A New Year Could Spell Scarcity Of Available Vacation Rentals
Clark Twiddy is the President of Twiddy & Company, a hospitality and asset management firm along North Carolina’s Outer Banks.
As the increasingly mainstream vacation rental industry goes from a challenge of endurance in 2020 to a challenge of emergence in 2021, both vacation customers and rental business operators are peering into the booking season of winter to better understand performance. They are looking at this verdict on travel confidence to weigh it against the continuing impacts of the pandemic on purchasing decisions. In short, stakeholders want to see the potential for this new year – and whether it breaks away from the trends of 2020.
While many global travel predictions remain dismal, especially around business and international travel, domestic leisure travel to drive-to destinations in 2021 looks to be remarkably vibrant. In fact, with the lengthening impacts of the pandemic, many vacation destinations may be faced with marketing scarcity rather than availability. A situation not seen in 2020. From my own company’s internal data, there are fewer available nights in 2021 than there have ever been at this point in the booking cycle.
This trend means several things to vacation rental stakeholders. For travelers, it means that early booking trends in late 2020 and early 2021 could mean little choice remains for short-notice travel planning in the summer and fall of 2021. It also means that rental prices will remain relatively buoyant for many homes as demand continues to outpace supply in many natural-environment destinations.
For homeowners, scarcity should support strong financial performance and, critically, earlier revenues in a time where global economic certainty is still present, according to Carmen Reinhart, the World Bank’s Chief Economist, in a recent Economist profile (paywall). While demand is linked in its impact across destinations and varies nationally, many bike and beach destinations close to urban centers are seeing record demand earlier than ever. This trend is supported by VRBO’s recent US 2021 report showing 61% of those surveyed are looking for outdoorsy destinations rather than urban ones.
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For strong vacation homeowners, this trend also puts more pressure on your home reinvestment timing. You’ll have less time to maintain and improve your home while at the use, and pressure on spaces like your home’s kitchen and outdoor spaces will likely increase more than ever before. I recommend focusing your investments there and move quickly to line up vendors. In addition, it will be remarkably tempting to make 2021 a new normal in terms of revenue, but keep in mind that the domestic market will most likely see a down year in 2022 as other vacation options become available. Do everything possible in 2021 to drive repeat customers. There is also a financial silver lining in record home sales sustained by strong annual rental revenue. For those in destinations with this advantage, keep your exit strategy clearly in mind.
For travelers, booking early means certainty — and the maximization of choice and value. While pre-pandemic trends suggest that waiting to book means a greater chance of discounts, early booking trends in late 2020 suggest this year that the wait-and-see approach is riskier. Delaying booking can lead to loss of preferred choice in accommodations. In other words, don’t wait too long to look for discounts — save that for 2022.
For management operators and facilitators, the enduring challenge in 2021 becomes how to pivot from the potential for a record financial performance in 2021 to sustained performance as the domestic market cycle moves downward in 2022. This gap is both the opportunity and the risk for real competitive emergence. For the moment, however, this scarcity likely means a busy January and February with significant impacts on marketing, advertising and search engine thinking. I expect a mad dash in web optimization during the first two quarts of this year.
In short, this summer tourism season likely means exceptional leadership in companies big and small will be focused on building both the repeat guest experience while sustaining home quality. There is likely to be a sense of urgency if projected trends in demand hold up. The potential for record usage puts pandemic-friendly amenities like kitchens and outdoor spaces at the top of maintenance lists, while the potential for expanded travel options in 2022 encourages strong customer engagement right now.
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