SEPTEMBER 2023 TRENDS REPORT: Navigating the Changing Vacation Rental Landscape - August 2023 Insights with Economic Impact

The vacation rental market continues to evolve, with August 2023 presenting property owners and managers with both challenges and opportunities. In this article, we'll delve into the key statistics for August 2023 and explore how being with Pelican Beach Management can provide valuable revenue opportunities for property owners. As we explore the latest data, we'll also consider the impact of the broader U.S. economy on the vacation rental industry.

 

August 2023: Key Metrics


August 2023 brought several notable changes in the vacation rental industry, but it's essential to consider these metrics within the context of the broader economy:

1. Inflation Impact: The United States saw a rise in inflation during August, with the rate increasing from 3.2% in July to 3.7%. This uptick is the second consecutive monthly increase after a year of decreasing year-over-year inflation rates. In simple terms, Americans are paying an average of 3.7% more for goods and services than they did in August of the previous year.

• Gasoline Costs Surge: Gasoline costs saw a significant 10.6% increase from July to August 2023. This spike in fuel prices was a primary driver of the steep inflation increase during the month.

• Airfare Challenges: Airfare also played a role in inflation, increasing by 4.9% after experiencing declines in previous months. This volatility in travel costs can impact consumer spending.

2. Average Booking Window: Booking windows in August 2023 were notably shorter than in previous years, reflecting changing consumer behaviors.

• Shorter Booking Windows: August's average booking window finished at 69 days, compared to 75 days in the previous year and 84 days in 2019. A substantial 27% of August stays were booked within 14 days of check-in, indicating travelers' preference for last-minute bookings.

• Pricing Strategies: The shift towards shorter booking windows poses questions about pricing strategies. Property managers must adapt to capture last-minute bookings and focus on marketing properties outside of peak booking windows.

3. Average Length of Stay: Stay lengths in August 2023 were slightly shorter than in previous years, contributing to lower occupancy rates.

• Shortened Stays: With an average length of stay at 4.5 days, August 2023 saw stays 3% shorter than the previous year, reflecting evolving consumer preferences. These shorter stays can impact the number of nights sold.

4. Average Daily Rate (ADR): ADRs softened but remained higher than in 2021 and 2019.

• Pricing Challenges: ADR in the U.S. decreased by $13 from August 2022. Increased supply has intensified competition, leading to reduced pricing power amid lower occupancy rates. Consumers, facing high inflation, are becoming more price-sensitive, challenging property managers' pricing strategies.

• Adjusted for Inflation: When adjusted for inflation, rates are notably lower than the previous year, highlighting the importance of an adaptive pricing strategy.

5. Revenue Per Available Room (RevPAR): RevPAR trends reflected the challenges faced in the industry.

• Declining Revenue: August 2023's RevPAR stood at $137 per active property per night, marking a $23 decrease from the previous year. This decline began in Q4 2022 and persisted through Q1 and Q2 of 2023, with RevPAR figures consistently lower than in 2022.

• Shifting Strategies: Property managers must communicate openly with property owners and consider implementing discounts or price adjustments to navigate the changing landscape.

6. Calendar Occupancy: Vacation rental demand continues to perform differently compared to previous years, influenced by supply and consumer behavior.

• Occupancy Trends: August's calendar occupancy was 5% lower than in 2022 and 10% lower than in 2021. A combination of fewer nights sold and increased supply contributed to this decline.

• Adapting to Trends: With shortened booking windows, it's crucial to anticipate pickup occurring later in the quarter and adapt marketing strategies accordingly.

 

Pelican Beach Management's Role in Uncertain Times


In the face of these evolving market dynamics and economic challenges, Pelican Beach Management continues to offer property owners a valuable advantage. With a multi-channel approach that adapts to shifting consumer behaviors and an understanding of pricing strategies in uncertain times, Pelican Beach Management can help property owners navigate the complexities of the vacation rental market.

As travelers book closer to their arrival dates and seek competitive rates, having a partner like Pelican Beach Management can make all the difference in optimizing revenue opportunities for vacation rental properties. In uncertain times, adaptability and informed decision-making are key, and Pelican Beach Management is committed to helping property owners succeed in this dynamic environment.

As mentioned above, the most significant shift in August 2023 was the sudden surge in available listings, contributing to the drop in occupancy rates. More units were coming online, increasing supply across all markets. For those relying on rental-by-owner (RBO) platforms exclusively for exposure and marketing, this surge in supply presented a challenge.

This is where Pelican Beach Management comes into play. Unlike RBO platforms that solely depend on consumers seeking listings, Pelican Beach Management leverages multiple channels, including RBO platforms, to provide property owners with a more robust demand stream. In an ever-changing market, this diversified approach can prove invaluable in maintaining consistent revenue streams for property owners.

In conclusion, the vacation rental market in August 2023 showcased the importance of adaptability and diversification. Pelican Beach Management's multi-channel approach proves valuable in navigating these market fluctuations, providing property owners with a reliable path to revenue generation. As the market continues to evolve, staying connected with a dynamic management partner can make all the difference in the world of vacation rentals.