Though summer is typically a popular time to travel, last year a lot of people put their summer plans on hold due to coronavirus- or economic-related concerns. But fast-forward to April 2021, and thankfully, we're already in a much different place than we were last July or August.
For one thing, coronavirus vaccines have been rolling out at a pretty impressive pace. As of this writing, it's estimated that half of U.S. adults have received at least one vaccine dose, which means the bulk of the adult population could be fully vaccinated before summer kicks off.
Furthermore, the U.S. economy is already showing signs of life after an abysmal 2020. The jobless rate has come down steadily, and new weekly unemployment claims are beginning to drop.
All of this means there could be a serious boom in summer travel this year. And while some people will no doubt seek to book hotels, others are apt to factor vacation homes, which offer the benefits of added space and privacy at a time when some may continue to harbor pandemic-related concerns.
In fact, vacationers are already out in full force, booking properties before their options start to narrow. Domestic reservations on the booking site Hopper were up 58% last month compared to March 2019. And that's just a single example.
If you own a vacation home, it begs the question -- should you increase the nightly or weekly rate for your rental property? Or should you leave things status quo?
Why a modest rate hike may be the right move
Jacking up the rate for your vacation rental substantially could turn guests away -- and coming off of what may have been a sluggish 2020, that's the last thing you want. But a modest rate increase at a time like this may be more than appropriate.
Remember, as a vacation property owner, you may be incurring extra costs due to the pandemic, like having to pay for deep cleanings or invest more in sanitation. You may also feel compelled to stock your home with safety-related amenities like extra soap, hand sanitizer, and even disposable masks for your guests to wear around town. If that's the case, there's no reason you shouldn't raise your rate to account for these extra expenditures.
Also, home values have increased nationally, which could, in turn, lead to a higher property tax bill. A good way to compensate for that is to raise the rate on your vacation home.
Of course, before you make that call, see what other local property owners are doing with their homes. If the average nearby property implemented a 10% rate hike, you may want to do the same. But either way, there's a good chance demand will be high this summer after a long winter of lockdown, so there's no reason not to capitalize on it by charging more for your vacation home.
As things improve with regard to the pandemic, vacationers may, in the summers to come, start favoring international travel after having been stuck in the U.S. for several years in a row. As such, now's the time to take advantage of the fact that more people may be looking to book vacation homes domestically. And to be clear, raising the rate for your vacation home doesn't make you unethical -- it makes you a savvy real estate investor.
That said, you may want to make one exception: If you have guests who book with you every year, you may want to honor the rate you've previously charged them. But otherwise, you shouldn't hesitate to squeeze a little more money out of your rental -- especially if you saw your vacation home revenue decline in 2020 and you're still operating in catch-up mode.