Hotel & Vacation Rental Outlook Report

Explore hotel & vacation rental outlook in 2021 with us through occupancy, demand & pricing insights. Transparent & Amadeus have combined their extensive datasets to shed light on the reactions of accommodations to the travel trends emerging in the wake of the COVID-19 pandemic, and together provide an overview and analysis of what this data shows.

Authors: Jade Tinsley, Head of Marketing, Transparent, and Katie Moro, Vice President, Data Partnerships, Hospitality, Amadeus

UPDATE: View the 2022 hotel & vacation rental report here

Hotel & vacation rental outlook on occupancy

The evolution of occupancy through the pandemic and into recovery paints an optimistic picture for hospitality. Traveller demand rebounds quickly upon eased restrictions; more quickly for hotels, but with more of a sustained rebound for vacation rentals.

Forward-looking, currently booked occupancy favours short-term rentals, which average 15% occupancy for the remainder of 2021, compared with hotels at 5%.
However, occupancies will likely become more comparable as check in dates approach because hotel booking lead times have been much lower since the beginning of the pandemic.

Hotel & vacation rental pricing

Here we look at weekly average price for a one-night stay in global hotels & vacation rentals and note a contrast in pricing strategy.

Hotels, with less flexibility in use, are trying to attract maximum occupancy with 26% lower rates so far in 2021 compared with 2020. 
Vacation rentals on the other hand have largely increased rate. An average 7% rise year-on-year has been applied; likely to capitalize on demand and recover short-term rental revenue. This makes an average night in a vacation rental property currently more expensive than a hotel at around $150.

Traditionally, hotel rates have been higher than for short-term rentals. An evaluation of the data uncovers opportunity for both accommodation types.

Hotel & vacation rental booking window trends

This chart illustrates the average number of days between booking and check-in for reservations made each week in global hotels & vacation rentals. 

We can see a continued trend of hotel bookings being more last minute, with lead times currently half that of rentals. Vacation rental booking window fell closer towards that of hotels through the pandemic, but looks to now be returning to pre-pandemic levels. 

A shorter booking window will better place hotels to secure more demand during this uncertain booking climate.

Hotel & vacation rental outlook

Our analysis suggests an optimism for hospitality in general: with demand, occupancy, rates, and length of stay all improving, the indicators point to greater traveler confidence on the horizon.

Considering the opportunity for each accommodation type: 

Alternative accommodations:

Alternative accommodations demonstrate a strong rebound, likely supported by a lower volume of inventory experiencing faster recovery. Increased occupancy with longer booking lead time paint a clearer picture of opportunity on the horizon. Several factors shape this opportunity, including: 

• flexibility of use; longer term lets are a good guarantor of revenue
• greater operational mobility than hotels with fewer staffing and running cost implications
• increase in daily rates
• better equipped for longer, domestic stays or remote working
• more locational choice, especially for isolated rural stays

Hotels:

The increased volume of hotel inventory across a broad spectrum of destinations provides more options for travelers. While having to adapt their marketing strategy to engage with a different traveler demographic, hotels too are rebounding due to leisure demand but will need group and business travel to accelerate in order to fully recover.  Some trends that we’re seeing in the data: 

• Travelers seeking the services and amenities only available in hotels and resorts will continue to drive leisure demand
• Hoteliers now have a better handle on demand, booking windows and consequently are improving average daily rates
• Flexibility in cancellation policies help ease traveler concerns with booking trips
• Cleanliness and safety precautions also provide a sense of comfort to travelers

Current trends and conditions appear favourable for the vacation rental sector to build on its growth and increase relevance. Yet it should be remembered that hotels traditionally enjoy higher occupancy and rates, and such a well-established industry will surely bounce back: crucially, absolute reservations currently remain far greater for hotels.

---