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As a dynamic industry, short term rental trends are constantly changing. Influencing these changes, to name a few, are regulation battles at city and local levels, the push towards instantly bookable properties, and the boom of supportive start-ups that are fueling industry acquisitions and partnerships. In reaction, vacation rental guests and hosts are also adapting. Here’s a quick and simple overview of the basic trends every host and guest should be aware of.
48% of homeowners with vacation and investment properties plan to rent these homes to others. From 2004 to 2015 the average age of the vacation home owner dropped from 55 to 43 – an average drop of about one year for every passing year. In addition, recent reports of Millennials choosing to rent their primary residences in urban locals and purchasing, instead, vacation homes as an investment are changing the way real estate is considered. As evidence of these trends, HomeAway, a leading vacation rental booking platform, reported 89 percent of newly purchased vacation homes will be rented out within their first year.
As mentioned, companies fueled by technological solutions are rising up within the short term rental industry to assist both hosts and guests – like Pillow, for example. More and more homeowners are turning to full-service short term rental property managers and other a la carte services to assist their short term rental businesses. Managing rentals remotely has become even easier and homeowners are beginning to purchase vacation homes and investment properties even further from their primary residences. HomeAway also reports the average vacation home investor will now purchase a home at least 322 miles away.
Airbnb has reported substantial growth within the last five years. Summer travel through their site has grown 353 times over and last summer nearly 17 million guests stayed in an Airbnb rental. Future growth estimates expect Airbnb’s room nights to increase from 79 million this year to around 500 million within the next five years, according to a survey from Cowen Group Inc.
This optimistic growth stems from the fact that only 11% of American adults have stayed in a short term rental. With only 35 percent of adults having heard of such services like Airbnb, HomeAway, and VRBO, there’s still a lot of room for growth.
Most importantly, for guests, vacation rentals offer options unavailable to hotel guests, like an abundance of space, fully-equipped kitchens, and lower pricing and greater location options. In addition, a Nasdaq article emphasizes that 30 to 40 percent of Airbnb travelers would not have taken their trip if it weren’t for vacation rentals. While it’s suggested that Airbnb is a threat to budget hotels, awareness and usage of short term rental services are higher among people who make $75,000 or more per year.
All in all, changes in real estate trends and the increased ease of managing a short term rental are resulting in growing supply, which is good because traveler awareness is rising and demand is also expected to increase.
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By Michelle Giuliano
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