Copenhagen [Peter Lloyd on Unsplash]

AirDNA: April setback offset by YoY growth in summer demand

Europe: While April saw sluggish demand for short-term rental stays, partly due to Easter’s shift to March, the setback looks set to be offset by year-over-year [YoY] growth in summer demand, according to the latest European market review published by data provider AirDNA.

In April, demand nights across the European continent totalled 29.7 million, rising one per cent YOY, a steep decline compared to March’s 28.8 per cent YOY increase in demand.

Despite sluggish demand, listing growth did not slow as listings increased 15.7 per cent YOY in April. With listing growth in the double digits and weak demand growth, occupancy declined 11.7 per cent last month – a sharp reversal from the 10.4 per cent occupancy growth we saw in March.

As per AirDNA, demand growth over the last two months averaged 12.5 per cent YOY while available listing growth averaged 17.7 per cent YOY. With listing growth far exceeding demand growth, occupancy dipped 2.6 per cent YOY but average daily rates [ADRs] kept growing at a rate of 7.2 per cent YOY.

The state of the European economy

In its macroeconomic projections report in March, the European Central Bank [ECB] forecasted 0.6 per cent GDP growth for the European economy. The first quarter of 2024 saw GDP growth of 0.3 per cent, but growth is expected to pick up in the second half of 2024.

The ECB maintains that private consumption will continue to be the main driver of economic growth in 2024. Private consumption is expected to increase by 1.2% due to declining inflation, a resilient labour market, and growing household disposable incomes.

The ECB also projects that inflation will decline from an average of 5.4 per cent in 2023 to 2.3 per cent in 2024. While a slowdown in growth is expected overall this year, total employment is expected to grow 0.5 per cent in 2024, and wages are predicted to grow by 4.5 per cent due to the strength of the labour market.

All this, alongside the growth in short-term rental demand and booked nights so far in 2024, offer good reasons to be optimistic about more disposable income and consumer spending this year. Both nights stayed so far and nights booked for future travels have been at all time highs for European STRs, according to AirDNA.

Listing growth continues to climb while ADR growth declines

New listings continue to add fuel to supply growth as the European continent added 137,000 new listings last month, which made up 4.3 per cent of all available listings in April.

ADR and RRI [looking at pricing power changes for hosts] growth have slowed significantly compared to summer and autumn of last year. And with declining occupancy chipping away at the pricing power of hosts, average YoY ADR and RRI growth are continuing to slow down.

Among the countries leading the way in ADR growth so far this year are Denmark [+15.3 per cent], Portugal [+14.0 per cent] and Hungary [+12.2 per cent]. In all three countries, more expensive new listings are contributing to driving up overall ADRs in the market.

Meanwhile, Norway [-3.0 per cent], Sweden [-3.9 per cent] and Croatia [-6.4 per cent] have lagged behind in ADR growth YoY as the rate at which new listings are being added is outpacing demand. This is resulting in crippled occupancy and lost pricing power for hosts, meaning that rentals enter the market at lower rates, driving down overall ADRs.

2024 summer is on track to beat 2023 demand

AirDNA states that current demand pacing for Europe is pointing to another “record breaking summer” for short-term rentals.

Demand on the books for June through August is up 19 per cent YoY, while June and July are both seeing 17 per cent YoY growth in demand pacing, and August is seeing 22 per cent YoY growth.

The countries seeing the most YoY demand pacing growth are Finland [+31 per cent], Norway [+30 per cent], Poland [+29 per cent], Germany [+29 per cent] and Czechia [+26 per cent].

Among the bottom five countries where demand pacing is lagging are the Netherlands [+14 per cent], Portugal [+14 per cent], Croatia [+14 per cent], Italy [+13 per cent] and Ireland [+12 per cent].

AirDNA: Many summer European stays have yet to be booked

AirDNA says that the demand on the books right now is only a fraction of what might usually be expected as we get closer to the summer travel months.

If this year’s booking curves stay similar to last year’s, for example comparing the second week of August to last year, then more than half of the stays for the second week of August have yet to be booked. Current demand on the books is 20 per cent higher than the same time last year but that may change as the second week of August gets closer.

Peak summer season brings pricing power

Pacing for booked rates is also showing promising returns for STR hosts this summer. ADRs are currently pacing 9% higher year-over-year (YOY) for June through August.

The destinations with the greatest ADR growth so far this year include Denmark [+27 per cent], the United Kingdom [+16 per cent], Spain [+14 per cent], Poland [+13 per cent] and Germany [+13 per cent].

Whereas the countries that are seeing more modest growth in ADR pacing this summer are Hungary [+5 per cent], Norway [+4 per cent], Sweden [+2 per cent], Greece [+1 per cent] and Croatia [-3 per cent].


Read the latest AirDNA European market review in full at this link.

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