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Short-Term Rental Market Analysis for 2022 — Is It a Good Time for Vacation Rentals?

There’s no denying that one of the most challenging times to be in the short-term rental market was during the 2021 pandemic. The industry was projected to experience exponential growth at the beginning of the year but went through unprecedented uncertainty instead.

Short-Term Rental Market Analysis for 2022

 

At the same time, however, 2021 has also seen a record of staycation bookings and an unexpected boost in the domestic tourism industry. This is a trend that’s continuing through 2022 and prompting more and more people to invest in their very first vacation rental.

If Covid-19 couldn’t stop the stellar growth of the short-term rental industry, then what could?

In this article, we’ll look at the current state of the vacation rental market, including the projected occupancy rates and demand trends following the pandemic. We will also guide you through the best choices property managers can make when investing in a new vacation rental property.

First, let’s answer the most burning question new real estate investors might want to ask in 2022: Is there even a market for short-term rentals when the world is at a standstill?

While back in early 2020, the pandemic definitely put a dent in many investors’ business goals. However, figures show that travelers (especially domestic travelers) are more eager to go out and explore new destinations than ever. 

For example, Airbnb accommodation or other short-term rental properties are much safer than hotels when isolating and avoiding close contact with other travelers. 

Uncontested industry giant Airbnb reached a market cap of $130 billion early in 2021. It just makes sense that newly vaccinated tourists would choose short-term rentals as their accommodation of choice for the summer.

But what other types of properties could you expect to be in demand?

According to the National Multifamily Housing Council, around 65% of all Airbnb rentals can be found in multifamily buildings, suggesting that most of the market resides in urban apartments.

That said, as travelers continue to avoid busy urban centers and prefer heading out to more secluded and quiet destinations, the supremacy of multifamily buildings is starting to waver. 

Therefore, it’s fair to assume that property managers might fare better by looking at more remote, beauty spot properties. They can even consider smaller, on-the-rise tourist hotspots.

Short-Term Rentals in Natural Environments are Increasingly Popular

The most significant short-term rental trends of 2022

As demand for these types of short-term rentals continues to rise, investors must adapt to the rapidly changing trends in the industry and use them to their advantage. They need to provide the ultimate vacation rental experience their guests are looking for and lock in the high returns this industry is so well-known for offering.

A study on travel and living was published by the short-term rental booking site Airbnb at the end of the previous year. The study discovered that the COVID-19 pandemic’s social impacts have made it harder to distinguish between living and traveling.

People now travel whenever they want and book short-term rentals rather than only taking vacations on the weekends or holidays. And instead of traveling to the locations they used to frequently visit, they are visiting new areas.

Following the impact the COVID-19 pandemic has had on the tourism sector, here are some of the biggest trends you can expect in the vacation rental market going forward.

Increased focus on frictionless stays

One of the biggest trends of the pandemic is that guests prefer tech-facilitated, contactless stays over more personal human experiences.

Short-term rental owners are now embracing the benefits of technology to meet the demand for a more frictionless stay. They provide keyless entry, comprehensive guide books on arrival, and constant digital communication opportunities to interact with guests and answer their questions. If social media was important before, it is now considered essential to ensure your guests feel well cared for without in-person contact.

Short-Term Rentals in Natural Environments are Increasingly Popular

Before the COVID-19 pandemic, 10% of short-term rental reservations were made in rural areas, 13% in mountainous areas, and 34% in coastal regions. Bookings in the above mentioned areas rose to 18%, 42%, and 22%, respectively, in the summer of 2021. These regions had the best short-term rental markets.

More long-term opportunities

The drop in demand and occupancy rates following the pandemic means that many short-term rental owners have had to find creative ways to adapt and make profits.

As a result, encouraging long-term or even longer short-term stays has become one of the leading strategies across Airbnb and other short-term rental listings. In addition, some property owners have started to enter flexible partnerships with traditional real estate agencies and professionals. These partnerships allow them to take over the property during the low season and rent it out to long-term tenants or “work-from-home” travelers.

Search for a hotel-like experience

Following the increased need for a frictionless, tech-driven, and more impersonal stay, travelers are also increasingly looking for a more hotel-like experience. This means that a solid social media presence, sleek branding, and exceptional service standards are slowly becoming the norm.

This might be due to the desire to truly switch off and enjoy a hotel-like experience without the contact risks associated with staying at a hotel.

Search for a hotel-like experience

 It might also just be an organic trend stemming from the growth of the short-term rental market and its increasing popularity.

Whatever the reason, it’s worth reviewing your current social media strategy and branding to ensure you can capture this growing audience. You should revise your service options or property design to ensure your short-term rental can keep up with these new expectations.

How do you analyze short-term rental properties?

So, how can you make sure to capitalize on these trends to your advantage this year? Knowing what to deliver is only the first part of the process. The rest will be learning how to evaluate a tremendous market opportunity.

Current trends seem to have left bustling urban centers and internationally-renowned destinations behind. Many more factors go into analyzing the viability of the location, neighborhood, and accommodation style you’ve been eyeing.

Short-term rental market, Short-Term Rental Market Analysis for 2022 — Is It a Good Time for Vacation Rentals?

Consider your target market

You should first evaluate your target market and how your desired guests will fit into the location and type of home you want to invest in.

Millennials, for example, prefer unusual accommodation and vacation rentals with a personality, whether they’re in the heart of the big city or staying in a remote cabin.

Millennials are unlikely to prefer a hotel-like experience but rather the small-scale feel of an independently-owned business. They will often look for plenty of Instagram photo opportunities when staying somewhere new.

On the other hand, beach lovers of an older demographic might prefer luxury-style accommodation and hotel-like convenience when looking for their next getaway. They might be looking for beautiful, quiet accommodation close to the beach and be prepared to pay top dollar for a convenient location. Whatever target market you’re trying to attract with your investment choices and marketing, make sure it’s something you keep in mind when making your final decision!

Understand the local economy

Understand the local economy of short-terms rental

After figuring out what kind of demographic you’re trying to reach with your investment, your next step will be to get in touch with an experienced local realtor. They’ll be able to give you all the insights you need to understand the local economy.

This will include getting familiar with the average cost of living, the amenities available, the best neighborhoods, and the projected state of the local economy for the years ahead.

This is also where you’ll evaluate the viability of your chosen location in terms of tourist appeal. Check the figures to see how many people visit the area during high and low seasons. Ensure that your property ticks all the boxes tourists will be looking for. 

You’ll also want to ensure your new property is conveniently located close to public transport and popular attractions, including beauty spots, restaurants, and shops.

Dive into real estate market analysis

Dive into real estate market analysis

 

Consulting local realtors and making an educated guess on the state of the real estate market in your chosen location can only go so far. The most accurate method for rental market analysis is to dive deep into the numbers in the real estate market and come up with your own conclusions.

Suppose you’re looking for the best place to start evaluating your options. In that case, you should look no further than our handy directory. We will help you discover all the best rental property investment opportunities available and set you up for a more significant cash flow. With our guidance, you’ll understand what making it in this industry is all about and gain valuable insights. Get in touch today to get the journey started!

Where Is The Best Short-Term Rental Market for Real Estate Investors?

Location is the most significant deciding factor in making your next short-term rental investment either a success or a flop. So, where in the country should you focus your attention to ensure your investment strategy gives you excellent properties with the best rental income?

Note that the exact answer will depend on your target real estate market and budget. Here are some of the most critical short-term rental markets you should keep an eye on in 2022.

Where Is The Best Short-Term Rental Market for Real Estate Investors

Chattanooga, Tennessee

With Zillow predicting that property values will rise by 17% in 2022, Chattanooga, Tennessee—located along the Tennessee River in the shadows of the Appalachian Mountains—offers a promising investment opportunity. The Lookout Mountain Incline Railway takes visitors to historical buildings and trails with breathtaking vistas.

Annual revenue potential: $47,000

Revenue growth rating: 78

Rental demand rating: 98

Investability rating: 88

Investor score: 88

Sevierville, Tennessee

Overlooking the majestic Smoky Mountains, Dolly Parton’s hometown can offer travelers the break of a lifetime. It’s also wildly popular all year-round among great-outdoors enthusiasts.

Annual revenue potential: $61,961

Revenue growth rating: 65

Rental demand rating: 71

Investability rating: 100

Investor score: 83.9

Maui, Hawaii

Maui is the best Airbnb investment destination in 2022 thanks to high occupancy, strong income growth from 2020, and high investability. The Valley Isle is well-known for its world-famous beaches, humpback whale sightings, and stunning views during the golden hour.

Annual revenue potential: $102,000

Revenue growth rating: 90

Rental demand rating: 93

Investability rating: 91

Investor score: 90

Kenai Peninsula, Alaska

The Kenai Peninsula provides access to numerous national parks, wildlife viewing opportunities, and Alaska’s genuine awe and beauty. Since the pandemic, there has been a spike in interest in outdoor adventure. Therefore it’s not surprising that the region’s revenue growth has achieved a score of 94. 

Annual revenue potential: $44,000

Revenue growth rating: 94

Rental demand rating: 89

Investability rating: 87

Investor score: 89

Gatlinburg, Tennessee

The Great Smokies are a sight to behold all year round. Getting a secluded cabin on their doorstep will guarantee great occupancy rates.

Annual revenue potential: $55,439

Revenue growth rating: 56

Rental demand rating: 70

Investability rating: 100

Investor score: 81.6

Your one-stop destination for understanding the vacation rental market

Your one-stop destination for understanding the vacation rental market

So, are you ready to dive into the short-term rental industry and invest in your new (or next) rental property?

There’s no point in denying that the tourism and short-term rental industry has felt the full impact of the pandemic. As travel resumes and the world starts to open up more, the already incredible investment opportunities available will quickly become even more profitable.

In short, there’s never been a better time to get in early and turn your next investment property into a successful short-term rental.

Take The Next Step

Suppose you’re looking for the best place to start evaluating your options. In that case, you should look no further than our handy directory. We will help you discover all the best rental property investment opportunities available and set you up for a more significant cash flow. With our guidance, you’ll understand what making it in this industry is all about and gain valuable insights. Get in touch today to get the journey started!

Start your investment property search!