In this article, we explore the growth of vacation rentals in Latin American nations in the context of global evolution. As one of the less established markets worldwide, numbers in supply, for instance, often appear dwarfed by those of Europe and North America. However, when we consider relative growth, trends in supply, rates, and occupancy: are all of them above average? Further below, we explore these trends for specific nations and with our data set we unfold insights on:
- Supply in Latin America
- Demand in Latin America
- Now let’s put that into a global context
- Why is this growth significant
Supply in Latin America
Over nearly two years, from September 2020 to August 2022, the short-term rental (STR) supply of entire home listings has risen in several Latin American countries. The countries we explore through data are members of the Central America Tourism Agency (CATA). The agency is a tourism promotion agency in Central America whose objective is to strengthen tourism promotion and the tourist economy in the following countries: Belize, Costa Rica, Guatemala, Honduras, Nicaragua, Panama, the Dominican Republic, and El Salvador.
We found that the Dominican Republic and Costa Rica are the countries with the largest market size out of the other CATA countries, with over 40,000 properties each, and the most significant positive trend. What’s more, Panama and Guatemala had steadily positive trends and have scaled at 8,000 to 10,000 properties each. Lastly, Honduras, Belize, Nicaragua, and El Salvador have 3,000 to 6,000 properties each, and Belize and Nicaragua have slightly decreased numbers in their STR supply.
Many of these Latin American countries have been recovering or stabilizing their vacation rental industries since the dawn of the Covid 19 pandemic. In this case, the Dominican Republic, the largest of the countries, experienced a 71% growth. Despite being the smallest, El Salvador experienced the highest market growth at 78%.
Demand in Latin America
Looking again from September 2020 to August 2022, we can see how much of a demand surge has been experienced for STR across all listed Latin American countries. On this occasion, the average of all of these countries amounted to an increase of 29%. Meanwhile, STR occupancy in Latin American nations Belize and Honduras have grown the most, and Guatemala and the Dominican Republic the least.
Now let's put that into a global context
The growth of inventory and number of reservations in the Latin American region has been very relevant with reference to the world level. Let's begin by observing the evolution of vacation listing count per world region from 2018 to 2022 in the chart below.
Listings on major OTAs are remarkably up in North America by 63%, and Latin America is close behind by 1% at 62%. Asia and Europe grew 27% and 20% respectively. Oceania is the only listed region with a negative listing count of -1.7%. In brief, vacation rental listings are advancing in many regions around the globe, and this progression may correlate to the emerging trend of professionalization.
Further, professionalization is the shift of the STR industry from a DIY, individual host perspective to a more professional perspective in the way hosting activities are handled (sourcing guests, hosting, welcoming guests, handling client requests, taking into account pricing and distribution strategy, etc.). If you would like to read more on professionalization in the STR industry, look over our "How professionalized are short-term rentals?" blog.
Indeed Latin America has experienced this wave, with professional brands raising the battlefield and contributing to more competition in the industry. This wave could even possibly account for the rise of STR occupancy over the last couple of years.
Bloomberg Linea delves further into this topic using our data if you would like to read more here.
Why is this growth significant?
Without a doubt, trends are crucial to surveil, and trends are emerging in CATA countries. For instance, inventory, average daily rate (ADR) for vacation rentals, and average occupancy rate for vacation rentals are all growing. To sum up the data from previously, inventory or supply has grown 30% and the occupancy rate for vacation rentals is up 29% on average. Furthermore, in the chart below, we can see how STR ADR rose 7% on average.
In brief, vacation rentals are a serious alternative to traditional forms of accommodations, such as hotels. Evidently, Latin America has recovered some of its numbers in terms of supply and has been seeing relative growth. The degree of professionalization corresponds with this data, and reminds us of the tourist ecosystem in terms of relative growth, emerging trends in supply, and finally historical and current rates and occupancy.
Explore further the power of vacation rental data if you want access to information and insights like these and much more by booking a demo now, and if you would like to learn about the future of tourism in CATA countries, watch the webinar below which features discourse of leaders from international tourism companies.