Have We Entered a New Era of the STR Industry?
Is this a new era for STRS?
Running a short-term rental business might seem like a dream from the outside, but those of us in the trenches know that it takes hard work and a little luck to succeed in this world. But there’s no arguing that the vacation rental world has gone through a major shift over the last few years, however, and that kind of seismic change has made it hard to know if the old ways of doing business still work in this new, post-pandemic world.
For STR owners who are unsure of the future, this blog is for you. Today we’ll explore how the short-term rental industry has changed over the last few years before moving on to some tips for how to adapt in this new and ever-changing landscape.
Exploring the Pandemic Slowdown and Post-Pandemic Travel Boom
If you worked in the vacation rental industry before 2020, you know how much things have changed since those days. With the onset of the pandemic came restrictions that put a severe strain on short-term rental owners, and cancellations and unemployment were at an all-time high during this period of time.
But once travel began to open back up in 2021 and 2022, the number of travelers reached record highs, and due to the shutdown of many urban centers and hospitality destinations, vacation rental owners saw a boom unlike any that has come before. Seasonal destinations even saw a shift, with travelers wanting to find a destination that wasn’t busy or filled with people, and shoulder season saw more traffic than ever before.
Unfortunately, 2023 has seen a bit of a departure from the last two years of the post-pandemic boom, with occupancy rates declining in most months of this year, demonstrating that this period of intense travel is not one that will last forever. There are also other factors at play, such as the evolution of the real estate market, which we’ll explore in further detail below.
How the Real Estate Industry of the 2020s Has Affected the STR Market
If you consider yourself a savvy short-term rental owner, you know that changes in the real estate market carry over heavily into the vacation rental industry as well. In no other years was this more apparent than between 2020 and 2022, when the real estate market saw record low-interest rates during a period of intense demand in the short-term rental industry. Together, this mixture of economic factors (including inflation) produced the situation that the industry now faces: an overabundance of supply of vacation homes, leading to lower occupancy rates and RevPAR year over year for 2023.
How will this overabundance of supply affect the coming years for vacation rental owners? That remains to be seen, although it seems likely that, as the industry shifts and changes, we will see a return that mirrors more closely pre-2019 levels of occupancy.
2023: The Year of the Regulations and Restrictions
Another factor that has shifted the perspective and perception of the short-term rental industry is the introduction of numerous regional and local regulations and restrictions on the way short-term rentals operate. New York City, for example, recently put into effect a new law that outlaws short-term rentals under 30 days, and other major cities are following suit. Even in places that still allow short-term rentals in essence, operating them has become a major hassle mired in bureaucracy, with the obligation to get permits and have your property inspected each year becoming more and more common.
Not all regulations are bad, as some of them do help to ensure the health and safety of travelers, but some of them can short-term rental owners under undue hardship. However, adaptability is one of the biggest assets in this new era of the STR industry, and learning when and how to adapt can help you move forward and be successful despite setbacks.
A New STR Industry Era: Tips to Adapt
Stay Up to Date with Changes in the STR Industry
The best way to know what’s coming is to keep current, and that couldn’t be more true in the short-term rental industry. Both in local and national outlets, news is always breaking about the state of the vacation rental industry, and it pays to keep up to date with the latest economic and travel trends you’ll be seeing in the coming weeks and months. Similarly, check out AirDNA or KeyData monthly for the latest numbers and projections–this will keep you in the know when it comes to how the industry is faring nationally as well as in different regions.
Protect Your Property by Contracting an Expert Property Management Company
Worrying about the future of the short-term rental industry? Although there are a number of things you can do to protect yourself against economic downturns and the like, sometimes it’s best to hand over your property to experts who know how to adapt to every situation. If you’re on the hunt for a property management service that will meet all of your needs and be there for you during the highs and lows of the vacation rental industry, take a look at LocalVR’s services. Our experts are always available to help, and we’re constantly analyzing the industry to make changes that will keep you in business far into the future.
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