Will 2021 Be a Great Year for Short-Term Rentals?

The travel industry took a beating in 2020. According to the United Nations World Tourism Organization, a decrease in international travel led to an estimated loss of $1.3 trillion in global export revenues. This contraction has caused many people their jobs, and communities that depend on tourism have been decimated.

Logically, many owners of short-term rental (STR) properties were concerned the damage to the tourism industry would extend to them. Without bookings, many small- to medium-sized investors would face ongoing expenses without any revenue. Luckily for many STR owners, the worst did not materialize.

According to data from STR.com and AirDNA, revenue per available room (RevPAR) was down only 4.5% in the first half of 2020, as compared to 2019. Although the numbers were down, consider that the same study showed hotel RevPAR down nearly 65% over the same period, and in the same markets. Thus, relatively speaking, STRs weathered the storm of 2020 better than hotels.

According to property management company Guesty, 2021 might be an even better year for STRs.

In total, summer reservation volume for 2021 in the United States is up 110% over the summer of 2020. (This includes June, July, and August.) Of course, a rebound from 2020 is to be expected—but even more encouraging is the fact that bookings are currently 6% higher than pre-COVID levels in 2019.

Revenue is set to rise too, as the average length and income per stay have grown. For example, the average reservation for August 2021 is 10% longer and will bring in 8% more revenue when compared to August 2020.

The data also suggests that Americans are ready to enjoy the holidays again. Memorial Day reservation volume is up 71% compared to this point last year, and Fourth of July volume is up 50%.

Other indicators are showing 2021 should bring about a strong rebound in the tourism sector.

According to the Transportation Security Authority (TSA), the number of people passing through their checkpoints has been steadily rising through the first quarter of 2021. Numbers are still about 38% below their 2019 levels but climbing steadily. This appears to be a combination of recovery and normal seasonality.

For those who have already invested in STRs, this data all amounts to good news. Strong unit economics paired with macro-economic tailwinds, could lead to 2021 being the best year on record.

For those interested in STR’s but not yet invested, now might be a good time to dive into this emerging strategy.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.