U.S. December Overview 2024: Occupancy Paces Behind For Q1 As Booking Windows Elongate

February 12, 2025
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U.S. Vacation Rental Performance for the Last Quarter/Next Quarter

As we head into 2025 and look back on the performance of the United States vacation rental industry in 2024, the question remains “Will supply and demand finally stabilize, and drive occupancy to remain consistent with 2024 and 2023?” Our same-store property managers’ direct data indicates that the gap is closing, with an annual guest nights (demand) figure that stayed stagnant while supply increased by only 3%, compared to an 11% increase in 2023. With supply growth slowing and demand stabilizing, it appears that 2025 will bring positive performance, but those are not the only two factors that drive the industry. Let’s dive into the impacts that decreasing occupancy, consistent rates, and increasing booking windows have on property managers across the United States.

Paid Occupancy % 

Paid Occupancy paces behind last year as we move through Q1 2025

Paid Occupancy % = Nights Sold / Total Nights

  • In Q4 2024, October and November paid occupancy figures were similar to 2023 but dropped 3% below last year in December. 
  • In Q1 2025, paid occupancy is pacing 2-3% behind last year.

What does it mean?

  • In 2024, supply growth slowed to a 3% year-over-year increase, while demand held steady. Increased supply is still contributing to decreases in occupancy.
  • Shorter stay lengths are also contributing to a decrease in occupancy. Stay lengths have been shortening since 2021, as weekend and urban travel have recovered post-COVID. Guests are taking more trips per year, but spending less time in their destinations. Try offering length-of-stay discounts to decrease orphan nights and entice people to stay longer.
  • Q1 2025 booking windows are pacing longer than in Q1 2024, so occupancy rates that are pacing behind are not necessarily indicative of poor performance. This likely means that a majority of the mid-term and short-term bookings have not occurred yet, and that property managers will be receiving more last-minute bookings.

Average Daily Rate

Daily Rates are fairly consistent with 2024

ADR = Total Unit Revenue / Nights Sold

  • In Q4 2024, booked rates were on par with Q4 2023. 
  • In January and February 2025, daily rates are pacing slightly higher than in 2024, but March rates are pacing $9 lower than last year.

What does it mean?

  • While supply growth has slowed in 2024, the increase in supply still outweighs the increase in demand, causing lower occupancy rates and driving pricing power down. Additionally, with more options and high inflation, consumers are more price-sensitive than they used to be.
  • March rates pacing behind is likely due to the shift in the Easter holiday date, since Property Managers can increase rates during high-demand periods and capitalize on holiday demand. Easter was in March in 2024, and is at the end of April in 2025, so we will likely see higher rates than last year for April.

RevPAR

Varied occupancy and rate performance lead to decreased RevPARs.

RevPAR = Occupancy x ADR or Total Unit Revenue / Total Nights in a given period

  • October and November 2024 RevPARs were consistent with 2023, but December was down $4 driven by decreased occupancy. 
  • Q1 2025 RevPARs are pacing an average of $5 lower than in 2024.

What does it mean?

  • RevPAR has been declining, driven by decreases in occupancy.
  • Shoulder seasons offer the most opportunity for increased revenues, so continue refining your marketing efforts to secure their much-needed last-minute bookings, and plan for the summer season ahead. 

U.S. Regional Vacation Rental Performance

Q1 2025 Paid Occupancy %

In Q1 2025, almost all regions are experiencing year-over-year occupancy decreases. The Mid-Atlantic States are the only region seeing an increase of 1%, during a shoulder season. The Hawaiian Islands, New England, Rocky Mountain States, and Southwest U.S. are all seeing the slightest decreases (-2%), while the Midwest (-7%), Western U.S. (-8%), and Southeast U.S. (-10%) are all seeing significant decreases. Climate.gov is anticipating average temperatures to be 33-50% higher in the Rocky Mountains, Southwest U.S., and Western U.S. in January, which could spell trouble for the ski season in these areas. Again, this decrease could be exaggerated due to the shift in the Easter Holiday, and elongated booking windows. 

Q1 2025 Average Daily Rates

Regional rates are a mixed bag in Q1 2025. The Mid-Atlantic States (+14%), Midwest (+7%), Western U.S. (+2%), and Southeast U.S. (+1%) are seeing increases over their booked rates from last year. The Rocky Mountain States (-1%), and Hawaiian Islands (-3%) are seeing slight decreases in booked rates, while property managers in New England and the Southwest U.S. are seeing booked rates 5% lower than last year. 

Q1 2025 RevPAR

Even with some regions’ increased rates, almost all regions saw year-over-year decreases in RevPAR. The Mid-Atlantic is capitalizing on their increased shoulder season occupancy with higher rates, leading to a 15% increase in RevPAR over Q1 2024. The Midwest is pacing only 1% behind, while the Rocky Mountain States are seeing a 4% decrease during their peak season. The remaining regions are pacing 4%-9% behind last year. Q1 starts to see bookings ramp up for beach markets and peak season for ski markets, so be sure to finalize your marketing strategies for the next few months.

State of the U.S. Economy

The inflation rate in the United States rose for the third month in a row to 2.9% during December; after increasing to 2.7% in November. In short, Americans paid an average of 2.9% more for goods and services than in December of last year. It is unlikely that the Federal Reserve will cut interest rates again, as they did in mid-September, as inflation rises.

Gasoline prices fell 4.4% from November to December, and airfare increased 3.9% from last month, following a 0.4% increase in November.

Trends to Keep an Eye On

Gen Z shows interest in financing their travel 

Future Partners (f.k.a Destination Analysts) explored the adoption of "Buy Now, Pay Later" (BNPL) payment plans to finance trips in 2025. More than one in five American travelers (21.2%) say they are likely to use "Buy Now, Pay Later" payment plans for some of their trips this year, although 62.8% say they are unlikely to.  As you might expect, usage of BNPL for travel is driven by age. Some 45.0 percent of Gen Z say they are likely to use BNPL to finance their trips in 2025, followed by 33.2 percent of Millennials and 21.2 percent of Gen X. Meanwhile, just 7.8 percent of Baby Boomers said they were likely to.

Politics may impact people’s travel plans

More than half of American travelers (52.3%) feel that an increasing number of travelers will avoid (or select) destinations based on their personal politics. Although this is down 4 points from last year, it remains something to watch and consider in travel motivations.

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