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What Are 'Vaxications,' and How Do They Affect Short-Term Rental Landlords?

Apr 23, 2021 by Brad Cartier
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The travel industry, particularly more international destinations, has been dramatically impacted by the coronavirus pandemic over the past 12 months. People love to travel, and that will never change, so what happens when people can't travel for an extended period of time and then they get vaccinated? Vaxications.

Vaccination vacations, or "vaxications,'' is a term used to refer to the pent-up demand for travel from those who have received COVID-19 vaccinations. And this growing trend has some critical implications for real estate investors with exposure to the travel or short-term rental markets.

Vaxications, explained

This thesis around vaxications covers the following points:

  1. The vaccination rollout has been successful and widespread.
  2. People have been harboring a desire to travel since the onset of the pandemic.
  3. The desire for domestic travel will subside as travelers can now more easily move internationally.
  4. People are tired of government warnings against travel.

People are so fed up with lockdowns and stay-at-home orders that as soon as they get their vaccine, they'll be packing their bags. This means a boost to airlines, hotels, and local tourism businesses reliant on travelers. So what does the data show?

Vaxications: the data

According to RateGain, a travel technology company that provides bookings to brands like Hotwire, Hyatt (NYSE: H), and Accor (OTCMKTS: ACCYY), mid-March marked the largest number of daily bookings since the onset of the pandemic. Further, RateGain also notes that daily bookings are now around 22% to 56% higher than averages from December 2020, which usually see very high rates.

A new survey from MMGY Global also shows a positive consumer sentiment toward travel intentions. Reportedly, 50% of US travelers planned on getting the vaccine as soon as it's available. Specifically, interest in international travel jumped. The percentage of respondents likely to take an international flight during the next six months rose to 25% in December 2020, up from 21% in Wave X, reaching the highest level observed to date.

According to the U.S. Travel Association, people are planning their trips. Reportedly, even in January of this year, about half of Americans were planning to travel "within three months." Now, that may have subsided with new waves of the pandemic; however, it's evidence of the pent-up demand and desire for travel both domestically and internationally.

The same report notes that, as of mid-January 2021, "In the past week, one-third of Americans have daydreamed about travel, [and] a quarter have talked to friends or family about future travel and have researched travel ideas online."

Airlines and other travel industry players are trying to get ahead of the game, urging government officials to plan for a vaccine passport to make travel much more manageable as the vaccine rollout progresses.

The Millionacres bottom line

For real estate investors and managers who operate in the leisure and travel industry, this is welcome news. More demand plus an ability to travel more freely will help revitalize this industry, which has been dramatically and negatively impacted over the last year.

The pent-up demand for travel means that occupancy rates and average daily rates will push higher and give this industry a much-needed shot in the arm. Pun intended.

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bradcartier has no position in any of the stocks mentioned. The Motley Fool recommends Hyatt Hotels. The Motley Fool has a disclosure policy.