STR returns rising above inflation.

SANTA ROSA BEACH, FL – Short term rental returns have risen strongly so far this year as the impact of both rising nightly rates and occupancy lift the sector ahead of inflation1.

Analysis by Key Data indicates a strong year for the industry if the momentum built up in the first quarter of 2023 can be sustained.

While nightly rates for 2023 have remained flat in the UK and the US, which means they have fallen in real terms, higher occupancy means that there, and globally, overall returns per room are much higher year on year.

Globally, average daily rates (ADRs) for 2023 were up 3.4% annually by the end of Q1, with occupancy climbing 17.6%, revenue per available room (RevPAR) is 21.6% ahead of last year.

The data reflects 2023 bookings made or taken by 1st April 2023.

Q1 leading indicators by region

UK
ADR was noticeably weak, rising just 1.7% to £164 ($204). However, coupled with a 13.2% YoY increase in occupancy, RevPAR is currently up 15.1% year on year. Inflation reached 10.1% in the UK in March, meaning ADR has fallen hard in real terms.

USA
ADR is flat at $296 but with occupancy climbing 12% YoY, RevPAR is running 11.9% higher than last year. Inflation reached 5% in the US in March.

Asia
Asia is performing extremely well. ADR is up 18.6% at $126 while occupancy has increased 56% YoY. RevPAR is currently running 85% ahead of 2022.

Middle East
ADR is also down heavily in real terms in the Middle East, where nightly rates have only risen 2.4% to $172. However, occupancy is up 25.3% YoY, sending RevPAR 28.3% higher than last year.

Europe
ADR is still struggling in Europe where it has also fallen in real terms, with nightly rates only up 5% to $170 (€154). However, with occupancy increasing by 17.4% YoY, RevPAR is up 23.2% from last year. Inflation reached 8.5% in the Euro area in February.

Global
Globally, average daily rates (ADRs) for 2023 were up 3.4% annually by the end of Q1, with occupancy climbing 17.6%, revenue per available room (RevPAR) is 21.6% ahead of last year.

Melanie Brown, Executive Director of Data Insights at Key Data, commented: “This was a promising start to the year but the outlook for 2023 remains on a knife edge. With ADRs weak, it is occupancy that is currently rescuing returns for owners and operators.

“While the picture can easily change, these initial readings of the market indicate greater demand and higher confidence among the majority of consumers who may be withstanding cost of living pressures better than expected. However, any economic shocks this year could change the picture quite dramatically.”

Vicky KarantzavelouVicky Karantzavelou

Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor’s degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.

She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.

Source

Categories:

No responses yet

Leave a Reply

Your email address will not be published. Required fields are marked *