Vacation Rentals May Greatly Benefit from COVID
Vacation Rental owners in Scottsdale Arizona are cashing in this summer. July bookings of vacation rentals may be at an all time high. “Airbnb saw more nights booked for U.S. listings between May 17 and June 3 than the same period in 2019, and a similar boost in domestic travel globally,” according to Bloomberg June 7. This contrasts to just a few months prior when COVID-19 caused nervous Vacation Rental Owners to sell rental property due to cancellations and uncertainty.
Airbnb saw more nights booked for U.S. listings between May 17 and June 3 than the same period in 2019, and a similar boost in domestic travel globally,”Bloomberg June 7, 2020
Reasons for the Popularity
Travelers are finding that it is much easier to social distance from others in a home with their own cooking and entertainment, than a hotel room. And working remotely from home, any home, has added to the enthusiasm, as families who have been cooped up for several months, look for a break.
Based on vacation trends discussed in Travel & Leisure in June, several key indicators favor private homes: Stays are Getting Longer, (reducing minimum night stay requirement risks); Private homes are desired over Condos and Hotels with Common Areas; Drivability to the Location instead of flying will be key; Pet friendly will be a huge draw; and Cleanliness is Critical.
The Effect of Low Interest Rates
Real estate continues to be a strong investment in most American’s portfolios (chart).
Today’s investors are able to benefit from today’s low interest rate environment. With current low rates, investors are able to have the same payment on a $333,000 home that cost $226,000 five and a half years ago in greater Phoenix. And analysts seem to be unanimous that housing appreciation will continue. More Market Stats here.
Vacation Rental Management Companies Paying Attention
At least some companies in the sector are making necessary changes while searching for COVID opportunities. Airbnb launched a heightened cleaning protocol for hosts, with guidance from the former U.S. Surgeon General Vivek Murthy, M.D., and leading experts in hospitality and medical hygiene. After re-thinking its plans for an IPO, don’t be surprised if the organization soon makes its market debut. And the stronger the industry, the louder its lobbying efforts. According to Fortune.com on June 30, “Airbnb is on track to have a better 2020 than 2019,” claimed CEO Brian Chesky on the Leadership Next podcast.
Booking flexibility is a huge factor in most survey results. According to an article in AARP in May, “Vrbo said it would ask hosts to refund a minimum of 50 percent of what customers paid, if they are not willing to rebook at another date.” Vrbo also rewards its host homeowners that demonstrate flexibility by posting a “cancellation badge” on that property’s profile.
Airbnb introduced some tools and programs called “More Flexible Reservations” to help hosts and guests navigate uncertainty as plans are canceled or postponed. If guests need to cancel bookings made during certain dates, both VRBO and Airbnb are refunding their nominal guest service fees redeemable on a future trip.
Scottsdale Arizona Ranks #1 for Vacation Rentals
In a Study by Realtor.com in April 2019, Scottsdale Arizona ranked #1 in its Study “Top 10 cities Where Vacation Rentals Rake in the Most Cash.” Criteria included the home affordability, and therefore the profitability of the business. Other criteria included rates, demand, per capita number of short-term rentals, average income as a ratio of monthly mortgage payment, and one-year home appreciation.
Why is Scottsdale such a popular location? Located in Greater Phoenix Metro, Scottsdale is a hotbed for American corporate elites looking for a weekend getaway full of mountain biking, golf, and hiking. And while cities across the country are creating tighter rules and outlawing Airbnb rentals altogether, Arizona has gone in the other direction—it signed a law in 2016 that prevents cities in the state from banning short-term rentals. That legal protection, combined with vacation rental demand, has made Scottsdale successful for investors for many years. (Note: laws can change. Also, there are stipulations, such as limitations to no more than six adult guests, etc.)
Another reason for the Scottsdale vacation rental boom: More than 200 golf courses and year-round sunny skies and 15 Major League Baseball teams stay in the greater Phoenix area each year during March Spring Training. These coaches, players, and their families often prefer renting an entire Scottsdale home than a hotel room for two months. And there are plenty of fans eager to rub shoulders with their favorite stars in a low-key setting. Other events include the Waste Management Phoenix PGA Open, the Arabian Horse Show and Equestrian Events and the most well recognized Collector Car Auction week.
Vacation rentals range from 7+ bedroom sprawling estates or Mountaintop Luxury Homes in Paradise Valley, to Horse Ranches in Rio Verde and North Scottsdale, to modest 2-3 bedroom homes with private pools. The budget-minded can score a relative bargain here when prices drop in the summer.
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About the Author: Denise van den Bossche has been a licensed Agent and homeowner for over 35 years in the Metro-Phoenix-Scottsdale Valley of the Sun. A Legacy LEED® AP, designated SRES, DMX, ePro. To request a no-obligation market report, home evaluation, or consumer guide on your specific needs, contact Denise at 602.980.0737 or email Denise@AZMultipleListingService.com. Denise’s husband Patrick is President of Realty Executives International, with 500 offices throughout North America.
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