In a sea of bad headlines, this is a breath of fresh air – vacation rental performance soundly beat hotels this summer and gave their owners a pretty remarkable return on investment. The newest industry research from HomeAway shows that the summer of 2013 was one of the strongest on record, with owners reporting an average weekly rental rate of $1,778, or $254 per night. This was a 19% increase over the same period a year ago, and trounced the average hotel rate of $110.21 per night, yet still offered greater value than a single hotel room since vacation rentals typically include multiple rooms, full kitchens, onsite laundry, and various other amenities.
Some notable highlights of the report include that more than half of the owners surveyed cover at least three quarters of their mortgage payments by hosting travelers. Seventy percent cover at least half, an eye-opening finding when you consider that most of these properties were otherwise underutilized assets that were dormant except for the few months a year that they were used by the owner.
In total occupancy, vacation rentals again beat hotels 77% to 70%, yet the time management requirements account for an average of 8.4 hours per week. In practical terms this means that owners earned an average of $71/hour for their efforts, more good news for that underutilized lake house, ski cabin, or beach bungalow. Four out of ten owners surveyed originally purchased the home for personal use, and another 15% intend the property to be a future retirement home, so with numbers like these it’s easy to see why some folks get so excited about vacation rentals as both a present and future opportunity.
In unrelated research, online search demand for vacation rental terms was up 13% in the second quarter of this year according to TravelClick. And on the largest online marketplace year-over-year demand grew by 35% while supply grew by only 15%. Finally, a full 36% of travelers using a vacation rental booking site are first time users of vacation rentals. So while vacation rentals are still a small percentage of overall travel accommodations, awareness, demand, and use are all increasing, in some cases dramatically.
These are exciting times.
About the author:
Joel Rasmussen is President and Founder of the Austin Rental Alliance, one of the largest non-profit association of vacation rentals owners in the U.S.
He is an internationally recognized speaker, writer, and filmmaker. As author of the Vacation Rental Success series, Mr. Rasmussen has become a frequent speaker for HomeAway, the world’s largest Vacation Rental marketplace. He has been interviewed for or featured in The New York Times, CNN, USA Today, Fox Business News, The Washington Post, and The Wall Street Journal.