After more than a year of delayed travel plans, get-togethers, and social gatherings, pent-up demand is hitting the market in full force after the vaccination rollout, starting this Memorial Day weekend. More than 37 million Americans are expected to travel 50 miles or more from home May 27 through May 31, 2021, which could be great news for short-term rental owners, hotels, and business owners in the tourism and hospitality fields. These industries have been among some of the hardest-hit sectors during the global pandemic, as mandated shutdowns and social distancing measures kept people from traveling and shopping in stores -- and ultimately spending less.
Memorial Day weekend boom is just the beginning
The travel boom we're seeing, however, isn't quite to pre-pandemic levels -- 2019 saw roughly 43 million Americans traveling over Memorial Day weekend. The number, though, is a positive start to what is hoped to be a very busy, active summer season.
HomeToGo found summer vacation rental bookings for travel in the U.S. are up 27% to date. Continued international travel restrictions also means most summer travel will be domestic, with 86% of travel searches being for U.S. destinations. Vacasa, a major vacation rental booking platform, expects to see $1.25 billion in bookings in 2021, the highest on record for the company.
Where the opportunity is and how it may impact investors
All this means real estate investors should expect to see increased demand, bookings, and rental rates in response. Summer vacation rentals in particular are poised for a record-hot summer. It appears searches for local destinations, roughly 50 to 300 miles from the guest's home, are the top searches on short-term rental properties for Memorial Day weekend. The following locations are seeing the highest search volume on Airbnb (NASDAQ: ABNB), one of the nation's largest vacation rental platforms:
- Alamosa County, Colorado
- Nye County, Nevada
- Sanpete County, Utah
- Angel Fire, New Mexico
- Forks, Washington
- Sandpoint, Idaho
- Washington County, Virginia
- West Yellowstone, Montana
- Jackson County, North Carolina
- Harper’s Ferry, West Virginia
While these locations are more rural than traditional vacation hot spots, less crowds and unique stays in off-the-beaten-path locations have proven to boost income by $2,000 on average compared to average host income in 2019, Airbnb says.
Specifically, smaller accommodations and unique stays are seeing increased demand. The following property types are trending on Airbnb, with the percentages reflecting the growth in searches for unique stay types over Memorial Day weekend 2019:
- Tent (260%)
- Yurt (167%)
- Campsite (153%)
- Earthouse (149%)
- Houseboat (142%)
- Dome house (140%)
- Farm stay (119%)
- Treehouse (111%)
- Tiny house (109%)
- Barn (86%)
New demand for vacation rentals may leave investors with the opportunity to increase rental rates in the summer months, particularly if the rental is in one of the highest-demand areas or property types.
Retail is also on the rise, with retail sales excluding e-commerce seeing a 28% year-over-year increase and a 11% month-over-month increase in March 2021, according to CBRE. Restaurants particularly saw a 13% month-over-month increase in sales.
The Millionacres bottom line
Consumers traveling often mean consumers spending, a trend that undoubtedly will help businesses and landlords who may have struggled over the past year. The increase in sales over the next season could help past-due retail tenants catch back up on deferred rent or help provide a boost in income for landlords who utilize a percentage lease could see an uptick in revenues in the coming months. While we're still a long way off from "business as usual," the upcoming Memorial Day weekend boom is a positive sign for real estate investors.