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The rest of summer remained peachy for short-term rental hosts, as daily rates reached a new high, nights booked were up 17 percent and demand continued to spike.
And homeowners are rushing to get a piece of the action. The number of listings on short-term rental platforms was up 23 percent in August compared to last year, according to a summer outlook by short-term rental data source AirDNA.
That glut of new listings is one of several headwinds facing an industry that, by every other account, is in the midst of a gold rush. Average daily rates (ADRs) grew at a slower pace that didn’t keep up with rising costs caused by inflation.
“Due to the supply increases, hosts have faced an uphill battle in the effort to have cover costs with high inflation, currently tracking above 8 percent in the U.S. as per the August Consumer Price Index (CPI),” the report said. Average daily rates (ADRs) “were up a scant 2.8 percent year over year in August, following a 3.8 percent ADR increase in July.”
“The addition of more listings nationwide, rising labor costs and the persistent inflation will continue to put pressure on revenue per available listing (RevPAR), which hit record levels in 2021,” it said.
Occupancy rates fell in August compared to the same time last year. At 63.8 percent nationwide, the occupancy rate remains 7.1 percent above pre-pandemic levels.
That’s not to say short-term rental owners struggled this summer. Average daily rates are now at $288 per night, which is 22.8 percent higher than in 2019, the report said.
Demand was up 19.8 percent in August compared to the year before and it grew through the summer. In July, demand was up 17.8 percent.
The low rates many homeowners have may be pushing some of them to list their homes as short-term rentals rather than sell them, according to Redfin’s deputy chief economist Taylor Marr.
“There was a surge of available listings on short-term rental platforms just in August,” Marr said. “It’s coinciding perfectly with where we’d normally expect them to hit the for sale market.”
Occupancy rates fell 4.3 percent, the sixth-straight month with declines.
Eventually, the increase in available homes — both through lower occupancy rates and higher supply — could put a strain on nightly rates.
“When comparing the performance across 265 U.S. short-term rental markets as defined and collated by AirDNA, we see that the markets with the highest year-over-year increase in listings (40 percent growth or more) are seeing the sharpest decreases in occupancy, ADR and RevPAR (Revenue Per Available Rental),” the report said.