The beaches, amusement parks, and cities of Florida are some of the top spring break attractions in the United States, making March an important month for vacation rentals in the state. In comparison to an outstanding 2022 season, 2023 is not looking quite as rosy.
While reservation activity for the U.S. overall is higher than last year, reservations for March stays in Florida are down, leaving rental units less occupied than last year. We know property managers, hosts, and homeowners are all worried and searching for answers and solutions. So we’ll break down what’s on the books for March, how reservation activity is tracking, and strategies for capitalizing on last-minute reservations and talking to your homeowners.
March Occupancy Rates in Florida
Florida vacation rentals are currently 45% occupied for March, which is a considerable decline from last year when they were 55% occupied by the middle of February. While some markets, such as Anna Maria Island and the St. Petersburg and Clearwater Beaches are as popular as they were in 2022, others are facing considerably lower occupancy rates. The St. Augustine area beaches are 8% lower than last year and 30A is 9% lower. Even Orlando is 8% less occupied for March than at this time last year.
While we’ve previously reported that increased supply is leading to lower occupancy rates despite increased demand, that’s not the case in most of Florida. Supply has declined slightly from last March in a few of these markets. Instead, low occupancy rates are being caused by waning demand. In Destin, for example, there has been a 19% decline in the number of room nights booked on Airbnb and Vrbo compared to last year. The number of nights available has declined, but only by 3%, which is not enough to keep the remaining properties occupied.
Just a few months ago, the spring break outlook was more positive. In December, there were only slight year-over-year differences in the adjusted paid occupancy rate for March. For the St. Augustine Beaches, the March occupancy rate on the books by December first was 3% higher than at the same point in 2022. New reservation activity was similar to last year until February when reservation activity slowed and many of these popular spring break destinations began to pace behind 2022. For example, 30A's March occupancy, which in December was only 2% behind last year, fell to 6% behind by February 1st. Reservation activity continued to fall behind 2022 over the past few weeks; Greater Orlando rentals were 3% behind 2022 on February 1st but 10% behind by February 16th.
The Impact on Booking Windows
These late reservations are crucial for many markets, especially those with shorter booking windows like Destin and Miami. Markets with long booking windows like Anna Maria Island and the St. Petersburg and Clearwater beaches are faring much better because many guests had already made their reservations before the recent slowdown in booking activity.
The decline in reservations during February does not necessarily reflect a change in the influences of the economy on travel - inflation has been high and disposable incomes have been declining for a while. Rather, it may imply that the travelers who tend to make last-minute reservations, often booking cheaper properties than those who book further out, have been more impacted by the current state of the U.S. economy.
A Varied Average Daily Rate
The average daily rate for March stays is extremely varied by market. In high-end markets like 30A and Anna Maria Island, the average daily rate is around $600 but many Florida destinations are more affordable with nightly rates of around $300. This year, travelers do not seem to be opting for cheaper destinations; the nightly rate does not impact the year-over-year change in occupancy.
For instance, 30A occupancy is down and Anna Maria Island is up, despite both being on the high end of the nightly rate spectrum. Similarly, the St. Petersburg and Clearwater Beaches are occupied at the same rate as last year but Orlando is less occupied, despite both of their average daily rates being about $320. There are also no universal trends in rates - some rentals are charging more than last year and others are charging less.
Impact on Florida RevPAR
While rate increases can sometimes make up for lower occupancy rates, occupancy changes are the driving force behind RevPAR changes for March in Florida. None of the markets with lower occupancy rates had high enough prices to increase RevPAR. Anna Maria Island and the St. Petersburg and Clearwater Beaches, where ADR has increased from 2022 and adjusted paid occupancy remained the same, are the only featured markets to have higher adjusted RevPARs than last year.
They also have the longest average booking windows for March stays, leaving them less impacted by the February reservation activity slowdown. The 25% decline in RevPAR for 30A and the 15% declines for Destin and Greater Orlando are not inconsequential and, if these trends persist as we arrive at the stay dates, will impact the bottom lines of managers, homeowners, hosts, and destinations.
So, What Can Be Done?
Know that this is not just you.
Your property is not the only one with lower occupancy than last March. On average, March revenue is pacing behind last year due to a recent decline in reservations. There are, of course, different year-over-year RevPAR changes between markets and inventory types. For example, houses on 30A are pacing 9% behind last year for March but condos are pacing only 3% behind. Use your benchmarking data to figure out if you’re a reasonable amount behind last year or if you need to make adjustments.
Be proactive with your owners.
You now know that many Florida destinations are pacing behind last year for March but that doesn’t mean your owners do. Whether you’ve heard from them or not, they may be concerned that they have less revenue on the books for spring break. Consider sharing reports that show market-level occupancy and ADR for their property type and size.
Capitalize on last-minute reservations.
Not all hope is lost; last year, reservations for March stays peaked at the end of February for Florida overall and some markets with shorter booking windows, such as Destin, Miami, and Orlando. In 2022, 23% of March short-term rental reservations in Florida were booked less than 14 days in advance. Another 18% were booked 15 to 30 days out. Even if your market has a longer booking window, potential guests are still searching. Adjust your rates and marketing to capitalize on last-minute reservations. However, don’t drop rates too far because you may not gain enough booked nights to make up for the lower rate.
Utilize market data.
You’ll need access to high-quality data for vacation rentals in your destination to make these adjustments. Key Data can help! Contact us to see how you can utilize historical data and forward-looking data to stay on top of trends and make informed decisions.
Looking for data on your local area? Book a call with us for a personalized demo of your market.