The Short-Term Rental Correction in the U.S. Was Sharp

06.12.2023 - 23:56 / skift.com / Srividya Kalyanaraman / Melanie Brown

This is not a story of “Airbnbust,” but instead we’re talking about a correction of the “Airbnboom” that has taken place since the highs of the pandemic.

In its latest report, data company KeyData found that the U.S. short-term rental market saw a revenue (RevPAR) drop of 17%. 

During June, July, and August, analysts observed similar dips in Europe, the UK, and elsewhere globally. However, the U.S. saw sharper declines in RevPAR and was the only country that KeyData surveyed where average daily rates decreased.

In the United States, RevPAR fell by 14% to $115, which amounted to a 16.8% decline when adjusted for inflation, and average daily rates dropped 8% annually going from $328 to $302 (an 11% decrease in real terms), and occupancy decreased by 6.5%, reaching 38%.

Comparatively, the rest of the world fared somewhat better, which means the American market faced greater challenges this summer. The data suggests that the U.S. RevPAR declined more rapidly than in Europe and the UK, putting property managers in the U.S. under more pressure to protect their revenues. 

What’s the reason for the drop? The short answer is market correction. And the long answer is travelers were excited to leave the country and go abroad for a vacation, and on the supply side, those who bought properties in the heat of the short-term rental boom unsurprisingly saturated the market. 

“Market correction is the main thing we are seeing, that’s why the U.S. is different because the big growth came in 2020, 2021 and now it is recorrecting,” said Melanie Brown, executive director of data insights at KeyData. “Everybody got super excited about short-term rental and supply increased, people jumped on the money making cycle and it went back down.”

Brown added that more people stayed at hotels or took cruises in addition to traveling abroad. 

“On top of that is that consumer wallets are tighter right now, and a lot of travelers took cheaper trips closer to home,” she said.

In Europe, ADRs increased by 0.3% to $182, helping offset an 8.2% drop in occupancy during the summer. As a result, European RevPAR only fell by 8% to $71. 

Looking ahead at the books data for September through December in the U.S., RevPAR shows a $20 drop, year over year, while occupancy is down by 6 percentage points over the same period. ADRs are expected to rise 0.9%.

Hungary’s national competition watchdog, GVH, conducted a raid on Booking Holdings‘ Budapest office as part of an investigation into the online accommodation booking and its service market in Hungary, reported. Booking Holdings has been embroiled in a dispute where it failed to pay commissions to short-term rental hosts in a timely manner.

GVH initiated the inquiry in the last week of August to