As we enter the new year, the short-term rental (STR) market continues to evolve and change – much like the entirety of our economy. As a team that works closely with players across the STR industry, these are our top three predictions for 2023, inspired by prevailing trends and internal observations:
Demand for short term-rentals is on the rise. As we move further away from the pandemic economy yet remote & hybrid work environments remain, it’s only natural that demand for STRs would only continue to increase.
At a high level, the state of the overall travel industry illustrates this trend well, given its close correlation to short-term rental demand. With that in mind, travel volume remained 3% above pre-pandemic levels in November, despite news of an impending recession.
As we look to 2023, secondary and tertiary markets are expected to experience a higher increase in demand, outpacing primary markets like New York and Los Angeles. For example, in 2022, Portland, Oregon had the highest occupancy rate for a city with 1,000+ listings, at 67.5%.
Long-term stays are becoming increasingly more popular and are expected to only continue to grow in popularity in the new year. This is largely influenced by the continuation of hybrid or completely remote work, allowing more travelers to explore for longer periods. In 2022, stays of 28 days or more were Airbnb’s top category for growth in all four quarters.
Supply of short-term rentals is also on the rise & it’s outpacing demand. Though the variety of factors mentioned above are surely contributing to a high-level increase in demand for STRs, the number of listed properties is also climbing and at a faster pace.
In 2021, the short term rental industry began experiencing a supply shortage as the pandemic economy inspired demand for secluded stays and local travel experiences. This motivated more and more real estate investors and second home owners to start their own STR business in order to fill the gap.
A shift began in May 2022 when 88,000 short-term rentals were added to the overall supply. This was a historic and record breaking number and one that transformed the landscape.
To dig deeper, the supply of short-term rentals increased by 15% in May 2022 while demand grew by only 11%. Though some markets are outliers, overall this trend symbolizes a shift in how STR owners will need to approach their business in 2023.
Due to increased competition, property managers & owners will need to create more value than their surrounding short term rentals. With the STR market becoming more crowded, increased competition will require owners to differentiate their properties by offering unique experiences in order to attract guests. But how?
Unique stays are king. We’re talking tiny houses (+173%), barns (+160%), domes (+134%) and treehouses (+116%) – all up by more than 100% on Airbnb in Q2 2022 when compared to pre-pandemic levels. This makes sense as one of a kind short term rentals definitely help owners stand out in a saturated market.
Short-term rental guests are sick of exorbitant fees and then being asked to strip the bed and haul the trash to the curb upon check-out. Our founder, Justin Pera, reinforces the point, “Guests are over being hit with cleaning fees and then a chore list on top of it. STR managers should strongly consider outsourcing their trash removal after each guest leaves and not burdening guests with trash that is not their own.”
Personalize short term rental properties – but not too much. Offering a welcome gift such as a curation of local eats or treats, putting together a guide book with your local perspective on the area and decorating the space with photography and art inspired by your locale are all good ways to make an impact. That being said, it’s recommended owners not hang any personal photos on the walls or leave behind their own clothing or personal items at the property.
Overall, the short term rental market is expected to remain strong in 2023, with more competition playing a large role in shaping the industry. As a property owner or manager, staying on top of these trends will be key to success in the coming year. Curious how to optimize your STRs through outsourcing professional services, specifically trash removal? Reach out today!