Unpacking Major Industry Reports and How they will Impact the Short-term Rental Market 2023 | Episode 15 | STR Data Lab™ by AirDNA

00:00:14:05 - 00:00:16:13

Speaker 1

Hello Jamie Lane.

00:00:17:12 - 00:00:18:02

Speaker 2

Mariah.

00:00:19:01 - 00:00:38:15

Speaker 1

How? I'm calling you from my ice fishing. No, I'm kidding. It's. I'm not in an ice fishing cabin. Is that what they're called? Clearly never gone ice fishing before. But it for some reason it just reminded me a little bit of that today. But I'm calling you from my soundproof room at the office. How the heck are you?

00:00:38:15 - 00:00:39:12

Speaker 1

Happy New Year.

00:00:40:06 - 00:00:44:24

Speaker 2

Happy New Year. I feel like the entire country was in an ice box during the holidays.

00:00:46:11 - 00:00:55:27

Speaker 1

Yeah, it was a little chilly everywhere. It was a little– was it cold where you are? No, you’ve got the beach, right?

00:00:56:10 - 00:01:20:12

Speaker 2

And I was in Beautiful Folly Island. And staying in one of the top vacation rental companies around the country. But yeah, and it was, it was cold at the beginning, warmed up by the end. I've got a one and five year old. We went to the beach every single day and had an ongoing sandcastle. We had the beach ourselves.

00:01:20:22 - 00:01:23:12

Speaker 2

We were in our puffy jackets. It was great.

00:01:25:00 - 00:01:40:23

Speaker 1

As long as there's no wind. Like, it's every time we go to Portland, Oregon, it's just so windy that we can't hang at the beach even if we are in our poofy jackets. But that sounds lovely. I think any time you're out the beach, I'll take the beach any day over the snow. Don't tell everyone else in Denver.

00:01:40:23 - 00:02:02:01

Speaker 1

I said that. Well, we are. We are gathered here today. We are going to help you folks out. Okay. So we know you are busy individuals with busy lives and you don't have time to read every single 2023 Outlook report or predictions for what the future is going to hold. So we're going to do it for you today.

00:02:02:01 - 00:02:23:24

Speaker 1

We have Jamie and I have sat down. We have dedicated some time to this. And so we are going to give you what I like to call the TLDR Too long. Didn't read on everything. You guys. Everything. We're going to start at the top with the macro economic stuff. We're getting nerdy with Oxfords and Moody's different opinions there.

00:02:24:06 - 00:02:42:21

Speaker 1

We're going to we're going to give you both sides of the fence opposing views as we go. We're going to dig into some of what the banks are saying. I'm sure you've heard of some of these guys, JP Morgan BlackRock. Then we're going to go down a level into STR and CBRE to talk a little bit about real estate and all of that good jazz.

00:02:42:21 - 00:03:02:19

Speaker 1

And then finally we'll get into the fun stuff, travel and of course STR’s short term rentals. Jamie, though, you kick us off, my friend. Okay, so you read the Oxford report and the Moody's report. They had different ideas on what's going to happen here with the economy next year. What did they say?

00:03:03:01 - 00:03:33:13

Speaker 2

It's not going to be a great year. So Oxford, they're the company that we use to drive our baseline forecast they are expecting and what they call a garden garden variety downturn, if there could be one. So they're expecting GDP down about 1%, about a 100 basis point increase in the unemployment rate. So from three, seven up to like four seven by the end of the year.

00:03:34:02 - 00:04:07:23

Speaker 2

But the recession will be mild because there's no sort of glaring imbalances in the economy's balance sheet. So there's nothing that's sort of going to take over like the housing market did in 2008. That causes massive sort of declines in weakness. And that said, and it is being this weakness, this mild recession is being caused and by the sort of interest rate sensitive industries of which the housing market is one.

00:04:09:13 - 00:04:41:03

Speaker 2

And so there are going to be and as they describe it, and sort of two different economies and one that is in recession and the housing market, it will be in the other sort of on the service side, actually performing decently well now, sort of in that same vein, Moody's thinks we can skirt a recession in a big piece of that is because of the ample, what they call excess savings.

00:04:41:15 - 00:05:10:06

Speaker 2

And that's all this money that we accumulated during the pandemic because we couldn't go out and spend on restaurants and travel and all those fun things that we used to do. So there's like $1.7 trillion still in our savings account, still in it. And they actually see it in our checking account. So we haven't spent it on homes, we haven't spent it we haven't put it into the stock market, we haven't put it into other forms.

00:05:10:06 - 00:05:54:03

Speaker 2

It's still sitting in our our checking accounts. And we have that to sort of draw down. And it to help us continue to spend. And I think what's important is all income groups have that excess savings. So, yes, the bulk is in the high income. So the average, let's say, for those making over $200,000 a year have $66,000 per household still saved up and those in the bottom 40%– so those making less than 50,000 still have about $6,000 per household still saved up.

00:05:54:13 - 00:06:20:29

Speaker 2

So yes, inflation's hurting. But I mean, if there is weakness, people have enough savings to sort of get us through it. And they can burn that off over time. And they think that's going to sort of save consumer spending. Consumer spending is such a big part of the overall economy. Two thirds of our economy is what we spend on a day to day basis.

00:06:21:21 - 00:06:23:18

Speaker 2

And that's going to hold up relatively well.

00:06:24:19 - 00:06:48:21

Speaker 1

That's really interesting. I know and I've heard that like especially for those folks under the 50k right, Like 6000 in savings is probably a good chunk of change. But I know they've been doing some surveys lately of folks just saying, hey, we're not confident that we would be able to ride too much out. So it's interesting to think about maybe folks that are obviously making a little bit more, being able to sort of like carry that weight by continuing to spend.

00:06:48:21 - 00:06:59:15

Speaker 1

And so what I'm essentially hearing from you is that I should keep going to target and I should keep going shopping, which I'm going to tell my husband now after this to support the economy.

00:07:00:20 - 00:07:11:29

Speaker 2

Mariah, you know, I'm a travel economists. I can't support target, but I can support you booking more extra vacations this year.

00:07:12:07 - 00:07:23:07

Speaker 1

Okay. On it. Don't worry. That's already covered. It's just this is an additional help I can bring, I think, to the economy. We've all got to do our part, folks. You heard here.

00:07:24:08 - 00:07:46:21

Speaker 2

Before we go on to the next one. What I want to hear is you shared with me pre recording was that you came up with a poem for the top trends in the industry. And I was wondering if maybe you could share that poem before we move on to the next section.

00:07:47:23 - 00:08:10:19

Speaker 1

Well, first of all, I if I have to apologize to you, my friend, because I clearly forgot I missed a beat here, but I don't know if I can claim full credit for this delightful melody. Whatever. So what are they? Is it in pentameter or whatever Shakespeare used to write in? I would be happy to recite it, however.

00:08:10:19 - 00:08:42:18

Speaker 1

Shall I? Shall we kick things off the right way. Because you're right. You know what? We probably. Guys, I'm sorry we didn't give you a very soft entry into what the topic was, and this will help. I think this will help. Just ease us into 2023. So the challenge was could we write the top five trends in the short term rental industry today in a rhyming poem and someone on this in this podcast, that guy, did that very well.

00:08:42:18 - 00:09:17:17

Speaker 1

So here we go. Are you ready? Is everyone are you ready? Jamie Lane, you're ready. Here we go. In the short term rental industry today, there are the top five trends. Hooray One, It's all about the experience. Gone are the days of mere convenience. Two, sustainability is a must. Eco friendliness is a plus. Three, the rise of the boutique hotel unique chic and oh so swell. Four, home sharing platforms are here to stay connecting travelers in a new way.

00:09:17:17 - 00:09:27:11

Speaker 1

Five, technology takes the Lead. Innovation is what we need. I think it's a lovely poem we did. We did good.

00:09:29:08 - 00:09:34:22

Speaker 2

And you're going to share that. That was that was Chat TPT. It wasn't actually us.

00:09:35:21 - 00:09:50:11

Speaker 1

But what? Oh, yes. Sorry. I'm not giving the right credit to the right people. I'm confused. Got it. Okay. Yes, please. We will put it in the show notes. Sorry, guys. Well done. Well done.

00:09:51:15 - 00:09:57:06

Speaker 2

AI creating our first poem on the podcast.

00:09:57:06 - 00:10:09:28

Speaker 1

Hey, the robots are taking over. We know this We know this. If you guys haven't heard about what? Actually, I apparently don't remember the name Chat, what is it?

00:10:09:28 - 00:10:10:29

Speaker 2

TPT, Yeah.

00:10:11:22 - 00:10:35:00

Speaker 1

It's. I don't know. Don't tell your teenagers about it because they'll start writing all their homework papers through it. I think. I don't know how the high school teachers are going to mitigate this, but it is great if you need to write something like a poem. All right, Jamie, thank you for keeping us on track and again, offering our listeners a better a better way to start this podcast.

00:10:36:23 - 00:10:57:29

Speaker 1

So we've talked a little bit about what Moody's and Oxford is thinking, a little bit of a mixed bag, but sounds like similar drivers, just different expectations for the results. What are the banks thinking? What is what is JPMorgan versus BlackRock, What's their outlook and what are some of their drivers that they're looking at?

00:10:59:00 - 00:11:34:27

Speaker 2

Yeah, so so broadly when looking at the sort of bank outlooks, most of them are considerably more negative for the outlook. JPMorgan calls specifically out the housing market because it is and housing markets are usually the first to react and we're already seeing higher mortgage rates and really crimping demand. And what happens is the housing market sort of ripples throughout the global economy.

00:11:35:09 - 00:12:33:15

Speaker 2

Construction will weaken spending on furniture. Other household durables will fall because falling housing prices could weigh on consumer spending and that and decline overall has the effect of taming inflation, but at the same time sort of pushes the economy into recession. Thankfully, they say the risks of a deep housing recession like we had in 2008 is very low. Housing construction has been very subdued and there's very little risk of oversupply of houses driving prices materially lower and banks and maybe they're tooting their own horn a little bit have been very restrained in sort of how they've been their lending standards.

00:12:35:04 - 00:13:13:12

Speaker 2

So overall, it's a recession. It's very deep weakness for the housing market. But not a a deep recession. On the other side, BlackRock, I think they're calling for two and a half percent decline in GDP in one of their sort of themes sort of sits around this recession is going to be different. And that's especially because of the inflation of today.

00:13:14:10 - 00:13:55:06

Speaker 2

So unlike past recessions, the sort of Fed doesn't have sort of loose policy that it can sort of roll out to support those assets and the sort of housing market getting hurt. And they think we're going to have to sort of live with inflation. So the politics of inflation, that narrative where everyone's like we've got to sort of raise rates, it's sort of extracting pain on everyday consumers.

00:13:55:13 - 00:14:29:23

Speaker 2

Prices are going up way too high and that this is going to sort of change over the next two years and we're going to see the politics of recession takeover. And once we start getting into this sort of next realm of a presidential race, and if we are in recession, which they expect us to be in that they're sort of going to pivot and that we may not fully return to these 2% targets for inflation.

00:14:31:12 - 00:14:46:22

Speaker 2

But this sort of wishy washy like, are we targeting inflation or not? Sort of what is sort of driving that national narrative? It is going to cause some major risks to the economy.

00:14:46:22 - 00:15:08:24

Speaker 1

Well, that that's definitely a glass half full perspective. But I think it's so good to have both, honestly. Right. That's what I love about the economists in the room generally is that you are thinking about it in three sort of layers, right? Worst case baseline and best case scenario. So those are two opposing points of view, 2% GDP.

00:15:08:24 - 00:15:11:21

Speaker 1

Give me some context that's like terrible like that's.

00:15:12:08 - 00:15:37:13

Speaker 2

A 2.5 percent loss in GDP is an average recession over the past. So there's been 12 recessions since World War II and the average recession has been down about two and a half percent. So they're expecting a sort of average one. And where Oxford is forecasting only down 1%, that'd be a very mild recession by historical standards.

00:15:38:07 - 00:16:01:13

Speaker 1

Gotcha. That was very helpful. Thank you, my friend. All right. So that's so we're going we're just going a layer deeper and a layer deeper folks. All right. So here we go. So the next layer is S.T.R, which is Smith Travel Research. Yes, Jamie, not short term rental and CBRE, your alma mater, if I may call it that, and their outlooks for 2023.

00:16:02:17 - 00:16:07:01

Speaker 1

Same, I'm guessing same story. Two different points of view on that.

00:16:08:02 - 00:16:44:12

Speaker 2

They're actually pretty similar in terms of their outlook. I think. It's actually a nice story because they're both expecting an economic recession but are calling for an unprecedented I hate that word, especially when talking about forecasts, but talking about an unprecedented rev par growth during a recession. So overall, hospitality demand is very highly correlated with overall GDP.

00:16:44:12 - 00:17:29:20

Speaker 2

So if GDP goes negative, you'd expect revenue revenue per available room rev par to go negative. But they do have are calling for a continued growth in 2023 and and it's a pretty good story and all forms of demand sort of leisure, group, corporate travel look pretty strong maybe and some weakness potentially in leisure where international travel and we've talked about that more people that were staying domestic potentially traveling overseas with sort of dollar euro parity impact.

00:17:29:20 - 00:18:05:03

Speaker 2

It's just so cheap to travel to Europe these days. Corporate travel still. The big question we're about 85% of 2019 levels so still not fully recovered. There. And there's the question of is, is business travel ever going to really come back? And sort of the big risk there is if we do see a recession, if we do see profits for major companies start to go lower, travel is usually one of the first things that gets cut.

00:18:05:22 - 00:18:41:01

Speaker 2

So if you think and we just and sort of the budgeting process so things are good you sort of budget for and maybe a decent increase in travel budgets next year. But if revenues start to not come in at what you expect, the easiest thing to cut is travel budget before you start cutting people. And we've seen that in past recessions and that and if we did see a mild recession and corporate profits start to pull back, that could cause a negative impact to corporate travel.

00:18:42:16 - 00:18:46:01

Speaker 1

I think these are domino effects that we're learning about.

00:18:46:22 - 00:19:20:21

Speaker 2

Yeah. And then CBRE, I think interesting, they call out higher wages and its impact on operating costs and how they expect that to outpace rev par growth next year. So we've all dealt with rising wages this year, especially in our industry, in hotels and sort of dealing with the same the same labor base. And they are expecting further margin pressure.

00:19:20:21 - 00:19:59:17

Speaker 2

So profitability of hotels, hotel operators lowering in 2023. They see further pushing into automation, offering less amenities, trying to do more with less to sort of offset that. But I think and and we see it in our industry like and labor is a big piece of it and you've got to pay people more. And that's sort of really putting pressure on profit margins.

00:19:59:17 - 00:20:35:29

Speaker 2

And then maybe on the plus side, they call out the return of China and the big impact that could have to U.S. travel. So China had has historically had the highest outbound international travel expenditures. And yes, we see issues with China today with COVID outbreaks there. But once they get through that, they could be a huge source of new demand for 2023.

00:20:35:29 - 00:20:49:21

Speaker 1

Super interesting. I love hearing about all this. And I think there's a little validation, too, for us in terms of those two perspectives from the hospitality, from the hotel perspective and what we were seeing in our Outlook report for demand and supply.

00:20:50:29 - 00:21:25:27

Speaker 2

Yeah, I am. And I think there was quite a few comments that we got backed sort of questioning how we could be forecasting a further expansion in rev par right, at least not not a big decline in rev par given weakness in the overall economy and the fact that our friends at CBRE and S.T.R are seeing something similar to us albeit and they are expecting more growth on the rev par side and I think call out.

00:21:26:12 - 00:21:52:20

Speaker 2

And some of the biggest risk for weakness is on leisure given how strong has been. And that's and we do expect some weakness next year and rate not growing especially as much as it has, especially in areas where it's grown really rapidly over the past three years. And as they're doing their forecasts and they're seeing very similar things.

00:21:52:20 - 00:22:02:21

Speaker 2

So gives us at least me, some confidence that our outputs have a high likelihood of coming true.

00:22:04:09 - 00:22:17:21

Speaker 1

Yeah, Yeah. It's good to see that validation I'd say across all of the hospitality reports. So yeah, gives us a little piece of mind that we're not just the only ones out there predicting these things.

00:22:17:21 - 00:22:46:28

Speaker 2

Yeah. And then sort of finally the groups I had to talk about was on the real estate side. So and we can't get around the fact that we do sit squarely in sort of the intersection between hospitality and real estate and any weakness in overall housing market. And it is definitely going to be felt in our industry.

00:22:46:28 - 00:23:30:16

Speaker 2

So I pulled out some predictions, one from CBRE, from their multifamily team and another from Redfin and from Redfin. I picked them and broadly because they're sort of in the middle in terms of their their housing forecast. So there's quite a few groups that expect housing prices to continue to gain in 2023. In others, that expect pretty stark decreases in home prices and Redfin sort of in the middle and have been historically pretty good in their predictions.

00:23:31:09 - 00:23:40:02

Speaker 2

And one and sort of two things that Redfin calls out is one, that the Great migration is over. So we've seen.

00:23:40:02 - 00:23:40:08

Speaker 1

Hmm

00:23:41:05 - 00:24:08:08

Speaker 2

Movements of people moving from one part of the country to another, and they're expecting that to ease. And I do think that this could have a negative impact on longer term stays in short term rentals. So people that were moving they were sort of tightness in the housing market. They need to find a place to stay. And short term rentals sort of fed this and this is part of the big movement we've seen recently and demand for midterm stays.

00:24:09:05 - 00:24:09:18

Speaker 1

Right.

00:24:10:26 - 00:24:55:22

Speaker 2

And part of that is just 16% fewer home sales in 2023. That's a 30% decline from 2021. So just fewer people sort of moving. And then the other trend I thought to call out is the rising disaster insurance cost. So climate extreme changes in climate is making insuring homes more risky, especially on the coast and in mountain areas that are sort of more at risk for major natural disasters.

00:24:55:22 - 00:25:22:14

Speaker 2

And it's prompted some insurers to stop providing coverage in some of these risky areas. So example, Florida. Property insurance premiums have increased 33% year over year in 2022. So this is a trend that could really impact especially short term rental investors, where a lot of those investments are made in some of these more risky areas.

00:25:23:23 - 00:25:41:12

Speaker 1

That's what I was just thinking about. I was like, well, those you know, it's always the places that people want to go, right? Like the coastal towns. But I think, yeah, we've I think we've seen folks start to pull out of even like Denver due to like floods and forest fires and all of that. That's a difficult one to answer.

00:25:41:12 - 00:25:53:12

Speaker 1

I've heard folks on bigger pockets talk about that as well as like how do you factor in the climate change into your investments strategy? Really good one to call out, Jamie. I love that.

00:25:53:12 - 00:26:17:19

Speaker 2

And I think this is going to be a broader trend that investors are going to be looking at. And in addition to and we know regulation is top of the list for investors when they're evaluating a deal. And that climate risk, even if it just comes from what is the potential increase in insurance premiums and is and is is going to have to play into your calculus.

00:26:19:10 - 00:26:35:12

Speaker 1

Yeah anything that's going to cut into your profitability. Right. And I do love that concept of sort of worst case scenario planning regardless, like what's the bottom level of profitability you could possibly get with those sort of factors in place? So that was a great one to call out.

00:26:36:22 - 00:27:18:18

Speaker 2

And then sort of the final one is on from CBRE on the multifamily side. So we've been talking about all this sort of weakness and and pretty much single family home prices and transactions. But I thought it was neat to call out what they're seeing on the multifamily side. So a good portion of short term rentals are in multifamily units, apartments, condos and in the 69 markets that they cover, they show 80,000 units under construction with 450,000 of those expected to deliver in 2023.

00:27:19:12 - 00:27:59:14

Speaker 2

And they're expecting vacancies sort of the opposite of occupancy. So vacancies to rise from. And we had seen a low of 2.6% in Q1 of 2022, and they expect that to hit 5% by the end of 2023. So how does that play into short term rentals for those I'm looking to solve vacancy issues for a multi family operators, we could see more and more of them looking to short term rentals as a way to rent out their units if they're not able to find long term renters.

00:27:59:25 - 00:28:38:13

Speaker 2

So there may be more opportunities for rental arbitrage. We saw Airbnb announce their apartments or their partnership with apartments. We saw Marriott announce their new apartment product, their apartment brand that could be a big trend in 2023 is sort of the sort of further merging between the traditional multifamily sector and short term rentals as a way to fill all of these empty multi-family buildings coming online.

00:28:39:24 - 00:29:07:12

Speaker 1

I love that. Yeah, and I think there are a couple other reports this sort of we're talking about that ability to have flexibility in that sort of what are you using this space for? Super interesting insights there. Well, thank you. Jamie Lane. Well, per the usual, I've given you the bulk of the homework which you clearly have done, and I only read to two reports which I will happily share some of the results from if you're if you're ready for me.

00:29:07:12 - 00:29:09:24

Speaker 1

Did I miss anything? Anything else you want to cover?

00:29:10:16 - 00:29:31:16

Speaker 2

No, I. I'm interested to see what your takeaways were from these two. And actually, I loved reading and I loved reading those reports way more than I did the the the report from Expedia was way better than the one from BlackRock. Let me tell you.

00:29:33:10 - 00:29:58:21

Speaker 1

You know, it's we were talking about how clearly the so it was Expedia Hotels.com and Vrbo obviously together did a report similar to unprecedented they called this the most unexpected travel trends for 2023. But they did survey thousands of people across 17 different countries. And you could tell that their marketing team probably had a hand in in the copy.

00:29:58:21 - 00:30:19:11

Speaker 1

It was a little less data focused there. Were there fewer data points, more pretty pictures. But yeah, you're right, it was we should blend the worlds. So that's what we try. That's what we strive for in our data folks, and always open to feedback because we want it to be accessible and easy for people to understand. Which Expedia, kudos to you.

00:30:19:11 - 00:30:41:13

Speaker 1

You did a great job making it very digestible for me, which again is why Jamie gave me this report to look at. But, you know, just sort of starting from the top here, I think they're calling and again, marketing team clearly had a hand in this. It's been the no normal. So last year was the new normal. This is the year of no normal.

00:30:41:20 - 00:31:03:23

Speaker 1

And the key takeaway there, folks, is that Expedia is essentially saying like just people's preferences, the way they travel, how they travel, what they're doing. There's no longer these sort of collective trends, Right. These sort of like big status quo groups. It's a little bit more diversified. Right. Which I think makes sense. Right? The whole world's a little bit more diversified than it ever has been before.

00:31:03:23 - 00:31:32:04

Speaker 1

So I thought that was a key takeaway. That said, if you're looking for some interesting places that folks are interested in traveling to, where people where the most popular places to go are, they have Edinburgh, Scotland, which I've never been. But Trevor Noah just told me it was a great place in his new standup piece Shout out to Trevor Noah, Lisbon, Portugal, Tokyo, Japan, Dublin, Sydney, Dubai, Montreal.

00:31:32:04 - 00:31:59:08

Speaker 1

I've been there. Munich, been there, and Bangkok. So nothing too, too surprising about that list, I'd say. But they do say that people are returning to those cultural capitals, right? Those places that are probably consistently on the bucket list for folks. Apparently everyone's watching too much TV. I didn't need to know that. I mean, I mean, I already knew that because I'm watching it and folks are getting inspired by what those destinations are on television, folks.

00:31:59:08 - 00:32:28:20

Speaker 1

So be aware of that. And then I loved I absolutely love this stat and I thought this was potentially a little bit applicable to our business. So Hotels.com data revealed that travelers are definitely browsing, so they're spending time searching luxury bookings, but then they're actually end up going for like the three star hotel instead. So searches for three star and under hotels were down more than 10% year over year, but interest was up globally by more than 20%

00:32:29:15 - 00:32:43:17

Speaker 1

So interesting little takeaway there in terms of people wanting to kind of do the search and then they're like maybe their expectations. They have to lower them a little bit. So the next best thing, I would say. Right, may be an opportunity in the short term as well.

00:32:44:02 - 00:33:01:03

Speaker 2

Yes. So my comment there is I've just finished White Lotus and really want to go to that Four Seasons hotel in Sicily, but probably can't afford that. So maybe I'll and I definitely looked up the prices for the hotel.

00:33:03:04 - 00:33:03:29

Speaker 1

Searched it and.

00:33:04:25 - 00:33:12:05

Speaker 2

If we make it out to Sicily will probably not be staying there. But it's nice nice to dream about right Right.

00:33:12:05 - 00:33:40:21

Speaker 1

And you probably saw part of Sicily. So now you're like, I know I can rent a villa. Yeah. Through Vrbo or wherever and afford it and take your whole family with you. Right. So, yeah, it's maybe more about the destination than the experience. I like it. Also, this whole concept of new wave wellness. I like those two were like those three words together because, you know, it's so wellness breaks have bounced back from 2021.

00:33:40:21 - 00:34:13:19

Speaker 1

So more than a 30% increase in 2022 in demand for wellness trips. So nearly half, 46% of global travelers are more open to wellness breaks or vacations than ever before, but they're looking for like, quirky stuff, right? So forrest bathing, chakra sessions, food boot camps, puppy yoga. I didn't know that was a thing. Laughter Therapy. I thought, that's what we did every day on this podcast?

00:34:13:19 - 00:34:41:08

Speaker 1

And the US actually was the top overall wellness break destination for 2022 though those Gen-z folks are looking more at Norway, Turkey, Switzerland, Iceland and Sri Lanka. All of those places sound great. To your point, there's a whole bunch of cool hotels we can put in the show notes just so people can see where they should go and then get the short term rental next to it that folks are looking at.

00:34:41:08 - 00:35:10:18

Speaker 1

And then I thought this was interesting. So we talk a lot about amenities as they relate to sort of bigger things, like if you have a hot tub, do you have a pool. Vrbo looked at foodie amenities, So places that have really great kitchens. So the top five cooking amenities, or outdoor kitchens or barbecues, 50% of people wanted that fancy coffee machines I’ll vouch for that one 37%, although I never know how to work them.

00:35:10:18 - 00:35:36:20

Speaker 1

So that's another problem. Air fryers. 40% of people wanted air fryers, pizza ovens, 25%, and access to gardens with fresh produce, y’all 24%. So more than half of travelers are looking for rentals with family or friends. And they say that the amenities are the one of the most important parts of the criteria. 38% of travelers use cooking to cut down on vacation costs.

00:35:36:20 - 00:36:18:11

Speaker 1

So this all makes sense. And 41% feel that. Actually, I think the cooking opportunity is an excellent opportunity for bonding. I'm in that other percentile ordering food is a great so. But anyways, I digress. I loved this again. Shout out to their marketing team cowboy-cations. I think this captured both your attention and mine and our imaginations. So demand for a Vrbo’s like completely private vacation rental homes in US Western destinations are up more than 30%.

00:36:18:11 - 00:36:58:24

Speaker 1

So people really are looking for that outdoors-y beautiful landscape, maybe some of that like farm vibe. I liked it. And then, of course, not too surprisingly, folks are always looking for those hidden gems. So people are exploring unassuming locales, unfamiliar places, and like little charm, right? I think we saw that last year. Right? Folks are a little bit more we talked about this last on the podcast into that little sort of western town versus going to like Vail or one of or Aspen or one of the more sort of established places on that list, Top hidden gems of the US.

00:36:58:24 - 00:37:28:26

Speaker 1

Nampa, Idaho. Greensboro, North Carolina. Layton, Utah. Irmo, South Carolina. I've never heard of any of these places. Oneida, New York. Hampton, Virginia. Bristol, Rhode Island. Spokane, Washington. Heard of that one. Las Cruces, New Mexico. And Missoula, Montana. So there you have it, Jamie. That is where people are going. That is what people are expecting. Hopefully some interesting trends for folks to look into.

00:37:29:06 - 00:37:53:01

Speaker 1

As we always say, I'd say Airbnbs should, and Vrbo’s, Vrbo, sorry, sorry, Vrbo. Need to be unique. They need to be special. And so there's some ways that folks are looking to make that experience special. And then you did give me one one other homework assignment, which was to look at some of the trends as it relates to vacation rental managers through the Hostfully Labor Report.

00:37:53:01 - 00:38:23:05

Speaker 1

So Hostfully released a hospitality industry study as well for 2022. Probably the big headline here is that folks are feeling like their space. If you're a professional vacation rental manager, that your space is getting way more crowded. You definitely are feeling that the competition is upon you. So the percentage of vacation rental operators who reported more competition than the year before, it was up to 80%.

00:38:23:05 - 00:38:55:18

Speaker 1

In 2022, it was at 61%. In 2021. So folks are definitely feeling the pinch of supply growing and their number one priority as hosts and managers is to grow their business. Single property hosts will focus the majority of their efforts on revenue management strategies, while those multi property vacation rental businesses are a little bit more focused on several different strategies at once and really focus on portfolio expansion.

00:38:55:18 - 00:39:43:19

Speaker 1

So adding more properties to their mix. And in terms of sort of growth strategies that host and managers leverage 2022, 62% added new properties, 55% increased rates, 50% use dynamic pricing, 43% automated tasks, 39% improved marketing, 38% added new softwares and 18% implemented upsells. So in a surprise to no one, an overwhelming 37% of folks said their number one challenge in 2022 was technology and adopting it and finding the right way to leverage it.

00:39:44:04 - 00:39:49:13

Speaker 1

It's a super interesting takeaways there as well, I would say, Jamie.

00:39:51:07 - 00:40:12:15

Speaker 2

There's a lot I mean, I definitely think it sort of matches up with a lot of the trends and sort of that we've been seeing that we've been talking to and Vrbo’s report sort of calling out the sort of small town rural areas being continually popular and sort of aligns that. That's still the fastest growing demand segment that we see today.

00:40:13:15 - 00:40:54:10

Speaker 2

And then Hostfully like this applies here and it's causing more competition and individual hosts are hearing and you've got to focus on revenue management strategies to maintain your revenue, that there's a lot to be gained from making sure you have the right price at the right time for guests to book in, and that property managers see the opportunity to convert maybe some of these hosts that maybe got in in 2020 and 2021 are realizing that this isn't a passive investment opportunity.

00:40:54:10 - 00:41:23:29

Speaker 2

Right? And can use maybe the potential weakness that we're seeing today and add to their inventory. So and I love seeing the trends. I love I'm just sort of hearing the surveys sort of match up with what we're seeing in the data as that sort of further validation point or in my head, a further confirmation bias that what we're seeing is what's happening out there.

00:41:23:29 - 00:41:27:02

Speaker 2

And I will continue to pull from it.

00:41:28:03 - 00:41:51:00

Speaker 1

No, I love it. Yes. And hopefully you guys found this helpful. We did your homework for you. We'll put all of the links to the show notes if you want to dive deeper. But yeah, Jamie, I love all those insights, especially for vacation rental managers. And as we as we always like to say, you know, where there's a bear, there's a bull and you know, there's always an opportunity in any market as long as you can understand the market and know what's happening.

00:41:51:00 - 00:42:11:05

Speaker 1

So looking in aggregated all of these trends, yes, we got some great validation confirmation. It wasn't the only reason we looked at it. Great to see all those opportunities. And there you have it, folks. Now now you know a little bit more about what's expected to happen in 2023. Jamie, let's talk soon.

00:42:11:23 - 00:42:13:22

Speaker 2

Yep. Thanks Mariah. This was fun.

00:42:13:29 - 00:42:15:05

Speaker 1

It was, always.