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Short-Term Rental Demand Surpasses 2019 Numbers -- but There's 1 Problem

The Motley Fool logo The Motley Fool 5/18/2021 Aly Yale
Short-Term Rental Demand Surpasses 2019 Numbers -- but There's 1 Problem © Provided by Millionacres Short-Term Rental Demand Surpasses 2019 Numbers -- but There's 1 Problem

There’s no doubt about it: Short-term rentals have officially bounced back (and then some) from the pandemic.

According to the latest data from AirDNA, a short-term rental data firm, demand for short-term rentals is now up 66.4% over 2020’s numbers as of April 2021 and 5.4% compared to 2019. The only problem? There’s just not enough supply to meet it.

“Higher levels of demand are putting pressure on short-term rental booking platforms like Airbnb (NASDAQ: ABNB) and Vrbo to rapidly increase their supply,” AirDNA reported.

It’s true: Airbnb CEO Brian Chesky even said so himself, telling CNBC the site needs millions of more hosts just to keep up with demand. Vrbo is also actively trying to pull hosts away from its competitor for similar reasons.

The investment opportunity

For investors, the high-demand, low-supply scenario presents a prime opportunity, especially as the summer heats up.

The report reads:

Booking pace for this summer rose even further in April, with all months now at or above 2019 demand levels. As of May 1st, June has 25% more demand booked than as of the same time in 2019. While demand is strong today, performance is expected to continue to improve throughout this summer with more and more countries and markets able to attract visitors and participate in the recovery.

If you’re looking to invest, data shows that mountain and beach towns are performing best. Demand growth is particularly strong in the following locations:

  • Gatlinburg/Pigeon Forge, Tennessee
  • Gulf Shores/Mobile, Alabama
  • Myrtle Beach and Hilton Head, South Carolina
  • Santa Rosa/Rosemary Beach, Florida
  • Panama City, Florida

In Gatlinburg, demand was actually up 69% in April, and Hilton Head is already 80% occupied for June.

The only areas not seeing short-term rental demand grow are the large, urban ones. In New York and Boston, for example, demand is down 74% compared to 2019’s numbers. Washington, D.C., has also seen a steep drop since the pandemic.

The bottom line

As Jamie Lane, VP of research at AirDNA, put it, “The search for new hosts is heating up.” If you’re looking to seize on the growing demand for short-term rentals, make sure to choose your market carefully, and stay in tune with STR travel trends. Post-pandemic travel looks a bit different than it has in years past, so you’ll want to be sure your property falls in line.

Finally, be ready to put some time and money in. It’s a hot market out there, and unless you’re willing to make a cash offer, expect some serious competition when buying a new property -- especially one in a vacation town.

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The Motley Fool has a disclosure policy. Editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Editorial content from Millionacres is separate from The Motley Fool editorial content and is created by a different analyst team.


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