October 5, 2022
How To Prepare For A Softening In Vacation Rental Demand In Q4, 2022
The vacation rental industry has been doing really well in recent years. Companies like AirBnB have posted some of their best financial results recently, and the vacation rental demand has already started to soften on shoulder/off peak. Most feel like a softening, however it’s more of an increase in available supply.
Why is it that we’re going to see a drop in demand for vacation rentals, and what can you do to soften that blow? Here’s everything you need to know.
Why is Demand Softening?
The first thing to ask is, why are we going to see a drop in rentals, after the last couple of years being so good to the industry? There are a few reasons why this may be the case.
Supply of Rentals is up: People are staying the same number of nights, but more places to stay in them. Which then leads to lower occupancy rates.
COVID19: As we’ve heard time and time again, COVID is still taking place and going to have an effect on bookings. “Depending on where you’re based, there has been a real loosening on COVID restrictions in general” says Jason Peters, a business blogger from Write My X and Australia2write. “However, there have been new waves of COVID and that still makes people nervous to travel.”
Possible recession: There’s also the issue that another recession is on the horizon too, and that’s always going to have an effect on vacation rentals. Savvy travelers will see this coming, and want to restrict or even stop traveling altogether to save money.
High inflation rates: Another issue happening globally is high inflation rates that are severely impacting everyone. Again, as they feel the financial squeeze, they’re going to look to make cuts to their budget. One of the first things to go will be vacations, and so you’ll see that drop in rentals.
Should You Be Wary Of A Fall In Demand?
These are all very good reasons why you may see a drop in demand in Quarter 4 of 2022, but will that mean that loss of sales is likely? While these situations are all hypothetical right now, you’ll see that a lot of businesses are being very wary about the future.
For example, Booking.com has seen that their booking windows are a lot shorter than they have been in the past, which shows that people are aware that conditions can change quite quickly. A lot more of those bookings are made as cancelable bookings, too.
How To Prepare For A Fall In Demand
So if there’s going to be a drop in demand for vacation rentals, how can you prepare for this? Here are some things that you can do.
Make changes to your minimum stay limits: If you’re anticipating a drop in demand, you can adapt your minimum stay requirements. “Offering lower minimum stays will attract different renters” says Michelle Field, a journalist with Origin Writings and Brit Student. “As such, you’ll be able to keep your property in use.” Also be sure to meet prospective travellers where they are. If everyone is searching for 2 night stays and you only have 3 nights minimum, they never even see your home.
Tweak your pricing: Not always down either! You shouldn’t make any drastic changes to your pricing, and of course you still need to cover your overheads. However, you can make small tweaks to your prices in order to attract more business and capture the maximum value for higher and lower demand nights
Adjust your marketing efforts: Again, meet prospective travelers where they are. This could be domestic travel, could be international travel, could be hyper local (~2 hour drive) but focus on who is most likely to come to you and when, and proactively seek those eyeballs, clicks, and stays with effective marketing tactics.
While there could be a softening in vacation rental demand this fall and winter, it shouldn’t be a cause for alarm. You’ll be able to make changes to your marketing and pricing strategies, to ensure that you’re still getting people booking out your property.