Mid-Summer 2023 Trends Update
As the summer of 2023 continues, the vacation rental industry in the United States is navigating a dynamic landscape of changing travel patterns and evolving demand. While there have been some challenges and shifts in the market, the overall outlook for the summer remains positive.
Occupancy and Demand Changes
The vacation rental industry in the US has experienced some setbacks in occupancy when compared to the previous year. The challenges are attributed to changes in travel patterns, with a shift from resorts to Top 25 markets, and an increase in international outbound travel. This change in demand mix, from pure leisure to a more balanced mix of business transient, group, and leisure travelers, has impacted the overall occupancy rates.
ADR Softening and Normalization of Demand
Average Daily Rate (ADR) in the vacation rental market has softened, which is not entirely surprising given the changes in demand patterns. As the industry moves towards normalcy after the disruptions caused by the pandemic, the demand mix has normalized, leading to a more modest growth in ADR. While this might result in flat to slightly down Revenue Per Available Room (RevPAR) as compared to last year, it is a reflection of the market returning to pre-pandemic conditions.
Global Recovery and Event-driven Performance
Outside of the United States, the recovery in the vacation rental market is in full swing. Across the globe, large gatherings around concerts, sports events, and festivals are expected to drive performance throughout the summer. This indicates a growing appetite for travel and leisure experiences worldwide, and it may have implications for the US market as well.
Forward Projections for the US Market
Based on historical data and STR's Forward STAR data, the US market was poised to see a similar trend to the previous summer. Occupancy is expected to increase for the weekend ending on 24th June, followed by a slight dip in the following two weeks, before reaching its annual peak in mid-July. However, ADR growth is likely to remain moderate due to the normalization of demand. Despite lower year-over-year gains, the industry remains on solid ground, and a stronger Fall season is anticipated.
Expectations for the Fall Season
Beyond the summer, the US hospitality industry is expected to maintain strong occupancy as it reaches its annual peak in mid-July. ADR and RevPAR will see at-best, only modest improvements, while hotels outside of the US will benefit from an increase in international travelers, particularly Americans. The forward bookings in the top US markets for the Fall season are already showing positive signs, indicating a strong performance in the autumn months.
Pelican Beach Management's Commitment
Pelican Beach Management is actively responding to the changes in the vacation rental industry. By utilizing advanced tools like PriceLabs and monitoring industry sources, we are adapting to shifts in the market and striving to maximize the earning potential of vacation rental properties. Our focus remains on providing the best opportunities for property owners at Pelican Beach.
In conclusion, the Summer of 2023 has presented both challenges and opportunities for the vacation rental industry in the US. Despite the softer growth rates and changes in demand, the overall outlook remains positive with solid summer weeks ahead. As the industry continues its recovery, adaptation and responsiveness to market changes will be crucial for businesses to thrive in the evolving vacation rental landscape.