By Will Parry, CEO of ALTIDO
There’s no denying that the short-term rental landscape has shifted in recent years. After what can only be described as a turbulent period for the industry (international tourism arrivals are still yet to fully recover after dropping by 70% in Europe in 2020), many asset owners have found themselves adapting their strategies and reshaping business models to fill vacancies.
Yet, despite the pandemic still disrupting travel, the popularity of short-term rentals is on the rise – and with this, plenty of new opportunities present themselves to property developers, asset owners and larger industry players.
Why are short-term rentals on the rise?
Data shows that short-term rentals have made a stronger recovery than hotels, with occupancy in the last half of 2021 matching 2019. Put simply, people are travelling again – but their preferences, needs and expectations have changed post-pandemic.
The increase in remote working is fundamentally changing the relationship between guests and property. As businesses across the globe continue to embrace remote working models, people are no longer tied to one location and the lines between business and leisure continue to blur. With 97% of people wanting to work remotely at least some of the time for the rest of their career, people are searching for accommodation that caters to their professional needs, and seeking property options that suit this newfound flexibility in the workplace.
Travellers are booking longer stays following two years of lockdowns and restrictions and want larger, accommodating spaces to live, play and work. According to research by ALTIDO, one of the largest short-term rental management companies in Europe, the length of stay in Europe during the first half of 2022 increased to 5-8 nights, higher than the last 3 quarters, and bookings for summer 2022 predict longer stays of 6-14 nights.
Dimensions and comfort are more important than location for many, and features such as fully-equipped kitchens and dishwashers are in high demand. Consumers no longer want hotel stays and instead crave home comforts and conveniences.
There’s a sure-fire demand for short-term rentals, but what opportunities does this present for property developers?
The bridge between property managers and developers
With new-found confidence in the market, it’s not just asset owners that are reaping the benefits from the rising popularity of short-term lets. Big players in the property markets are noticing the appeal of this growing market and want to know how they can benefit.
As a result of the increased demand, urban property developers can also capitalise on the growth of interest. Developers are now actively working with the short-term rental market to form long-term strategies, welcoming significant opportunities for property managers globally.
ALTIDO, the leading short-term rental management company in Europe with over 2,000 units under management in England, Scotland, Italy and Portugal, is an example of this bridge. Having teamed up with property developers in Edinburgh and Milan over the last two years, ALTIDO has supported three projects to refurbish old office blocks and one hotel into apart-hotels, helping to meet the growing demand for private spaces and longer stays.
Will Parry, CEO of ALTIDO, says, “To build long-term relationships with property developers who have either bought the asset or leased it for a long period is ideal. It’s a way to scale faster by onboarding multiple units in one go, and you have complete control of the calendar and the availability thereby justifying refurbishment to a high standard. This usually leads to a significant increase in the average daily rate (ADR), resulting in a profitable relationship for both.”
Working with property management companies to develop short-term rentals and serviced apartments is lucrative for developers and removes the hassle, so it’s a win-win for both parties.
What does the future look like?
As countries once again welcome visitors, people will continue to make up for lost time with travel and holidays (now coined the ‘catch-up consumer’). The relationship between people and travel remains strong, with 61% of people saying they plan to go abroad in the next year.
What does this mean for the short-term rental sector? After experiencing a renewed interest from users, property managers and developers, the market looks set to soar. After reaching a record high of 73.6% occupancy rate last year, we expect to see more refurbished buildings turned into apart-hotels cropping up across the globe.
