October STR Market Performance and Election Impact Analysis

In this episode of STR Data Lab, Jamie Lane, Chief Economist at AirDNA, is joined by Scott Sage, AirDNA’s Vice President of Marketing, to analyze the performance of the short-term rental (STR) market in October.

Together, they delve into key metrics, including occupancy rates, rental market analysis, and vacation rental industry trends, while discussing broader economic factors and their impact on STR operators.

The episode highlights the importance of data-driven decision-making for hosts and investors as they navigate a shifting market landscape. With demand remaining stable and supply growth slowing, Jamie and Scott provide actionable insights to help operators capitalize on current trends and plan for the future.

Here’s What You Can Expect from This Episode:

A deep dive into October’s performance metrics, including RevPAR and occupancy rates
The impact of slowing supply growth on the STR market
Insights into holiday demand patterns and how to optimize your nightly rate
A preview of vacation rental industry trends for 2025

Episode Highlights

October’s STR Market Performance: Key Metrics

The discussion begins with an overview of short-term rental market performance for October in the U.S., which showed positive growth across critical metrics. Jamie reports that demand for short-term rentals has grown steadily throughout the year, especially in October with 7.5% year-over-year growth. This marks a turnaround from earlier in the year when occupancy rates were declining due to oversupply in some markets.

Scott points out that the current growth in occupancy is largely due to a slowdown in new supply. High mortgage rates and regulatory pressures have made it more challenging for new operators to enter the market. In contrast, demand has remained stable, with year-to-date booking growth of over 12%, which creates a favorable environment for existing hosts.

RevPAR (revenue per available rental) also saw a year-over-year increase, reflecting hosts’ ability to adjust rates effectively in response to market conditions. Jamie highlights that this growth is being driven by both higher occupancy and strategic rate adjustments by hosts.

Understanding the Impact of Slowing Supply Growth

Jamie explains that rental market analysis often reveals a close relationship between supply growth and occupancy trends. In recent years, the rapid addition of new listings in many markets created downward pressure on occupancy rates. However, October’s data shows that this trend is reversing, as the pace of new supply entering the market has slowed significantly.

Scott provides context, noting that regulatory factors are playing a major role in slowing supply growth, particularly in Urban and Coastal markets. For example, cities like New York and San Francisco have implemented strict regulations that limit the number of short-term rental properties. In some cases, these rules are leading property owners to convert STRs into long-term rentals or sell their properties entirely.

At the same time, Rural/Small City markets continue to grow, driven by lower barriers to entry and strong demand from travelers seeking unique experiences. Scott emphasizes that operators in these markets have an opportunity to capture demand by offering high-quality amenities and competitive pricing.

The Role of Occupancy Rates in Pricing Strategy

Occupancy rates are a critical performance metric for STR operators, as they directly influence revenue and pricing strategies. Jamie and Scott discuss how hosts can use occupancy data to optimize their pricing throughout the year. For October, the rebound in occupancy rates provided a clear indication that demand is outpacing new supply in many markets, allowing hosts to increase their rates without sacrificing bookings.

Jamie advises hosts to pay special attention to seasonal trends, particularly during high-demand periods like the holiday season. With Christmas and New Year’s Day both falling mid-week this year, the result has been an extended two-week period of peak demand. This unique calendar alignment has created opportunities for hosts to capitalize on elevated demand by optimizing their rates for late December and early January.

Scott suggests that hosts use dynamic pricing tools to adjust rates in real-time, ensuring they remain competitive while maximizing revenue. He also recommends monitoring local events and travel patterns to identify additional opportunities for rate adjustments.

Vacation Rental Industry Trends: Looking Ahead to 2025

The episode concludes with a discussion of vacation rental industry trends that are likely to shape the market in 2025. Jamie and Scott identify several key themes:

Supply Growth Will Continue to Slow
High mortgage rates and regulatory pressures are expected to keep supply growth subdued, particularly in Urban and Coastal markets. However, Small City/Rural markets are likely to remain strong performers due to favorable market conditions.
Demand Stability Will Support Growth
Despite economic uncertainties, demand for short-term rentals remains strong, driven by stable employment rates and rising disposable incomes. Jamie predicts that this trend will continue into 2025, creating opportunities for hosts to capture more bookings.
Rate Optimization Will Be Key
With occupancy rates rebounding, hosts are regaining pricing power. Jamie highlights that strategic rate adjustments, informed by data, will be critical for maximizing revenue in the coming year.
Increased Focus on Unique Guest Experiences
Travelers are increasingly seeking properties that offer unique amenities and experiences. Scott advises operators to differentiate their listings by investing in high-quality furnishings, curated decor, and local partnerships that enhance the guest experience.

Actionable Takeaways for Hosts and Operators

Monitor occupancy rates: Use occupancy data to adjust pricing and identify opportunities for revenue growth.
Leverage data for decision-making: Tools like AirDNA’s Performance Dashboard can help operators track key metrics and make informed decisions.
Optimize rates for seasonal trends: Capitalize on holiday demand surges by setting rates that reflect the unique calendar dynamics.
Focus on amenities and guest experience: Invest in features that set your property apart and attract repeat bookings.

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Connect with Jamie on LinkedIn and Twitter:

LinkedIn: https://www.linkedin.com/in/jamiehlane/

Twitter: https://twitter.com/Jamie_Lane

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Connect with Scott on LinkedIn:

LinkedIn: https://www.linkedin.com/in/sagescott

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Connect with AirDNA on LinkedIn, Twitter, TikTok, and Instagram:

LinkedIn: https://www.linkedin.com/company/airdna/

Twitter: https://twitter.com/airdna

TikTok: https://www.tiktok.com/@airdna.co

Instagram: https://instagram.com/airdna.co

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Up Next:

From House-Hacking to High Returns with Matt Kruger, Co-Founder of DSM Stays

In this episode of STR Data Lab, Jamie Lane, Chief Economist at AirDNA, sits down with Matt Kruger, co-founder of DSM Stays, to discuss his journey from house-hacking to building a successful short-term rental business. Matt shares how he leveraged real estate automation, strategic market research tools, and the power of sweat equity to transform his investment strategy and scale his portfolio in a non-traditional vacation rental market.

Despite starting in Des Moines, Iowa, an area not typically associated with vacation rentals, Matt identified unique opportunities to cater to larger groups and families. His success stems from a deep understanding of local market dynamics, a focus on enhancing property amenities, and the use of automation to streamline operations and improve guest experiences.

Here’s What You Can Expect from This Episode

Insights into transitioning from long-term to short-term rentals
The role of market research in finding profitable STR opportunities
Strategies for leveraging sweat equity to maximize property value and cash flow
Tips for using real estate automation to scale and manage operations efficiently
How to enhance guest satisfaction with thoughtful property amenities

Episode Highlights

Building a Short-Term Rental Portfolio in a Non-Traditional Market

Matt began his real estate journey with house-hacking. He bought properties, lived in them while making improvements, and eventually rented them out. This hands-on approach allowed him to build a solid foundation in long-term rentals before transitioning to short-term rentals.

Matt chose to stay local in Iowa rather than invest out of state. He identified untapped potential and catered to a niche audience in Des Moines by focusing on his local market. While most properties in the area were designed to accommodate smaller groups, Matt saw an opportunity to target larger families and groups traveling for events, family reunions, and business retreats. His first STR, equipped with amenities like game rooms, hot tubs, and spacious living areas, quickly became one of the top-performing properties in the region.

Understanding the local market was crucial for Matt’s success. Using market research tools like AirDNA, he identified gaps and tailored his properties to meet the specific needs of his target audience.

Leveraging Sweat Equity to Build Wealth

One of the key factors in Matt’s success is his focus on sweat equity, the value added to a property through renovation and improvement. Instead of purchasing turnkey properties, Matt and his wife sought out homes that needed work, allowing them to build equity and increase cash flow.

Matt shares an example of a property he purchased for $160,000. After investing time and resources into renovations, including modernizing the kitchen, upgrading the bathrooms, and adding high-demand amenities, the property now generates over $85,000 in annual revenue. The sweat equity not only increased the property’s market value but also made it more attractive to guests, leading to higher occupancy rates and better reviews.

For new investors, Matt advises focusing on properties with potential for improvement rather than those that are move-in ready. The value you create through sweat equity can provide a significant buffer against market fluctuations and help you build long-term wealth.

Real Estate Automation: The Key to Scaling Operations

As Matt’s portfolio grew, managing multiple properties manually became increasingly challenging. To streamline operations and improve efficiency, he turned to real estate automation tools. One of his most valuable tools is Hospitable, a platform that automates guest communication, synchronizes bookings across platforms, and coordinates cleaning schedules.

Automation has been a game-changer for Matt’s business. It lets him focus on growing his portfolio and improving his listings, instead of getting caught up in everyday tasks. Matt has been able to scale his business while maintaining high levels of guest satisfaction by automating guest messaging, cleaner scheduling, and dynamic pricing through tools like PriceLabs.

In addition to automation, Matt emphasizes the importance of having a direct booking strategy. He built a website to showcase his properties and encourage guests to book directly. This approach reduces reliance on third-party platforms like Airbnb and Vrbo and helps build a loyal customer base.

Direct bookings allow Matt to control the guest experience from start to finish. He can offer personalized touches, provide better customer service, and reduce fees associated with third-party platforms.

Enhancing the Guest Experience with Property Amenities

In a competitive market, property amenities can be the differentiating factor that drives bookings and positive reviews. Matt continuously updates his properties to stay ahead of the competition and meet evolving guest expectations.

He started with game rooms and hot tubs, but now he is adding unique features like barrel saunas, fire pits, and pickleball courts. These amenities not only attract more guests but also encourage longer stays and higher nightly rates.

Creating a memorable guest experience goes beyond offering standard amenities. It involves curating a space that guests will remember and want to return to. Matt focuses on the details, high-quality furnishings, comfortable beds, fully stocked kitchens, and thoughtful touches like welcome baskets and personalized notes.

Matt has been able to maintain high occupancy rates, receive glowing reviews, and build a strong reputation in the Des Moines market by prioritizing guest satisfaction and continuously improving his properties.

Actionable Takeaways for Aspiring STR Operators

Conduct thorough market research: Use tools like AirDNA to analyze local market trends, identify gaps, and tailor your properties to meet demand.
Invest in sweat equity: Focus on properties that need improvement to build equity, increase cash flow, and improve guest appeal.
Leverage real estate automation: Automate guest communication, scheduling, and pricing to streamline operations and scale efficiently.
Differentiate with property amenities: Continuously update and enhance your properties to create a unique guest experience that stands out in the market.
Develop a direct booking strategy: Reduce reliance on third-party platforms by building a direct booking site and offering a seamless guest experience.

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Signup for AirDNA for FREE👇

https://app.airdna.co/data

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Connect with Jamie on LinkedIn and Twitter:

LinkedIn: https://www.linkedin.com/in/jamiehlane/

Twitter: https://twitter.com/Jamie_Lane

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Connect with Scott on LinkedIn: