“2023 was a dynamic year in the U.S. short-term rental (STR) industry.”
So begins AirDNA’s December market review report for the United States. And that may understate the variability seen by the industry last year.
On the plus side: July was the most in-demand month on record with 24 million nights stayed; September racked up a record number of available listings at 1.64 million; and revenue for the year reached a new peak of $64 billion.
Yet the year also saw a 2.4% decline in average daily rates from the previous year to $311 and an even steeper 8.1% drop in revenue per available room to $155.
And then there was New York City, where enforcement of stricter regulations contributed to both the steepest decline and sharpest growth among two of the largest markets in the report
“The effect of the New York regulations is staggering,” wrote AirDNA, an analytics company that tracks short-term vacation rentals data.
Yet the report found hope for a steadier market in the coming months.
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“The economy performed better than expected by the end of the year,” the report noted, citing lessening recession fears and ongoing unemployment levels near record lows. “Although many uncertainties still exist across geopolitics, natural disasters, and the U.S. regulatory environment, we’re starting 2024 on a much firmer economic footing than in January 2023.”
The optimism is built in part on January demand, which the report said is about 8% higher than the same time in 2022. On-the-books demand through June stands between 13 and 21% higher than at the start of last year.
Looking back on 2023, the report said the year’s “major theme” was an ongoing growth of supply in response to the sector’s post-pandemic high performance. That resulted in a 12.6% increase in the supply of available nights over 2022, greatly exceeding the 6.5% growth in demand. As a result, occupancy was lower in 2023 by 5.4% year over year.
Much of that drop occurred early in the year when occupancy rates were below pre-pandemic levels. “By September,” the report said, “occupancy was almost exactly in line with 2019 levels and has since very tightly adhered to those levels.”
As for New York City, the new rules that prompted thousands of Airbnb hosts to drop their listings weren’t bad news for all short-term rental hosts in the area.
While demand in the city dropped 46% for the year — the biggest drop among the top 50 markets tracked in the study — the nearby Jersey City/Newark market saw the highest demand growth at 54%. That increase was more than double any of the other big gainers, including Myrtle Beach (20%), San Antonio (17%) and Miami (16%).
