A months-long shutdown has led to cabin fever. How will this affect the hospitality and tourism industry this travel season?
Airlines - Airlines have been hit hard by COVID-19 restrictions and look to claw their way to a healthy balance sheet in 2021. Boeing and other aircraft manufacturers are offering favorable rates to airlines for new orders. Southwest added new routes and smaller airlines are offering attractive deals. Rumors show that large airlines may look to offer discounts for vaccinated passengers and may even partner with vaccine providers to help lower the risk of traveling. Emirates Airline announced that they will serve 100% of their routes by summer 2021.
Combine the efforts from airlines to encourage traveling with the intense cabin fever and desire to travel shown from many, and summer 2021 may shape up to be a booming tourism year. We have already seen examples of this desire to travel even before a vaccine was rolled out; November 2020 and December 2020 were particularly aggressive travel times for a pandemic.
Hotels - Like airlines, hotels are still hurting from COVID-19’s effect. The average occupancy percentage in 2020 dropped to around 36%, from 68% in 2019. RevPAR (revenue per available room) also dropped 60% in 2020, after remaining steady for 9 years. Economy scale hotels fared the best and are expected to recover the quickest too. As expected, upper-upscale and luxury segments were hit the hardest and are expected to recover slower. Some estimates predict that upper-upscale and luxury hotels won’t fully recover until 2025.
What this means for vacation rentals - Studies show that travel has been focused on “driving distance” attractions. Small cities/towns, suburban, and rural areas went from the least popular to the most popular destinations. Guests have left hotels behind, favoring whole-house vacation rentals, feeling that they are safer. With people yearning to travel, “work from anywhere” more popular than ever, and with a sentiment of caution towards hotels, short-term rentals are set to have a very popular season.
How should vacation rental owners prep for this? - One of the most important things is understanding how to balance occupancy rate and ADR (average daily rate). Without this, you may be losing profits while increasing the wear and tear on your property. Short-term rental operators need to understand the most desired traits of a property for guests and how to capture a property’s unique value.
Having a manager who knows how to maximize your property’s value is essential. This can raise your profits, maintain the property more efficiently and decrease your work. Contact East Shore Management to put our industry knowledge and experience to work for you.
Dominic Tarallo is a third-generation real estate entrepreneur and a lifelong Tompkins County resident. He holds a degree from the Cornell University S.C. Johnson College of Business with a focus on real estate and law. Dominic also advises clients with respect to residential/commercial real estate, property management, and Airbnb rentals. Email dominic@eastshoremanagement.com for an appointment.