Vacation rental revenues halved amid COVID-19 crisis
Over the years, the vacation rental industry became a huge business, with millions of tourists choosing fully furnished homes or apartments instead of a traditional hotel or motel experience.
However, the COVID-19 outbreak caused an enormous financial hit to the entire market, cutting down revenues of both the big players like Airbnb or Booking.com and smaller vacation rental owners and property managers.
According to the latest data, the revenue of the global vacation rental industry is expected to plunge by $35 billion in 2020, a 42% drop year-over-year.
Airbnb, Booking.com, and Expedia Witnessed a 90% Plunge in Reservations
The vacation rental segment includes private holiday homes and houses and short-term rental of private rooms or flats through online marketplaces like Airbnb and Booking.com or in travel agencies.
In 2017, the entire industry generated $78.7 billion in revenue, revealed the Statista data. In the next two years, this figure rose by 7% to almost $84 billion.
However, vacation rental companies had a rough start to 2020. After a promising first few weeks of 2020, the initial wave of the COVID-19 caused massive cancellations of stays, with even the market’s biggest players witnessing colossal reservation drops.
In week 14 of 2020, short-term rental bookings on the Expedia platform saw a 94% drop year-over-year. Two other travel industry giants, Airbnb and Booking.com, followed with a 93% and 91% plunge, respectively. The strong negative trend continued between June and September after the coronavirus pandemic ruined what is typically a peak summer travel period.
As of week 35, there was a 62% YoY drop in short-term rental bookings on the Airbnb platform. However, Booking.com and Expedia witnessed even more significant losses, with their reservations plunging by 66% and 86% in this period.
Statista data show the global vacation rental industry is expected to witness a recovery in 2021, with revenues growing by 36.7% to $66.9 billion, still $17 billion under 2019 levels. In the next three years, this figure is forecast to rise to $88.4 billion.
The average revenue per user in the vacation rental segment is forecast to amount to $111.1 in 2020, a slight increase in a year. By 2025, this figure is expected to rise to $117.
The Number of Users to Plunge by 42% to 445 Million
Although the initial wave of the COVID-19 caused massive reservations drops in the first months of 2020, statistics show the number of users is expected to stay deep below the last year’s levels.
In 2017, almost 750 million people chose vacation rentals instead of hotels and motels. Over the next two years, this figure rose to 777 million.
However, Statista estimates the number of users in the vacation rental segment to plunge by 42% YoY to 445 million in 2020 and remain under 2019 levels in the next three years.
In global comparison, the United States represents the world’s largest vacation rental market, expected to generate $9.5 billion in revenue in 2020, a 45% plunge in a year.
To fight the spread of COVID-19, some US states placed restrictions on short-term rentals, which caused massive complaints from the companies operating in the market. In Florida, property owners and a vacation rental management company even filed a federal lawsuit against the governor, accusing him of violating their constitutional rights.
The Chinese market, the second-largest globally, is forecast to witness a 43.5% drop YoY, with revenues falling to under $5.3 billion. Japan, the United Kingdom, and Germany follow, with $3.2 billion, $2.6 billion, and $2.5 billion in revenue in 2020, respectively.