Why holiday rentals present ‘unprecedented’ opportunity post-pandemic
On 20 March 2020, it was announced that Australia would close its borders to the entire world, writes Darren Karshagen.
At the time, international visitation to Australia was worth $44.6 billion a year, was one of the highest-yielding markets in the world and was even growing faster than our national GDP.
Such was the impact of the pandemic, and fear of the unknown, that we put a complete halt on our fourth-biggest export. Two years on, further lockdowns, interstate border restrictions and knocked traveller confidence continued to have an impact.
Slowly but surely, shorter, and more frequent (but closer to home) trips came to the fore. Interstate travel became a possibility, and now here we are with quarantine-free international travel open once again. Immediately, there is plenty of encouragement for a good international rebound to come, with searches to Australia growing 30 per cent month over month since it was announced that we would reopen.
However, what has emerged is a very different traveller – characterised by different priorities and preferences. I argue that this changed traveller is here to stay, and that it means growing demand for holiday-home-style accommodations.
We’ve heard the word “unprecedented” a lot over the past two years, but rarely placed in front of the word “opportunity”; however, that’s exactly what lies ahead for those who own investment and holiday homes planning to leverage this property as a short-term rental. Unprecedented opportunities.
Here are my top three reasons why the popularity for holiday rentals as preferred accommodation is here to “Stayz”, particularly as we welcome back international travellers:
Increased group travel: Australia is a long way away from most countries. It’s why historically, travellers to Australia from our top three inbound markets – the United States, Japan, and the United Kingdom – typically take longer trips than domestic travellers and stay an average of three nights per location – which is only set to increase.
Heightened sense of hygiene and cleanliness: there is, and will be for some time, a greater emphasis on minimising encounters or shared spaces with other travellers. With this in mind, traveller penetration for short term rentals hit 20.1 per cent in 2022 and is expected to hit 24.3 per cent within the next four years. It makes sense, holidaying away from the general public, where you can enjoy the location and local experience but in a private space with amenities to call your very own. Across Stayz, for example, the biggest traveller drawcards are flexible cancellation policies and pools/hot tubs.
Opportunity for “flexcations”: there’s a huge pent-up demand for travel, domestically and internationally. We expect to see a return of longer trips – lasting weeks at a time, which has a natural benefit on the spend and income for short-term rental owners. That desire for extended breaks, combined with the newfound flexibility of remote working, presents great opportunities for hosts who are seeking solid lengths of stay from holiday-makers. In fact, more than half (56 per cent) of those who often work remotely will take a “bleisure” style trip – extending a work trip for leisure, or vice versa. What’s more, Vrbo, the platform powering Stayz, surveyed “flexcation” global travellers and found that a large majority (67 per cent) would take one again. As international travel reopens, this provides even greater volumes of travellers looking to stay for extended periods of time, and the ability to be able to step away from the family to find an office-appropriate space is something unique to holiday homes that will make this style of accommodation even more attractive for travellers.
We’re facing a truly “unprecedented” opportunity to embrace the appeal of holiday homes in this new travel industry for higher earning potential.
Darren Karshagen is director ANZ vacation rentals, Expedia Group.