Vacation Property Vacuum: Short-term rental

SHORT-TERM PAIN

Vaccinations Expected to Re-motivate Vacationers

By Erin Ruddy

ALTHOUGH SOME INDUSTRIES

have made gains in the COVID-19 era, the majority have not been so lucky. Among them is the short-term rental sector.

With cities worldwide caught in a cycle of locking down and gently loosening the reins, travelling has been wrought with challenges, making it nearly impossible for anyone to leave home. A new report from the U.S.-based revenue management platform, Beyond Pricing, sheds some light on the uncertain months ahead for the hard-hit sector.

“While we expect the travel industry to have stops and starts in 2021, with different geographies and sectors of the industry reacting, adapting and recovering at different paces, we see a steady, upward trend in travel and spending moving forward,” says Julie Brinkman, Beyond Pricing’s Chief Executive Officer. “We are overall optimistic about the future and growth of the travel industry in general and the short-term rental market in specific.”

A year ago, there was little reason to be so optimistic. When the pandemic first began its sweep across the Asia-Pacific region in February 2020, the travel industry suffered an abnormal rise in cancellations, followed by a significant decrease in the pace of bookings as lockdowns and restrictions were put into place. By mid-March, the short-term rental sector was suffering noticeably.

Defined by the City of Toronto as “all or part of a dwelling that is rented out for less than 28 consecutive days,” short-term rental units are available everywhere housing exists through sites like Vrbo and Airbnb. Last summer saw some markets pick up as people sought to escape their confinement.

“The first markets to see an uptick were coastal, drive-to and non-urban markets where consumers could travel and have an entire short-term rental to themselves in order to avoid contact with others,” the Beyond Pricing report states.

That demand continued into the fall as remote work and schooling capabilities coupled with lower rates, typical of September and October, helped entice some travellers to extend their short-term stays. However, a second wave of COVID-19 once again undermined that activity.

“The total amount of reservations in Canada in 2021 to date is down 30 to 40% compared to 2019 levels, continuing the trend of depressed demand experienced in 2020,” Brinkman reports. “While regional destinations easily accessible by vehicle have been performing really well recently, the near closure of the U.S.-Canada border has brought serious consequences to some of the frequent destinations of U.S. travellers.”

That includes Whistler, where occupancy slid by 30% with a corollary 35% decline in rental rates. Cities located relatively near the U.S.-Canadian border are also suffering from the travel restrictions

“Overall, pacing occupancy and average daily rate (ADR), won’t resemble last year’s numbers until July,” Brinkman projects. “Toronto, Montreal, Vancouver and Quebec were the most sluggish markets in Canada in terms of bookings per listing over the winter months, while the less urban areas of Owen Sound, Canmore and MontTremblant were doing the best.”

Beyond Pricing’s analysts remain optimistic about the continued progress of vaccination programs in Canada and outside its borders. Projections for the remainder of 2021 include: • The short-term rental sector will see an increase in demand with remote work and distance-learning continuing to prevail. • People will likely favour small rental properties over big hotels to avoid hightraffic public areas. • Lead times between bookings and occupancy will remain truncated. (In 2020, lead times shrunk by half). • People will continue to book short-term rentals, but at a slower pace than in previous years. • Property managers and owners of shortterm rentals will need to settle on less profit during the high season due to cancellations and discounts provided in 2020 that will need to be honoured. • Property owners should brace themselves for a possible continuation of cancellations throughout 2021. • If they haven’t already, they should consider adjusting booking projections and cancellation policies to be more flexible. • Property managers will need to consider diversifying their offerings by providing more long-term stay options to help stabilize their portfolios. zz Erin Ruddy is the Editor of Canadian Apartment. The complete text of Beyond’s

Short-term Rental Industry Trends Report

can be found at https://blog.beyondpricing.com/ beyonds-short-term-rental-industry-trendsreport-2/.

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