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5 Short-Term and Vacation Rental Trends to Expect in 2021


Feb 16, 2021 by Aly J. Yale
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Short-term rentals had an up-and-down year in 2020. Bookings plummeted in the early days of the pandemic thanks to lockdowns and travel restrictions. Though they picked up later on in the year, it was quickly evident these weren't your average, days-of-past bookings.

Interest in rural and more remote properties jumped. Travelers looked for places to isolate and socially distance rather than party it up or hit cultural hotspots. Stays got longer.

Will these trends continue as we get further into 2021? What about when vaccines are more widely distributed? Let's dive in.

Once vaccine distribution ramps up, travel is sure to gain steam as well. But that doesn't mean it will go back to "normal" by any means.

In fact, according to new reports from Airbnb (NASDAQ: ABNB) and AirDNA, a short-term rental analytics firm, we can expect some definitive changes in the travel industry for 2021 -- and likely beyond. Here are five trends the two companies expect this year.

1. Lack of seasonality

Prior to the pandemic, it was easy to predict when those bookings would pick up and slow down. But now that people are largely working from home (and many kids are schooling from home, too), that typical seasonality isn't really valid anymore.

"Now that remote work and learning are giving many people more freedom to choose when they travel, a significant percentage of Americans are more open to traveling during off-peak times of year and days of the week," Airbnb's report says. According to the company's recent survey, 25% of travelers are opting for off-peak seasons or days of the week this year.

Markets are less tied to seasons, too. Take AirDNA's recent data, for example. Though ski towns are typically popular destinations in the winter, bookings show travelers plan to visit these markets well into spring this year -- particularly places like Big Bear and Lake Tahoe, California.

2. Close-to-home locations

Airbnb's report shows most travelers are planning to stay close to home this year. Over half said they plan to go somewhere domestic or local, while just 21% say they'll venture further out (or even go international). Another 20% say they'll stick within driving distance of their home base.

Brian Chesky, CEO of Airbnb, wrote: "Wherever we go in 2021, for most of us, it won't be far from home. We will get in cars and travel nearby, dispersing to thousands of smaller cities, towns, and rural communities, making tourism an important part of how local economies recover."

3. More spacious bookings

Pod travel has been big this year. Families pick one or two households to "isolate" with, and they lean on each other for support, socialization, and often schooling while maintaining social distance from other households. They also often travel together, which requires larger properties with more square footage.

"Hosts who managed bigger, single-family units made out best" in 2020, according to AirDNA. The company projects these properties to outperform other segments again this year, so if you're thinking about a new investment, keep this in mind when choosing your property.

4. Longer stays

Travelers are also opting for longer stays. Part of this is due to the increase in remote work and school arrangements, and part is just pure desire for a change of scenery during isolation.

AirDNA data shows that short bookings of one to seven days accounted for 80% of all bookings prior to the pandemic. After, that fell to just 30%.

AirDNA's report states:

It seems that longer-term stays weren't just a flash in the pan. Not only have stays of eight-plus days not returned to pre-pandemic levels; they've been steadily rising since the summer. Longer-term stays now account for twice as many trips as they did in 2019. Heading into 2021, hosts relying solely on short, pricy weekend stays will likely need to readjust.

5. More meaningful travel

According to Airbnb, this year will be one of more "meaningful" travel. Wrote Airbnb CEO Chesky:

In 2021, travel will be less about where you go and when you go, and more about who you are with and what you can do together…. Once people feel safe to travel, they will. But it will look different than before the pandemic. Travel will be viewed as an antidote to isolation and disconnection. People don't generally miss landmarks, crowded shuttles, and lines and lobbies packed with tourists. Mass travel is really just a different form of isolation -- you are anonymous, herded around with other travelers, never really experiencing the people and culture of a community. What people want from travel now is what they've been deprived of -- spending meaningful time with their family and friends.

The long and short of it? Americans will travel this year, but it won't be for the attractions or the activities. It will be for the people.

What you can do as an investor

If you've got short-term rental properties in your portfolio, there are a few things you can do to capitalize on these trends.

First, offer discounts for long-term stays. According to Airbnb's survey, nearly 20% of all Americans have rented a vacation home for 28 days or more since the pandemic began. Another 24% say they plan to take more long-term stays in the future.

To further encourage those longer-term stays, offer perks that enable seamless remote work -- great Wi-Fi, a dedicated workstation, a Nespresso or Keurig (NASDAQ: KDP) machine, etc. Home-like amenities are also wise. "Larger homes with amenities like full kitchens, washers/dryers, and pet-friendly homes have become more important than ever as guests are staying longer and willing to pay more for the comforts of home while they travel during the pandemic," said Jamie Lane, VP of research for AirDNA.

Finally, choose your new investments carefully. Smaller rentals in busy urban markets aren't too in demand these days, so try venturing outward for new opportunities. A nice perk? You'll probably get a better deal when you do.

The bottom line

Short-term rentals are poised for growth this year, but don't expect the same pre-pandemic travel tendencies you're used to. Be flexible, adapt your existing properties as necessary, and be extra careful about where you expand your portfolio.

Need more help maximizing your short-term rental profits? Try these handy tips.

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Aly Yale has no position in any of the stocks mentioned. The Motley Fool recommends Airbnb, Inc. The Motley Fool has a disclosure policy.