With the ease of travel restrictions worldwide, we’ve seen a HUGE increase in bookings this year! Therefore, we’ve decided to revisit the main observations and predictions from our previous blog – “Why you should consider short-term rentals for the return of travel” from November 2021 and compare them to the current market conditions, to show you why now is the perfect time to consider short-term rental for your investment property!
1. The rebound is coming
November 2021 market:
Guesty, our software provider, were recently quoted in multiple media articles sharing their data on occupancy post Covid-19, “Thanksgiving reservation volume is up by 302% compared with 2020, and 93% higher compared with 2019 volume, according to Guesty, a vacation rental platform. And Christmas reservation volume across the U.S. is up 469% compared with 2020, and is currently 157% higher than 2019 volume. Home rental rates on websites such as Airbnb, Vrbo, Expedia and TripAdvisor may be as much as 82% higher than what they were in 2019, according to the company.”
Current market:
In the past 6 months we have seen our closest neighbour Australia follow the same path as Europe and the US, in it’s domestic travel boom. The Australian pent-up demand for travel and reduced supply of STR accommodation, combined with the Covid stigma associated with hotels has created an unprecedented increase in ADRs (Average Daily Rates), up to 35% across the different states according to the Global Travel Report from Rentals United and Transparent. With similar characteristics in terms of supply and demand, complexities around long term tenant rights and the isolated nature of the country, here in NZ we can already feel the increases in both occupancy and ADRs pushing to pre 2019 levels.
2. Local trends
November 2021 market:
Closer to home we have seen the same happen once consumers have been able to book with confidence around government Covid regulations, with both nightly rates and occupancy at much higher levels even compared to 2019.
Current market:
At The Urban Butler, our current advance booking window (number of days reservation is made prior to booking) is sitting at around 60 days. This 2 month advance booking average hasn’t been seen for 24 months. The average booking window has typically sat around 5-7 days for the period since the pandemic started, due to the uncertainty that we have all experienced during this time. The underlying message in the data is that consumer confidence has returned to the travel and tourism market where travellers (Whether Business, Leisure or Bleisure (yes it’s a thing!)), now have the confidence to book and plan travel way beyond the last minute nature we’ve experienced during the last two years and more in line with pre-pandemic levels.
3. Supply shortage compared to demand
November 2021 market:
Recent data from AirDNA, (a data source for short-term rentals globally) shows Auckland as at October 2021, has only 52% in short-term rental stock compared to February 2020 indicating a supply shortage once travel returns.
Current market:
There is still clearly a demand and supply disparity happening for the STR industry in NZ and, especially Auckland. Auckland for example has roughly 50% of the STR stock that was available in 2020, (2,532 vs. 5,400) a similar trend to overseas markets. At The Urban Butler our occupancy level was 66%+ over the portfolio in March 2022, the highest since July 2021. This coupled with the negative Covid related stigma that is clouding the hotel industry and the changing nature of travellers and their needs/requirements is creating unprecedented demand for quality properties.
4. Consumer behaviour and trends for 2022
November 2021 market:
A 2022 Travel Trends report from Evolve that surveyed 16,000 travellers has a very positive outlook for the future; “Almost 80 percent of survey respondents indicated they are actively moving forward with 2022 travel plans; 47 percent indicated they won't consider cancelling until much closer to their trip dates whereas 32 percent said they are planning to travel regardless.”
Current Market:
November’s data corresponds with what we are currently seeing in the market. According to the recent Global Travel Report from Rentals United and Transparent, almost a third of property managers already feel that demand is exceeding pre-pandemic levels (which is supported by their findings in booking revenue). Additionally, a further 21% believe that demand has recovered, giving a total 50% believing that recovery is complete or bettered.
5. Auckland and New Zealand are in demand
November 2021 market:
Auckland and New Zealand have been getting a lot of media attention post Covid-19 to help drive travel demand. Here are some recent encouraging articles from global press;
- Economist – Auckland was named the World’s Most Liveable City.
- Lonely Planet – Auckland was named the Best City to Visit in 2022.
Current market:
Travel demand to New Zealand has increased dramatically over the past 3 months! According to a recent article from Routes, “Auckland Airport is seeing a strong rebound in traffic from Australia following New Zealand’s border reopening, and airlines are preparing to add more routes when travel resumes from other overseas markets”.
At The Urban Butler, we’re confident that there will be unprecedented travel demand domestically and now internationally. The image that New Zealand has globally in terms of Covid-19 and general safety is well documented and with all the recent accolades Auckland will be high up on everyone's travel bucket list!
If you would like to discuss your property and how partnering with The Urban Butler works for your situation, we can help! Get in contact with us for a free consultation or if you have any questions regarding our full short-term property management services by clicking here.