Short-term rentals bouncing back
They are recovering quicker than hotels
Sean Malin and his friends, like many Americans this summer, were desperate to get the heck out of (quarantine) Dodge despite the coronavirus pandemic.
“We needed to vacation somewhere,” Malin, 28, told USA TODAY.
But they didn’t want to go just anywhere over July Fourth weekend. They were looking for safety and seclusion, but also weren’t willing to drive more than two or three hours away.
The group of five crammed into a Toyota Camry and wound through narrow uphill roads to reach their Airbnb in Sugarloaf, California, outside Big Bear. Perhaps it was too secluded, considering they had no Wi-Fi signal there and were given an incorrect address.
Still, Malin managed to enjoy himself, given the circumstances.
“It wasn’t paradise, unfortunately, but we enjoyed the company and the natural surroundings were beautiful,” Malin, of Canyon Country, California, told USA TODAY. “It sufficed.”
Their choice mirrors a trend in the industry as travelers have sought out socially distanced excursions within half a day’s drive from home. Some are also opting to stay in private homes where they can prepare their own food and won’t come into contact with strangers from outside their quarantine bubble.
And traditional hotels have paid the price, literally. For the week ending Aug. 15, U.S. weekly hotel occupancy occupancy was down 30% from the same period in 2019, according to data firm STR.
The news is not all bad for hotels: Occupancy topped 50% for the first time since March, and it has ticked up for 17 of the past 18 weeks, though growth in demand for rooms has slowed.
Still, short-term rentals have bounced back faster since the coronavirus pandemic pummeled travel interest in March. They have also benefited from a weakened business travel environment and a shift in travel preferences to more rural and remote areas where guests can opt for longer stays.
Which is safer?
Both hotels and short-term rentals have announced extensive cleaning measures and social distancing procedures to reassure cautious travelers that it’s safe to stay there during COVID-19.
Augusto Amorim, 41, always stays at hotels when he travels.
“Especially under the current circumstances, I’d expect a hotel to be cleaner,” said Amorim, a market researcher from Detroit. “I think that chains like Hilton, Accor, SPG, etc., have more strict rules in place and that they’re holding each property accountable.”
Still, when he stayed at the Swissotel in Chicago over the July Fourth weekend, he bought his own supplies and cleaned the entire room anyway.
James Alexander, 32, rented a car with his boyfriend and drove from New York to the Berkshires the week after July Fourth. They stayed at boutique hotel Seven Hills Inn in Lenox, Massachusetts, in an effort to support small businesses, and also because they weren’t sure whether they’d get refunds on anything if they prepaid.
“We were very impressed with the social distancing and cleanliness measures they had in place,” Alexander told USA TODAY.
But Dr. Keith Armitage, a professor at the Case Western School of Medicine in Cleveland, told the USA TODAY Network earlier this summer that a home rental might actually be safer.
“The ideal situation would be an Airbnb or a rental that had been empty for a couple of days,” he said.
Regardless of which is safer, the data is clear: Short-term rentals are more popular right now.
“It looked like one of those viral videos you see with way too many people.” Mike Naypauer, vacationer in Virginia Beach, Virginia speaking of an encounter at his hotel
‘An unequal impact’
Hotels have traditionally had higher occupancy rates than short-term rentals, according to a global analysis of 27 markets around the world from January 2019 through June 2020. Data firms STR and AirDNA, which analyze short-term rental trends, worked together on the analysis.
But then the pandemic struck. Hotel occupancy fell 77.3% at the end of March compared with the previous year. Rental occupancy fared better, dipping 45.1% for studio and one-bedroom rentals, and 46.2% for two- or more bedroom rentals.
The crisis for hotels was twofold. “First, as quarantine restrictions, social distancing and economic troubles took hold, many business meetings, conferences and other events were canceled,” wrote authors Will Sanford, a research analyst at STR; and Dillon DuBois, a product marketing manager at
AirDNA. “Given the hotel sector’s reliance on demand from group and business travel, this had an unequal impact on hotel occupancy.”
Short-term rentals initially saw a dip in bookings, plummeting 47% from more than 2.3 million in January to 1.2 million by April. Bookings crept up in the following months, which researchers attribute to several factors:
Short-term rentals could make social distancing more feasible, with multiple bedroom-units and whole homes to rent.
More homes are in rural and/or remote vacation markets, a boon for travelers seeking to leave urban areas amid spiking COVID-19 cases.
Most have full-service amenities, including kitchens, making longer-term stays more convenient.
The average length of a guest stay has ticked up 58% during the pandemic.
This thinking played out earlier in the pandemic. Omer Rabin, property management software company Guesty’s managing director of the Americas, told USA TODAY earlier this year about the increasing length of stay trend. Historically, the average length of stay was consistent at around 3.6 to 4.2 days. That average shot up to an unprecedented eight days at the end of March.
From June 1 to Aug. 24, the average length of stay in the U.S. was 4.24 days, a 19% increase from the same time last year. The average length of stay peaked in the last week of July at 7.5 days.
When will hotels recover?
U.S. hotel demand likely won’t see a full recovery until 2023, according to a forecast from STR and consultant Tourism Economics. The industry is also facing a historic wave of foreclosures, according to a report from trade group American Hotel & Lodging Association, which also noted that the number of delinquent hotel loans is higher now than even during the Great Recession of 2007-2009. The AHLA is pushing for legislation in Congress to further aid in the ailing industry.
STR and Tourism Economics said recently that it expects average hotel occupancy of 40% this year, slowly climbing to 52% in 2021. That’s down from a healthy 66% in 2019.
Hilton CEO Chris Nassetta said during the company’s second-quarter earnings call this month that he expected Hilton hotels to be in the 45% to 50% occupancy range, and that summer leisure travel will bleed into fall given that kids won’t be going back to school, or will be doing so virtually. Marriott CEO Arne Sorenson said he was “optimistic“about travel’s recovery.
The coronavirus will weigh heavily on travel through at least the first quarter of 2021, said Adam Sacks, president of Tourism Economics. Sacks expects a cautious recovery in the first half of next year, with stronger growth in travel in the second half.
But for now, it’s up to guests to decide whether they can stomach potentially uncomfortable encounters with fellow travelers.
Vacationer Mike Naypauer and his family mostly ordered food through DoorDash and ate in their room at the Hilton Oceanfront in Virginia Beach, Virginia, earlier this summer, but also did some outdoor dining. They went to the beach and pool when it wasn’t crowded; elevators were a spot where they encountered close contact with others, and they had to avoid the rooftop pool.
“It looked like one of those viral videos you see with way too many people,” Naypauer said.
U.S. hotels have been busier this summer in beach locations like Norfolk, Virginia.
According to STR data, the only area to hit more than a 60% occupancy level the week ending Aug. 15 was Norfolk/ Virginia Beach, Virginia, at 65.3%. Some of the lowest occupancy levels occurred in Orlando, Florida (29.9%), and Oahu Island, Hawaii (22.8%), where Gov. David Ige recently extended the ban on out-of-state tourists through September and reinstated the interisland quarantine rule.