2023 Year End Review & 2024 Outlook From CEO/Owner Chris Petzy

2023 Year End Review

If I had to give 2023 a name, I'd call it the "Year of Normalization" - after the post-Covid boom, the STR industry saw its first RevPal (Revenue Per Available Listing) decline since 2014, dropping 4.9% in the US. This was primarily driven by the increased supply over the last 2 years. However, supply is slowing, with growth about 1/2 of 2022 (12.8% vs 25% in 2022) and demand is showing no signs of slowing down with unemployment under 4% and job growth remaining strong (199K new jobs in December). As long as people remain employed, you can expect them to take vacations. In fact, July 2023 showed the highest number of demand nights on record.

In reviewing our own portfolio and benchmark data - a new feature our management system started providing in July - we see our Average Nightly Rates outpaced comparable listings by 17% in July and August ($490/nt vs $420/nt). This is important because 40% of our portfolio's annual revenue comes in those two months.

Our booked nights and cancellation rates are also outperforming the market, but given the leveling off of ANR beginning in November, we know our mid-term rental strategy is the right move heading into 2024.

2024 Outlook

Demand is expected to grow by 10.7% supported by economic growth and domestic travel recovery.

Supply is expected to slow as mortgage rates remain high but we may see a continuation of the "lock-in" effect - owners who have hyper low interest rates from a couple years ago, not willing to sell, and instead putting their places on the market for rent. This lack of "churn" is expected to offset demand growth.

This means overall occupancy is expected to level off around 54.7%, which is the same pace as 2023, and in line with the long-term averages seen pre-covid. As a result, overall revenue per listing is expected to remain flat this year.

Check out the full AirDNA outlook report here: https://www.airdna.co/outlook-report-2024