker 2

Was sort of on sort of onset of omicron where not a whole lot of people were booking. And so we had an easy comp. So when you compare this year to last year and it was pretty easy one.

00:18:27:02 - 00:18:29:03

Speaker 1

We got set up for success there.

00:18:29:20 - 00:19:10:01

Speaker 2

And we're going to see another easy comp probably in January because Omicron was still in week already looking at the weekly numbers, right? Last week, sort of at the beginning of January, bookings were on fire and I think it was up significantly like 14, 15% year over year. So we're still seeing really strong growth, but we sort of that sort of ticks off in my mind, sort of spring summer booking season and bookings are always really low during the holidays.

00:19:10:12 - 00:19:40:15

Speaker 2

So that sort of period from Thanksgiving to Christmas is sort of a lull in booking activity. And then you get past New Year's and it's a no holds bar. And we have definitely been seeing in our data some of the strongest bookings in the U.S. that we've really ever seen. So awesome to see. And I think sort of bold bodes well for the year ahead.

00:19:41:01 - 00:19:47:21

Speaker 1

I love that. It's kind of like a predictable rollercoaster. You know, you're always going to go tanking down and then it's going to shoot back up.

00:19:48:01 - 00:20:09:13

Speaker 2

Yeah. And it's something I have to remind myself when I see the numbers, it's like, Oh, well, another bad week. Like, don't worry, it's coming. Yeah, it going to be here before you know it, and then it shows up and the numbers tick up there. But it's always, it's, it's always a worry. Like what if they don't tick up it this year?

00:20:09:13 - 00:20:15:25

Speaker 2

What if it's sort of a continuation of the winter or the December bookings? But yeah.

00:20:16:00 - 00:20:30:17

Speaker 1

That's my sweaty palms moment, just so you know, that's where my, my palms are getting sweaty. I'm like, okay, we're going to we're going to go back up right? I love that. So that's a good indicator. What else? What else are you looking at there, my friend?

00:20:30:18 - 00:21:01:29

Speaker 2

Yeah. So that's nights booked, demand nights. So how many nights were stayed in December. Also a a good month up 20% and that's really been in line with the past four months so sort of steady as it goes new listings up. We did see one of the it was the most new listings ever added in the month of December.

00:21:02:06 - 00:21:03:17

Speaker 1

Wow.

00:21:03:17 - 00:21:33:22

Speaker 2

So, I mean, if there's if you remember when we were going through the Outlook report, if there's any big risk out there, is that listing new listing growth continues to go at 20% and demand slows to 10%. You see some pretty big declines in occupancy, but we haven't yet seen that. Definitely not in December. So occupancy only declined 1.2%.

00:21:34:03 - 00:21:39:00

Speaker 2

So we are seeing a slowing of new listing growth.

00:21:39:00 - 00:21:43:24

Speaker 1

very micro level.

00:21:43:26 - 00:21:44:04

Speaker 2

Yeah.

00:21:44:07 - 00:21:46:04

Speaker 1

Still seems stubbornly high.

00:21:46:04 - 00:22:12:22

Speaker 2

A few listings were up 24% last month. They're only up 23% this month. So and if you squint, you can sort of start to see the the growth rates come down and as we've talked about, we do expect that to continue to ease over the next few months as we head into 2023.

00:22:13:06 - 00:22:23:10

Speaker 1

Yeah, you're sort of projecting that in the Outlook report to significantly decrease in terms of supply growth. That's said it's not quite keeping pace with demand.

00:22:24:08 - 00:22:25:19

Speaker 2

Yeah.

00:22:25:19 - 00:22:28:14

Speaker 1

Which is, which is growing at a slower rate to be more specific.

00:22:28:25 - 00:22:43:05

Speaker 2

Yeah. And, and occupancy was down 5% last in November, only down 1.2% last month. So Right it was down but not down as much. So a little bit of positivity. I feel like you can pull out of that to.

00:22:44:01 - 00:23:05:28

Speaker 1

100%. Yeah. Yeah. And just again, like having that predictability, understanding where to index off of 2021, 2022, how we kind of come up with that predictable revenue model in the future I think is some of the key takeaway there. But that's all we hear about right lately is occupancy is down, book nights booked are down. So giving folks some context as to some of the drivers of that I think is really important.

00:23:07:06 - 00:23:16:03

Speaker 2

Yeah, and we never talked about New Year's resolutions, but one of my New Year's resolutions, is to try and index off of 2019 anymore.

00:23:16:14 - 00:23:17:16

Speaker 1

I love that.

00:23:17:18 - 00:23:37:29

Speaker 2

We've got a decent year now of comparables for 2021, 2022 now. So I and I can't say we're never going to index first 2019, but I'm happy to not be indexing off a year that year anymore.

00:23:38:19 - 00:23:57:03

Speaker 1

Well, it's so funny because I was actually so I was saying the same thing, but I was thinking 2021 because it was such a bananas year as I like to call it that. It's also it's indexing off the high, which is always dangerous. If you're in this business, you know, the folks that are making short term rentals their primary business, right?

00:23:57:04 - 00:24:13:29

Speaker 1

You know, you got to think about it in terms of the long term. But to your point, 2019 sort of being where it is so far in the rearview mirror, I'm assuming, and completely different world that we're living in today. And so now having those four years of data points in addition to 2019 being really helpful.

00:24:14:13 - 00:24:27:27

Speaker 2

Yeah, that said, I'm still using the 2018 2019 data for underwriting. So if I'm looking at what a property is going to earn going forward, I don't want to index off of 2021.

00:24:27:27 - 00:24:28:20

Speaker 1

You do not.

00:24:29:10 - 00:24:51:14

Speaker 2

2022, but 2018, 2019 in terms of what is a reasonable occupancy for a market, I think it's I'm still doing. But in terms of growth and sort of industry health, I think we can squarely start indexing off of prior year and get away from those 2019 data points.

00:24:51:14 - 00:25:11:01

Speaker 1

I love it. Yeah. And of course there's no like unfortunately black and white in our line of business, right? It's a that's useful for some things, less useful for other things. But yeah, that sort of context of worst case and I really love that take away from a couple of podcasts I did a podcast I did with the Top1percenter where he's like, ‘Look, I'm only investing off the worst case scenario.’

00:25:11:01 - 00:25:30:26

Speaker 1

It's like, I'm never like he's like, I've got my my bottom cash on cash return percentage that I'm willing to accept. And then everything else on top of that is gravy. I think that's a really great way of looking at it too. So underwriting of 2018 2019 numbers might get you to a better baseline than if you're trying to underwrite off of 2021.

00:25:31:14 - 00:25:37:05

Speaker 2

Yeah, and sort of I'm not pushback, but the other sort of caveat there is.

00:25:37:05 - 00:25:38:12

Speaker 1

Yeah caveat us.

00:25:38:29 - 00:25:43:18

Speaker 2

Those were those are two of the best years ever for travel as well so we don't.

00:25:43:26 - 00:25:44:13

Speaker 1

Fair, fair.

00:25:44:27 - 00:26:10:00

Speaker 2

A true recession in our data set only goes back to 2014. Right It is the industry's longest but it doesn't have like the deep recession that we saw in 2008/2009. It doesn't have the impact that 911 had on the industry. So there's still some room for risk adjustment there.

00:26:10:10 - 00:26:33:07

Speaker 1

Yeah. Which is why I also love that our new outlook report incorporates that Oxford data, right? So we're able to now do a better job of looking more historically at, you know, further back in time to understand what sort of all of those that baseline might be. And then worst case, best case. So another great way to sort of bolster our data set, I would say increased the accuracy.

00:26:33:18 - 00:26:55:07

Speaker 1

I love it. Okay. All right. So we've talked about nights booked, nights stayed, new listings. All right. Should we get into– as we know, we can't take occupancy to the bank, but we can take revenue. Let's talk about well, maybe the other thing before that the ADR then the revenue. But you know where I was going with it.

00:26:55:16 - 00:27:21:22

Speaker 2

Yeah. So ADR’s, we're up up about three and a half percent, not as high as we had been seeing past three months where it was up closer to six. So and if that's a trend which we are forecasting it to continue to trend down and that's important to to take into account, especially when budgeting inflation's coming down.

00:27:22:15 - 00:27:31:21

Speaker 2

More than likely the increases in rates that you're able to get in 2022 when rates were and rates were up 6% for the year.

00:27:32:21 - 00:27:33:13

Speaker 1

So crazy.

00:27:33:13 - 00:28:05:00

Speaker 2

We're not expecting that to continue into 2023 in the sort of slowdown in rate we saw really across all different location types. There no areas really spared the weakest growth in rates happening in mountain resort areas. Right. Dealing with with some decent declines in occupancy there. A lot of new supply.

00:28:05:18 - 00:28:07:08

Speaker 1

Yeah.

00:28:07:08 - 00:28:33:04

Speaker 2

So yeah, it's something we're keeping an eye on. We don't expect Overall industry ADR’s to go negative next year, but we do expect them to only be growing by about one and a half percent for the full year. So that more than likely will mean that some location types, many cities do go negative and expecting in quite a few areas to go negative.

00:28:33:04 - 00:28:39:16

Speaker 2

So I mean, and a big piece of that is the increased competition. So as there’s

00:28:39:17 - 00:28:40:03

Speaker 1

More listings

00:28:40:03 - 00:28:42:07

Speaker 2

As there's more listings, more competition.

00:28:43:08 - 00:29:14:14

Speaker 1

Yeah yeah yeah. Which bodes well for the innovators which I know we have a few in this space. It was part of the part of the things I love about that, the hallmarks of our business investors here are folks that are going to innovate. I love that. Well, and sort of we've talked about this before, this idea of like, I guess I'm going to you know, I only talk in like cliches and things like that, but Tale of two cities, tale of two areas and I love the way that you position that Jamie, which was sort of there's these unrecovered areas and then there's these recovered areas.

00:29:14:26 - 00:29:21:23

Speaker 1

So let's define that for folks. What does it mean to be recovered, I guess first.

00:29:22:10 - 00:29:59:22

Speaker 2

So we can bifurcate markets. And sort of grouped into areas that demand has gotten back to 2019 levels. So you think they're recovered And then there's areas that have not recovered and are still well below 2019 levels. And when looking at demand growth and now we're looking at demand growth year over year 2022 versus 2021 for just about every market, pretty decent demand growth.

00:30:01:14 - 00:30:40:19

Speaker 2

But by sort of breaking into those two groups to get a sense of which markets are seeing strong recovery and which markets are seeing strong expansion in some of the strongest recovery markets. So those still below 2019 levels, but sort of growing quickly back and seeing strong recovery today, areas like New York, Newark, San Jose, Boston, Seattle, San Francisco, D.C. So these are a lot of major cities, a lot of areas that still are very much supply constrained.

00:30:40:19 - 00:31:15:25

Speaker 2

Many of them have tight regulation now where it's really hard to add new supply into that market. So a lot of that demand is just feeding into much higher occupancy for those hosts. And if you can get into some of these markets, great. And you're going to continue to be able to ride that recovery wave as as more and more people venture back to the cities, more and more businesses are having their workers come back full time, which brings much more sort of business travel back.

00:31:16:22 - 00:31:33:17

Speaker 2

And we do. And then just the recovery of international. All of those markets are at historically been very dependent on international travelers. And we're seeing strong recovery now and international travel back to the US.

00:31:34:21 - 00:31:58:15

Speaker 1

I love that. Yeah, No, that's I love that sort of unrecovered recovered and then the expansion, which I think is really important, right. Which are maybe places like that are in it to win it in the long term. Right. So we're thinking about places in Texas and good old Gatlinburg, which we talk about a lot, the Hamptons, Hawaii, places that just probably will always be wonderful markets to be in if you can get into them.

00:31:58:22 - 00:32:28:25

Speaker 2

Yeah, And these are markets that are really popular to invest in today generally have a laxer regulation. I mean, if you want to invest, you can get a permit, you can get into that market and broadly since. And there are areas where we are seeing the most demand growth that supply is being absorbed. Hosts that bring new listings into the market.

00:32:30:00 - 00:32:54:11

Speaker 2

They're seeing decent, decent performance, they're getting bookings. There's more people that want to stay in that market than can actually stay in, especially during peak seasons. So and broadly, they're seeing expansionary growth and that's that's, that's great for the industry as more and more people are being able to be accommodated by short term rentals.

00:32:55:04 - 00:33:16:15

Speaker 1

I love it. I love it. I love those categorizations. I think we should go deep on that in the near future. We should talk a little bit more about sort of where the best places to invest are potentially on the podcast and again in the near future. Hint, hint. Shameless plug, shameless plug. Okay. So I think this gives everyone a lot of context.

00:33:16:15 - 00:33:40:16

Speaker 1

I love sort of the topic thematically of this podcast has really been these indicators, right? What are the indicators? What are the things that you can look at which I think we haven't overtly talked about in a while for the audience. I think this is a really great place to sort of level set, jump set the year. I always like taking a look back because like, you know, I mean, I am in Colorado, I don't hike, but in the past I hiked, right?

00:33:40:16 - 00:34:05:22

Speaker 1

And like when you're hiking up a mountain, you're like, you know, is that a false peak? Is that a false peak am I ever going to get to the frickin top? And so often you forget to look back and realize you just went 13,000 feet up in the air. So I think this was great context for folks. Again, some interesting indicators of, you know, why our Outlook report is predicting a little bit more of a maturing of growth.

00:34:05:22 - 00:34:11:27

Speaker 1

I know people have been talking a lot about the the gold rush. So now we have the canaries in the coal mine as well, folks.

00:34:12:18 - 00:34:18:01

Speaker 2

Yeah. And one month is never a trend. No.

00:34:18:10 - 00:34:20:01

Speaker 1

No, that's a fair point.

00:34:20:07 - 00:34:35:20

Speaker 2

You got to continue to to tune in and see if those those trends are continuing. And I you know, we'll be here to sort of dive in and and keep everyone up to date on what those trends are showing.

00:34:36:10 - 00:34:57:12

Speaker 1

I love it. Yes, absolutely. We're going to keep showing you what happens month over month, year over year, give you all the context. So that you can climb all your mountains, get to the top of those 14 years, hopefully with better information in your back pocket. All right. I say we call this a wrap. The sun is slowly encroaching on my face.

00:34:57:12 - 00:34:58:29

Speaker 1

I think that means it's time to end.

00:34:59:12 - 00:35:04:16

Speaker 2

Yeah. And I think I heard my kids just get home so.

00:35:04:16 - 00:35:14:11

Speaker 1

Okay, that's definitely a good reason to wrap it up. Yeah. All righty. Jamie, as always, it's been a pleasure. And folks, we'll catch you on the next episode.

00:35:14:22 - 00:35:15:26

Speaker 2

Yeah. Thanks, everyone.

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