The U.S. Economic Outlook Summary and STR Demand Forecast

In 2016, when AirDNA first started tracking the short-term rental (STR) market data, about two thirds of bookings were for apartments rentals and just one-third were for single-family homes. That ratio has flipped in 2020.

Probably not a stunning statement, but it shows the shift in this industry this year. It along with other STR trends were shared in “The U.S. Economic Outlook Summary and STR Demand Forecast,” part of the Flexible Rentals Investment Conference, sponsored by Rently, featuring Jamie Lane, Vice President of Research, AirDNA, with moderator Steve Lefkovits, Joshua Conference Group.

The urban markets have been decimated during most of 2020 while smaller, resort-based markets have thrived. Lane says he sees the urban-market rebound coming on in 2021 and expects a full REVPAR recovery for the industry by 2022.

This, of course, is all predicated by the COVID-19 recovery in the United States and the world.

The travel and lodging industry are certainly keeping their eyes on the economy. Right now, the U.S. financial situation is wholly tied to the pandemic and regulatory shutdowns. In Europe, it’s all about watching how the vaccine that was recently introduced performs as a sign for the rest of society.

In the U.S., by mid-2021 we’re told that everyone who wants a vaccine will have access to it. The virus, no doubt, has left deep scars, Lane says. Some 14 percent of the labor force was lost in April. It will take about three years to get it all back, he says. Job growth will surely accelerate once the country is vaccinated.

Amazingly, given all the fiscal stimulus, consumer spending only fell 2 percent since that time. Most spending has been on durable and non-durable goods. Spending on services – such as travel and lodging – have been hit hard. Lane expects that to reverse in 2021 and he anticipates a return to greater urban demand.

For the hotel industry, revenue is down 50 percent for November 2020, an improvement from the first few months of COVID-19. The forecast for hotel revenue in 2021, according to leading analysts, is for growth by anywhere from 20 percent to 40 percent. It’s anyone’s guess, he says.

Right now, you see “travel by car” far outperforming air travel, Lane says. It’s down about 20 percent, while air travel has sunk 65 percent. U.S. inbound international air travel is down 95 percent as most countries level-up their warnings and insists on lock-downs.

Don’t expect any vacancy relief before spring, Lane says, pointing out that right now he’s also seeing that guests are waiting until the absolute last moment to book.

Although short-term rental supply and demand are both shrinking, revenue is up by 28 percent to 30 percent because the supply constraints are driving rent prices higher.

And people want more space and will pay for it. The more bedrooms in the home, the higher the rent. Homes with four to five bedrooms have seen rents rise by about 20 percent – especially in resort small towns.

As of Nov. 30, the best performing short-term rental markets were Big Bear, Calif.; Gulf Shores, Fla.; Pigeon Forge, Tenn.; Panama City, Fla.; Myrtle Beach, S.C.

The five worst performing markets were New York; Boston; Oahu, Hawaii; Havana, Cuba; Montreal.

Another positive in the STR rental industry is job growth. Hiring in our space (called alternative accommodations) is outperforming that of hotels and motels, casino hotels and bed-and-breakfasts.

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