AirDNA and STR report: Rentals weathering pandemic better than hotels

Worldwide: Short-term rentals are weathering the pandemic better than hotels in 27 markets, according to a joint report by leading accommodation data providers, STR and AirDNA, which compared the impact of the coronavirus crisis on hotels and short-term rentals from January 2019 through to 27 June 2020.

The report found that while both accommodation types were badly affected during the worst weeks of the pandemic, the features that differentiate short-term rentals from hotels – such as full-service amenities, living space, larger properties and inventory in more remote destinationsĀ  – have proven to be vital assets during the pandemic. Guests were looking for accommodation where they could safely socially distance and comfortably stay for longer periods of time, as data from AirDNA shows that length of stay increased by 58 per cent during the pandemic.

Research shows that two proponents that have traditionally benefited hotels have also caused this sector to be unevenly affected by the crisis.

The first is their reliance on business and group travel, which the pandemic has brought to a temporary halt. The second is the fact that for economic reasons, many travellers have migrated toward mid-scale and economy class options as leisure travel fuelled early recovery.

High level findings:

  • The hotel industry saw greater drops in both occupancy and average daily rates [ADR] than the short-term rental industry, which experienced more stable ADR throughout the crisis. Hotels bottomed out at 17.5 per cent occupancy for the week ending 28 March, while short-term rentals fell to a low of 34.3 per cent.

  • For the short-term rental industry, average daily rates were actually reported as higher in July 2020 than in July 2019 in the US, Spain, Italy, France and China.

  • As of 21 June 2020, short-term rental RevPAR was down just 4.5 per cent, while Hotel RevPAR was still 64.8 per cent lower than the previous year.

  • Hotel ADR increased 31.9 per cent during that same period, while ADR for one-bedroom or studio rentals increased by 23.2 per cent.

  • Hotels were hit harder due to greater reliance on group demand and business travel, though hotel occupancy has since increased 124 per cent from its lowest point.

Performance appears to be trending upward for both sectors, but things are not back to normal in most cases.

Prior to the pandemic, hotels historically had the upper hand in performance compared to their short-term rental counterparts. Hotel performance fell much further, so gains have been more pronounced.

Short-term rentals have shown more resilience and stronger performance amid the crisis but the recovery has not been identical across all types of rentals – larger properties such as four-bedroom homes near leisure destinations have performed strongest throughout the crisis.

The report concludes that, comparing lodging declines since the outbreak of coronavirus to the US hotel sector experience during the Great Recession, it will likely take years to rebuild performance to pre-coronavirus levels.

While it may be too soon to call this swathe of new bookings a ‘rebound’, recent improvements to the lodging industry have been encouraging. As countries, providers and guests continue to adapt to the changing landscape of the pandemic, AirDNA said it expected rates to slowly return to levels of normalcy.

To see the full report, see the linksĀ here and here.