Key Data: US STR market sees 17 per cent revenue drop

US: The US short-term rental market saw a summer slowdown, experiencing a 17 per cent decline in RevPAR, according to analysis by short-term rental data provider Key Data. 

While signs of a similar dip could be seen in Europe, the UK, and globally for stays in June, July and August, the United States saw sharper declines in revenue per available rental [RevPAR] and was the only country to see average daily rates [ADR] fall in raw terms.

RevPAR in the United States fell 14.1 per cent to $115 — a 16.8 per cent decline when adjusted for inflation. ADR fell 8.1 per cent year-over-year, dropping from $328 to $302 [a real-terms fall of 11 per cent], and paid occupancy fell by 6.5 per cent, settling at 38 per cent.

Contrast these declines with the rest of the world and it is clear that while the American market slowed this summer, the UK and Europe likely lag behind the United States in returning to pre-Covid norms. The data shows that US RevPAR declined more than twice as fast as Europe and the UK, meaning property managers in the United States are under more pressure to defend revenues.

In Europe, ADRs rose 0.3 per cent in real terms to $182, which helped offset an 8.2 per cent drop in occupancy this summer. This meant European RevPAR only fell eight per cent in real terms to $71.

The United Kingdom saw RevPAR fall six per cent in real terms to $86. Occupancy fell 2.4 per cent in the UK, not helped by ADRs that fell 3.6 per cent in real terms to $213.

Globally, RevPAR was down 9.8 per cent in real terms to $70. Aided by a 4.9 per cent real-term decline in ADR over June, July and August while occupancy also helped to drag revenues down, falling 5.1 per cent annually.

[Credit: Key Data]

Key Data says that it is the only short-term rental data provider to use direct data from property managers to better interpret the millions of scraped data points it collects from online travel agencies [OTAs] Airbnb and Vrbo. This allows it to adjust RevPAR and occupancy statistics worldwide to account for the days bookings are blocked by owners for their own stays and maintenance.

Outlook for the rest of the year [September to December 2023]

This is a very early stage picture based on bookings as they stood at the end of August. Occupancy and RevPAR figures should be treated with caution, and Key Data’s forward-looking data is not adjusted for inflation.

Looking at ‘on the books’ [OTB] data for September to December in the United States, RevPAR shows a $20 drop, year over year, while occupancy is down by six percentage points over the same period. ADRs are expected to rise 0.9 per cent.

However, the data also shows that booking windows in the United States have shrunk 11.4 per cent year-on-year for this period – from 68 days to 60 days – which potentially leaves room for property managers to make up ground by December.

UK RevPAR is pacing 22.9 per cent behind for stays in September through December, and ADRs are currently up 6.7 per cent to $220. Occupancy is currently down 28 per cent year-over-year.

Europe is currently seeing a softer drop in RevPAR [-11.8 per cent], with ADRs up 15.9 per cent, though occupancy is lagging behind last year, down 24 per cent.

As it stands, global occupancy is also down 31 per cent from the same period last year, but ADRs have increased by 9.9 per cent, pushing RevPAR down 24.1 per cent.

[Credit: Key Data]

Key Data CEO Jason Sprenkle said: “Many property managers in the United States were probably disappointed this summer. The rest of the world saw declines in RevPAR, but the US should see improvement in 2024.

“It’s likely that the cost-of-living crisis, coupled with an increase in short term rental supply, has hurt revenues this summer. It’s still difficult to tell what the rest of the year holds but, as it currently stands, we do see lower occupancies globally,” he added.