U.S. November Overview 2023: Shoulder Season Occupancy Increased In Some Regions

December 20, 2023
2 minute read

November vacation rental performance saw some of the same patterns we observed in the first half of the year; decreased occupancy rates compared to previous years, and a decline in pricing power and RevPAR. However, increased shoulder season occupancy seems to be a major change over 2019.

  • Vacation Rental demand continues to underperform 2022 and 2021, but averaged 10% above 2019. 
  • Rates are softening, but still higher than in 2019.
  • November RevPAR was lower than last year and 2021, but higher than in 2019. 
  • Net reservations have leveled out with both 2022 and 2021, but are significantly higher than in 2019.
  • Average stay lengths and booking windows shorten, continuing a trend that started in September

How do these high-level trends break down? Let’s take a closer look.

U.S. Vacation Rental Performance for the Last Six Months

Calendar Occupancy % 

Vacation Rental demand continues to underperform 2022 and 2021, but averaged 10% higher than in 2019.

Calendar Occupancy % = (Nights Sold + Owner Nights + Hold Nights) / (Total Nights)

In November, calendar occupancy was only 1% lower than in 2022 and 5% lower than in 2021. However, compared to 2019, occupancy was 10% higher in 2023. Q4 Calendar Occupancy rates are only pacing about 2% behind last year and 6% behind 2021. Interestingly, there is some extra shoulder season demand sticking around. During the peak Summer travel season, calendar occupancy averaged about 5% higher than in 2019. In September, October, and November 2023, the average increase from 2019 to 2023 jumped to 10%. Shoulder seasons offer the biggest opportunity to increase revenue, so lock in your marketing and rate strategies as we move into 2024!

Average Daily Rate

Daily Rates are softening but still higher than in 2019.

ADR = Total Unit Revenue / Nights Sold

The average daily rate in the United States decreased by $7 from November 2022. With increased supply, property managers are facing more competition, and pricing power has declined in the face of lower occupancy rates. With more options and high inflation, consumers may be more price-sensitive than they used to be. Additionally, when adjusted for inflation, rates are much lower than last year. Q4’s rates are pacing $12 lower than last year, and $14 lower than in 2021. Property Managers are torn between decreasing rates and hoping for more reservations, or holding rates steady to account for lower occupancy. However, with high-demand periods such as the Thanksgiving and Christmas holidays coming up, make sure to keep your rates high. 

RevPAR

October RevPAR was lower than last year and in 2021, but higher than in 2019.

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

RevPAR suffered because occupancy and rates decreased. At $53 per active property per night, revenue decreased by $8 from November 2022. This trend began in Q4 of 2022 and is continuing into Q4 this year. Q4 2023 RevPAR is pacing $11 lower than last year and $19 lower than in 2021. Now is the time to communicate openly with your owners and shift strategies for the coming months. We anticipate less investment activity in many markets due to high mortgage rates and lower revenue potential. 

U.S. Regional Vacation Rental Performance

With increased shoulder season occupancy, three regions were able to increase their occupancy over last year; New England (+6%), the Mid-Atlantic States (+1%), and the Rocky Mountain States (+1%). Most of the remaining regions saw marginal decreases from last year, from -1% (Midwest U.S.) to -4% (Southeast U.S.). The Hawaiian Islands are still seeing the effects of the devastating wildfires in Lahaina, and their occupancy is down 11% from last year. November is the second month in which almost all of the regions above saw single-digit year-over-year occupancy decreases.

All regions above saw lower nightly rates year-over-year in November 2023. Demand has waned so guests are likely no longer willing to book reservations at the rates they were this time last year. New England saw the largest decrease in nightly rates from last year, -8%. However, since their occupancy increased the most over 2022, PMCs there likely could have raised their rates.  The remaining regions saw similar decreases in nightly rates; between -1% (Mid-Atlantic States), and -4% (The Hawaiian Islands, Southeast U.S., and Southwest U.S.)

Though there were only slight decreases in both occupancy and nightly rates, those decreases compounded and led to decreased year-over-year RevPAR for almost all of these regions. Since occupancy in New England increased 6% YoY, the 8% decrease in rates was somewhat mitigated and RevPAR decreased 5%. This was one of the smallest decreases, with the others being in the Midwest U.S. (-6%) and the Rocky Mountain States (-3%), who are coming into their busy season. The Southeast U.S., Southwest U.S., and Western U.S. all struggled in November, with RevPARs decreasing between 13% - 17%. The Mid-Atlantic States were the only region to improve RevPAR over last year; by 3%. 

U.S. Vacation Rental Performance; Booking Activity

Net Reservations per active property

Net reservations on par with 2021 and 2022, and higher than in 2019.

Net reservations per property = (bookings made - cancellations) / active properties

From week 20 (May 14th) to week 26 (June 25), the increase in net reservations continued to grow, surpassing 2022, 2021, and 2019 figures. In July (weeks 27 - 31), net reservations paced right alongside 2022, though still averaging 6% ahead of 2021 and 7% of 2019. Starting in week 32 (August 6), net reservations dipped below 2022, and in the following week, dipped below 2019 as well. In the last week of August (Week 35), net reservations per property averaged roughly 5% lower than last year and 4% lower than in 2021, but 21% higher than in 2019. Through September, net reservations increased slightly. By week 38 (September 17), reservations had increased to 7% ahead of last year, but still 4% behind 2021. Again, net reservations were still 21% ahead of 2019. Through October (weeks 40-44), net reservations were 5% higher than last year, 20% higher than in 2019, and 6% lower than in 2021. In November (weeks 44-48), net reservations were right alongside 2021 and 2022 figures, and about 13% higher than in 2019.

Average Length of Stay and Booking Window

Average Length of Stay

Average stay lengths are slightly shorter than in previous years, and these shortened stays are contributing to lower occupancy rates.

Average Length of Stay = Total Nights Sold / # of Guest Check-ins

At 4.1 days in November 2023, stay lengths are 5% shorter than last year, 7% shorter than in 2021, and 4% shorter than in 2019. And though the change from 2022 may seem slight (-.2 days), the 5% decrease in the average length of stay from 2022 leads to 5% fewer nights sold if the number of reservations remains the same. Additionally, property managers have to work harder to increase the quantity of reservations just to maintain year-over-year occupancy. With nightly rates remaining high and remote work becoming less popular, shortened stay lengths are an important indicator of changing consumer behaviors. Consider promos that target longer stays, like “Stay More, Save More” discounts.

Average Booking Window

Booking windows were significantly shorter than in 2022, 2021, or 2019.

Average Booking Window = (Arrival Date - Booked Date) / # of Guest Check-ins

In the first half of 2023, booking windows were extremely similar to the previous year’s, shortened over the peak summer season, and are now returning to lengths similar to last year.  November’s average booking window finished at 50 days, compared to 53 days last year, and 57 days in 2019. With lower occupancy rates, are travelers booking closer to the date of arrival to secure lower rates, because they know they will still be able to find a property that suits them? Or are property managers pushing travelers to book closer to the date of arrival because they are holding rates too long? With shortened booking windows, ensure you have an appropriate pricing strategy to capture last-minute bookings. Focus on marketing properties outside of your popular booking windows and adjusting rates accordingly.

State of the U.S. Economy

The inflation rate in the United States eased to 3.1% during November, the lowest since July 2023. In short, Americans are paying an average of 3.1% more for goods and services than in September of last year.

One of the biggest contributors to falling inflation rates was the cost of gasoline. Gas prices dropped 6% in November, or 24 cents per gallon of regular-grade gas. Airfare has remained mostly flat over last month, but is now 12.1% lower than in November 2022, and 4.4% lower than in November 2019.

Trends to Keep an Eye On Going into 2024

Macroeconomics:

Investments:

  • Supply increases have slowed: Demand (Key Data customer guest checkins) growth, (+52% YoY) greatly outpaced Supply (Key Data customer properties) growth (+19% YoY) in 2021, which allowed property managers to drive high rates while capturing high occupancy rates. 2022 and 2023 have seen higher supply growth than demand growth, which is one of the contributing factors to softer occupancy rates. 
  • Mortgage rate locks on second homes have continuously fallen since their peak in Q1 2021, due to a combination of low inventory, high interest rates, a return to the office for some of the workforce, and declining revenues. Property Managers may have difficulty finding new homeowners, so be cautious when considering inventory and/or location expansion.

Travel:

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