Six Reasons Vacation Rentals Will Thrive in 2022 (& Why 2023+ Won’t)

Posted on Categories Industry News, Search Engine Optimization, Vacation Rental Marketing
Vacation Rentals of 2022

It’s no surprise that 2021 was a spectacular year for all of us. It just goes to show you that vacation rentals and vacations in general are heavily impacted by the conditions that surround us. COVID thrusted us into a “supply without demand” to a “demand without supply scenario” almost instantly, and with the virus still not out of the picture, vacations of 2020 ruined (and 2021 still not back to normal), you better bet everyone (and their mothers) are gearing up for a 2022 vacation of a lifetime!

I have been in the marketing for VR space for about 15 years. I’ve seen so many trends and user behaviors that I could fill Santa’s bag! From special deals, to incentivized booking, to market conditions, to rate disparity, you name it. It was with that knowledge that I said back in early summer 2020 in the peak of COVID, the flood gates will open when these travel bans are lifted. Oh man, did they.

Let’s Recap 2020 & 2021 Really Quick

We know this story already. COVID hit, the world shut down. Everything went caddywhompus! It wasn’t until later on in 2020, while VR companies were short staffed and scared, that the flood gates opened.

The above are traffic patterns from beach client websites’ on the east coast. You can tell exactly when COVID shut everything down and tell exactly when beaches were announced open.

The traffic patterns you see above were record breaking. Not only were our servers here at ICND were under high stress that we didn’t anticipate, but property managers were hit with a huge influx of phone calls and online bookings. However, the topic at hand for all guests — “what are you doing about COVID?” This question prompted many property managers to make a dedicated COVID page with new cleaning standards.

Here is another interesting tidbit. We have quite a few clients in Florida, on both the gulf-side and ocean-side. While Florida was dragging their feet about “opening” after COVID, vacationers did NOT want to wait to make plans. We saw a shift in Georgia residents heading booking vacation rentals to the east, rather than their south, specifically with stays in southern South Carolina and south-east Georgia.

This further solidified that vacations, of any kind, anywhere, were in high demand.  The US population as a whole is simply not content staying home.

Reasons Why 2022 Will Rock for Occupancy

Reason #1: 2020 Resulted in Truncated Vacations

Even though late 2020 occupancy made up for the lapse in early 2020 due to pent-up-demand, guests still never really got their “planned family vacation” that they spent months organizing and anticipating. They got a “last minute vacation” just because they just had to get out. They didn’t care as much, took what they could get, and they were just happy to get out.

This lead to the vacationer’s itch still not being scratched with their coveted vacation.

The problem though, which even carried over into 2021, was the lack of a workforce of cleaners. Property managers across the country all cited the same problem: “there is nobody to clean these units!”

Reason #2: Guests Turned to “Secluded” Vacation Rentals

This is not new news of course. Due to people wanting to “stay secluded” but still vacation, vacation rentals took off like a flash fire leaving hotels and condos in the dust. Private homes is where it’s at.

This fundamental forced-shift basically set the VR industry up for success for future years to come. Guests learned about the perks for staying in a private home vs a hotel/condo, which used to be their vacation of choice (usually due to on-site amenities and cheaper price.) The new favoritism for private homes (COVID aside) basically is going to create (or actually, has already created) a higher demand for vacation rentals and vacation rental managers. However, this new demand for managers is going shake up the industry in a couple years, but more on that later.

Reason #3: New Guests Pigeon-Holed Repeat Guests

After speaking with property mangers throughout 2021, pretty much everyone was fully-booked during their peak season – without much effort. The clients of ours who trusted us with their vacation rental seo and vacation rental ppc management were in a prime position. ICND was able to drive quality traffic to their websites due to their high visibility and top search engine ranking. That high visibility lead to bookings like crazy in 2021.

However, there is a downside to that.

With the major influx of vacationers turning to vacation rentals, there is only so much inventory. “We need more properties!” was a common scream amongst many property managers I spoke with.

Those guests who have been using vacation rentals for years as their accommodation of choice, were faced with limited availability of their favorite homes, desired amenities and sought-after locations. Why does this matter? They were then forced into two options a) take a less-desirable rental, which means strike-two for their yearly big vacation or b) not take that vacation, which again, is strike-two for their yearly big vacation.

Reason #4: 2022 Is Already Way Ahead of Pace

At ICND, we provide monthly traffic and booking reports for our clients. This allows both us and the clients to look at pace and bookings. After analyzing October to December 2021, there is one thing that stood out. Bookings are up! Not for fall stays though, for Summer 2022. Actually, after speaking with many of these property managers as well, they were getting 2022 bookings in record numbers even in summer 2021.

We even have property managers who cite they are or almost are already fully booking for prime season in 2022!

Those vacationers who still never got their “true” vacation from 2020 and 2021 are basically throwing all their chips on the table and saying “Oh, it’s happening, hell or high-water, we’re taking a vacation, and I’m booking it now so I get what I want!”

Reason #5: Shift in Booking Windows

Well, ok, this one isn’t a reason, but it’s something worth pointing out. Raise your virtual hand if you are in a beach destination and you remember 10-15 years ago that January 1 as “flood gates opened” for bookings. January was always the prime booking month. Fast forward to 5 or 6 years ago now. It shifted, right? March became the largest month for bookings. (February was also a peak at one point as well.)

Why was that? Why the shift to later in the year? We conditioned people to wait to book!

Granted, we didn’t try to condition people to “hold off” on booking, but rather, it’s just what happened.

  • We started running larger and larger discounts closer to prime season due to pressure from homeowners to fill summer. The regular vacation rental users were aware of this, so no sense of urgency when they can save $500-1000 and still get a nice place.
  • There was never a shortage of availability, especially with AirBnb surfacing, adding more and more inventory. Why scramble at the start of the year to book when a vacationer can wait AND get a discount?

Now, it’s shifting back! There is less availability now (even with increased inventory.) There is more demand. Hardly any vacation rental company ran any sort of discount (and still booked solid) and many even raised their rates due to demand!

It’s no wonder 2022 is already filling up. Everyone learned their lesson! Great news for us!

Reason #6: International Travel Still “Iffy”

I won’t get into this much. We all know the news. We know people are staying in the US. It’s just another reason why 2022 is going to rock.

Vacation Rental Downward Trend Illustration

Why is 2023 & Beyond Not Going to Fare (as) Well?

Let me preface this by saying, it will. The VR industry as we know it has changed due to COVID.

  • There will always be more demand now for vacation rental properties.
  • The shift to later booking windows won’t return for a number of years.

However, those really are the only two “constants” we can be sure of. Everything else is up in the air.

Reason #1: International Travel Will Return Soon

It’s only a matter of time before those who frequently travel abroad will return to doing so, thus leaving empty holes in US-based rental availability.

Reason #2: Oversaturation of Rentals (and New Property Managers)

I hope I’m wrong with this one. I really do. Feel free to comment below if you disagree (or even if you do agree.)

At all the latest vacation rental conferences, there has been a larger-than-normal influx of new property managers. Three to five bedroom units and growing. Of course, most of them use OTAs currently to fill rooms. With 2020 and 2021 being so lucrative for the VR space, new managers are getting in on the action, thus leading to more inventory. While this inventory will be filled in 2022, it’s still TBD if our pace will continue past that. This is going to eventually shift us back to what I stated above in Reason #5. Why book early when there is so much inventory available?

This leads to lowering rates again to fill rooms as well.

Reason #3: Vacations Won’t Be As Coveted

I feel like 2022 is going to be the year for the “proper” vacation. While there are still plenty of mask mandates and other restrictions, the general public is now “used to it” and can adapt and cope with everything better. With that proverbial vacation itch now scratched, demand itself will wane. Granted, people will still vacation, but not to the magnitude we have seen the last couple years.

In Conclusion, Let’s Keep Riding that Wave!

No doubt, we’ve seen a shift. Things went caddywhompus in the OTHER direction instead! And if history is any indication, 2022 is going to be a much better year for all property managers out there. You have had your “reset” time – time to breathe again, time to get back into that rhythm. Only time will tell if 2022 is going to be as good as 2021, or if the new VR “enlightenment” will continue.

One thing is for certain though, with all these new guests staying with you, you need a plan in place to turn those one-timers into repeat guests. Not only that, you need to spent a good chunk of time educating these guests on #bookdirect. Show them price differences and other advantages with booking directly with you rather than through an OTA. This is especially true for one to ten unit rental managers who want to grow.

Author: Paul Hanak

Paul built his first website at 12 and ranked his first website on Yahoo when he was 18. Fast forward through 13 years of vacation rental marketing experience, he is now the Director of Digital Marketing for InterCoastal Net Designs, leading the team through some of the biggest industry changes for the vacation rental market, and some even bigger changes in the Google landscape.