The Short-Term Rental Correction in the U.S. Was Sharp

This is not a story of "Airbnbust," but instead we're talking about a correction of the "Airbnboom" that has taken place since the highs of the pandemic.

In its latest report, data company KeyData found that the U.S. short-term rental market saw a revenue (RevPAR) drop of 17%. 

During June, July, and August, analysts observed similar dips in Europe, the UK, and elsewhere globally. However, the U.S. saw sharper declines in RevPAR and was the only country that KeyData surveyed where average daily rates decreased.

In the United States, RevPAR fell by 14% to $115, which amounted to a 16.8% decline when adjusted for inflation, and average daily rates dropped 8% annually going from $328 to $302 (an 11% decrease in real terms), and occupancy decreased by 6.5%, reaching 38%.

Comparatively, the rest of the world fared somewhat better, which means the American market faced greater challenges this summer. The data suggests that the U.S. RevPAR declined more rapidly than in Europe and the UK, putting property managers in the U.S. under more pressure to protect their revenues. 

What’s the reason for the drop? The short answer is market correction. And the long answer is travelers were excited to leave the country and go abroad for a vacation, and on the supply side, those who bought properties in the heat of the short-term rental boom unsurprisingly saturated the market. 

“Market correction is the main thing we are seeing, that’s why the U.S. is different because the big growth came in 2020, 2021 and now it is recorrecting,” said Melanie Brown, executive director of data insights at KeyData. “Everybody got super excited about short-term rental and supply increased, people jumped on the money making cycle and it went back down."

Brown added that more people stayed at hotels or took cruises in addition to traveling abroad. 

“On top of that is that consumer wallets are tighter right now, and a lot of travelers took cheaper trips closer to home,” she said.

In Europe, ADRs increased by 0.3% to $182, helping offset an 8.2% drop in occupancy during the summer. As a result, European RevPAR only fell by 8% to $71. 

Looking ahead at the books data for September through December in the U.S., RevPAR shows a $20 drop, year over year, while occupancy is down by 6 percentage points over the same period. ADRs are expected to rise 0.9%.

Booking Holdings’ Hungarian Kerfuffle

Hungary's national competition watchdog, GVH, conducted a raid on Booking Holdings' Budapest office as part of an investigation into the online accommodation booking and its service market in Hungary, Reuters reported. Booking Holdings has been embroiled in a dispute where it failed to pay commissions to short-term rental hosts in a timely manner.

GVH initiated the inquiry in the last week of August to evaluate whether competition has been adversely affected by Booking's contracting and contract enforcement practices. The country’s competition watchdog said it received 28 complaints about the withholding of commissions, potentially impacting fair competition among accommodation providers. 

Booking Holdings has confirmed its full cooperation with the Hungarian Economic Competition Office during the raid. The EU Commission last week opposed Booking Holdings' acquisition of Sweden's eTraveli Group, citing concerns about competition in online hotel sales, where Booking.com holds a leading position. 

Speaking at the Goldman Sachs conference last week, Booking Holdings’ CFO David Goulden said that alternative accommodation is a significant and growing part of the company’s business, representing 34% of room nights in the last quarter, which is 200 basis points higher than Q2 of the previous year, and the company expects that trend to continue.

“We have been driving that in a couple of different areas," Goulden said. “So we've been adding to that inventory. We've also been adding sequentially. So you kind of look at the sequential increases from Q1 to Q2, they're also quite decent. Biggest increase was in Europe because that's our biggest business. But the U.S. was the second biggest piece from a sequential increase.”

Goulden added that the company recognizes the need for further development in the U.S. market, and is actively collaborating with supply partners to enhance competitiveness. Recent product enhancements including improvements to payment system for partners, partner liability insurance, simplification of the damage policy, and the addition of a request to book functionality, all aimed at meeting partner needs and securing more inventory.

Vacasa’s Reverse Stock Split

Property manager Vacasa plans to execute a one-for-20 reverse stock split in an effort to increase its share price to above $1 per share, thus maintaining its listing on Nasdaq. The reverse stock split, approved by Vacasa's board of directors on September 1, is set to take effect before midnight on October 2, with the adjusted shares trading on the stock market the following day. This move aligns with a trend among companies like Sonder, which have planned to implement reverse stock splits to address share price declines below $1.

Homeowners and STR Data

Realtor.com users can access estimates of potential short-term rental income through an integration with Airbnb. These earnings estimates are available on Realtor.com's dashboard and are based on Airbnb data from similar listings in the ZIP code. According to a recent survey, 39% of homeowners have considered or are open to renting out part of their primary residence, HousingWire reported.

The integration with Airbnb also allows homeowners to assess whether renting out their current home might be a viable alternative to selling it. Sixty percent of surveyed homeowners stated they would consider renting out their current home instead of selling it if they were looking to buy or rent elsewhere. This decision is influenced by the potential for extra income from renters and the desire to maintain the home equity owners have built.

South Africa’s Short-Term Rental Register

South Africa's Ministry of Tourism and Airbnb have formed a partnership to regulate the short-term rental industry in the country. This collaboration will introduce a voluntary national registration system, providing the South African government with essential data to better understand the rental business. The goal is to make more informed policy decisions regarding this sector. The registry aims to protect hosts and address issues caused by property speculators that harm local communities.

Airbnb has been advocating for clear rules distinguishing professional and non-professional rental activities and fostering public-private cooperation to promote inclusivity in South Africa's rental sector. As part of the partnership, Airbnb will grant the South African tourism ministry access to its City Portal, a tool already deployed in over 300 jurisdictions. This portal helps governments develop and manage fair short-term rental policies and regulations.

Sonder Holdings announced that it has appointed Katherine Potter as General Counsel, effective September 11, 2023.

Prior to this role, Potter was the CEO of nursing care facilities company AlerisLife Inc., and held several executive leadership positions at The RMR Group Inc. including senior vice president and assistant general counsel.

South Africa to Launch Short-term Rental Register

Sonder Appoints General Counsel

Sonder Holdings announced that it has appointed Katherine Potter as general counsel, effective Monday.

Prior to this role, Potter was the CEO of nursing care facilities company AlerisLife Inc., and held several executive leadership positions at The RMR Group Inc. including senior vice president and assistant general counsel.

In May, General Counsel Phil Rothenberg, who served in the post since 2018, notified Sonder he would be leaving the company after a transition period. He left in July and is now general counsel of Envision Digital.