What is your outlook for 2023 and onward?

Question

Hi all! Just curious for peoples' opinions on how the STR market will shape up into 2023 and onward. In the markets I'm invested in, there's been a massive supply increase, but I imagine that will return to an equilibrium once people don't see the returns they were expecting. For example, in Seattle, this winter has been brutal & plenty of properties have had extremely low occupancy (<30%). I'm viewing the next 3-6 months as more of a "survival" phase & then we'll ease back into a healthier STR market after that.

For now, I think the top 25% properties & the bottom 25% (budget) properties will do the best & anything in the middle will suffer the most.

What do you guys think & what are your predictions?

For now, I think the top 25% properties & the bottom 25% (budget) properties will do the best & anything in the middle will suffer the most.

What do you guys think & what are your predictions?

John Underwood · Answer

I think there will always be opportunities for investors that due their due diligence and buy right.

Michael Evans · Answer

Make sure you have perfect 5 star reviews, no complains. Your goal should always be to achieve the "super host" status with Airbnb. Potential guests start with the reviews when deciding where to book

Good luck!

Drew Sygit · Answer

A decent percentage of STR investors will panic and sell, creating opportunities for other investors.

Stephanie Walker · Answer

I agree with your views on it. In my market (Charlotte, NC), there are specific pockets that are doing really well and others that just aren’t performing due to a ton of competition and the simple fact that January is overall a slow market here. I’m seeing many STRs drop out of the market, especially the individuals and companies operating via the arbitrage model. Our properties and the ones we manage have been performing beyond our expectations and I expect our business model to do really well through 2023.

Mike Shemp · Answer

If the property doesn't have something that gives it an edge over its competitors in terms of location or amenities, then I think those properties are going to take a bit of a revenue hit this year.

Mike

Ryan Wallace · Answer

Hey Eric,

Your assessment seems pretty spot on, but I would add unique (experience) properties will continue to thrive.

In the Boise MSA and the destination markets outside of the city vacancy rates have been steadily climbing. Many people over extended themselves to secure seconds for properties in these vacation markets and are now not seeing the returns (plus the unanticipated headache of running STR in remote areas).

The other side that is interesting is how AirBNB and other booking platforms are going to change their policies surrounding booking. They have to address many of the consumer complaints that are growing (maintenance, cleaning fees, management fees, etc.). They have to thread the needle of making consumers and investors happy. All this while, hotel chains are going forward with aggressive construction project to attempt to regain market share.

Brooklyn McCarty · Answer

This!

Brooklyn McCarty · Answer

I think we are going to see occupancies return to pre Covid, although I still they will be a touch higher with the amount of remote workforce we have now.

I think adr’s will remain the same though.

My occupancies are down, but my gross revenues are the same or in some properties better than last year.

As far as the market goes, properties are sitting longer, sellers are making concessions.

Leslie Anne Morris · Answer

In my market I am getting calls from folks wanting to sell their cabins because they didn’t realize how much work self managing is and the returns aren’t worth it. I assume this trend will continue for several months. Some properties will be sold, or they will seek property management to optimize rent and hopefully their numbers work (if they did appropriate underwriting initially).

Andrew Steffens · Answer

Hey Eric - I think you are pretty spot on.  We are on the West Coast of FL and there is definitely lower rates and lower occupancy as compared to 2020-2022.  However we are still better than pre COVID.  I think traditional STR strong markets (think Clearwater, FL) will do well despite some saturation but places that boomed during and only during COVID will suffer (think Boise, ID).

What is your outlook for 2023 and onward?

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