Actual Intelligence AI - Lodging Newsletter January 31, 2025

And now, on with the news. First there was Covid. Then, a remarkable surge in vacation rental occupancy and rates, followed by a slow return to "normal seasonality," - occupancy such as in 2019 and before. Toward the end of 2024, as occupancy declined in most markets, rates held steady. But in recent months, competitors have dropped rates, in an attempt grab a share in what is currently a smaller share of bookings.

 

Over recent decades, vacation rentals have become an ever-increasing segment of the lodging market. Nothing seems to stop that, but there have always been ups and downs, followed by ups. Here is some recent news -  local, national, or even international.

 

Hawaii. Recently, vacation rental tourism in Hawaii reported 52% drop in occupancy (unrelated to the 2023 Maui fires). At first, rates stayed high, but are now dropping. Some blame the excessive tourism taxes that now hover at 18%. But Maui County is considering a 55% tax on rental cars.

 

Beaches. Washington Ocean areas' winter occupancy has been lower than in many years. Some say similar to 2008. The number of vacation rentals in Grays Harbor County, as well as the towns of Ocean Shores and Westport have doubled in recent years. Research we buy shows a far lower number of total bookings, spread among a larger group of properties.

 

Skiing. Washington and Idaho ski communities are a having a decent year, because the snow fall has been above normal and started earlier in the winter, which motivates skiers to book early and stay longer. With continued snow, perhaps through April, the market will be good. Here, too, however, there are more rentals to bite into the pie.

 

National. Industry numbers show decreased demand in major markets, like Florida, the Outer Banks, the Smoky Mountains, and even some ski resorts. Urban bookings have cooled off. Business is good, but not as good as it has been. Property owners who anticipated an ever-increasing income will have to wait until summer revives business.

 

Rent by Owners. Owners attempting to manage a home from far away, figuring it will be fun and eliminate management fees, continue to learn their income is less, and that issues, questions and interruptions 24-7 are high, and ownership becomes a chore. Remember when VRBO estimated it only takes an owner 436 hours per week to self-manage (8.4 hours per week often at odd hours or at their work)?

 

Losers. A corporate-type management company, which offered a very low fee (by refusing to do the hard work of onsite management), has now (after losing hundreds of millions of dollars) increased their fee 50%. That is, if owners actually want to have a dedicated representative they can talk to. Another corporate-type management company, which blew through 750 million dollars to "disrupt" the industry, achieved that by losing all the cash, recording the most bad reviews in history, and is now being broken up and sold for parts. The ousted founder of that company has now started another, to again disrupt the industry. Hey, what could go wrong?

 

The Future. So what can any property owner do to increase bookings?

 

Hire a "Full Stack Manager", who cleans deeper, servers guests better, advertises wider, answers the phone, and has instant service. Empower them to work their tails off in this 24-7-365 industry without micromanagement, but expect great help. We can start for you today.