Impact of COVID-19 on Short Term Rental

According to AirDNA, short-term rental bookings for 2020 were sporadic, and the United States Travel Association predicts a 44.8% drop in U.S. travel dollars since 2019. Short Term Rentals, on the other hand, sees a bright future for vacation rentals. So what's going on with the market right now?

Data from Short Term Rentals (STRs) and COVID Travel

Before COVID-19, international travel accounted for over 70% of U.S. travel bookings, with domestic travel accounting for the remaining 30%. 

Since April 2020, more than 65% of bookings have been domestic. Travelers are now driving to their destinations, staying for more extended periods, and looking for more space. The average length of bookings has increased by one whole night due to COVID, and apartment bookings have decreased by over 10%, while house bookings have increased by 12%. 

At the height of COVID, global STR bookings dropped 45%, compared to 77% in the hotel industry. However, as COVID has progressed, STRs have made significant gains, while hotel bookings have remained low. According to S&P Global Intelligence, this is because of fewer business trips and the perception of safety in a private setting.

In addition, after a significant drop in rental bookings in March, April, and May, there has been a steady recovery since June 2020. As a result, short-term rentals have fared far better than hotels in terms of COVID.

How do people choose their Short Term Rentals?

A professor in Finance from the University of Nevada, Sean Wilkoff and Lily Shen from Clemson University is researching short-term rentals on real estate and setting out to analyze the impact of the pandemic on Airbnb properties.

Willkof thought The short-term rental m`can affect the demand for housing. 

They came up with the study called "Cleanliness is Next to Income: The Impact of COVID-19 on Short-Term Rentals" which focused on Airbnb listing and review data from Austin, Texas, between July 2018 and July 2020. Wilkoff said Austin was the ideal location to focus on since it is a desirable travel destination. In addition, the local authorities did not impose any mandatory travel restrictions after the initial onset of the COVID-19 pandemic, allowing Austin to be open to visitors.

Willkof and Shen discovered the value of cleanliness in the short-term rental market during the pandemic by using a machine-learning algorithm to create an extensive cleanliness dictionary to detect whether an Airbnb unit is clean.

Here's the surprising result of the cleanliness factor alone. 

1.  Available listings declined by 25% once the pandemic hit and those that remained lost 22% of their income and had occupancy decrease by 20%
2. Properties perceived to be clean increased their income by 17.5% and their occupancy by 16.5%, mitigating the negative shock due to COVID-19.
3. Rental prices for clean Airbnb listings did not increase after COVID

So now it's more valid for me to say there's clean money in a clean property.  Let’s make sure our cleaning crew is paying special attention to details and maintaining cleanliness that will wow our guests and show up in their positive reviews.  Check out our listings at www.EpicPropertyPros.com and see how we’re doing.

God Bless

-Philip Warrick 

www.PhillipWarrick.com