Why travelers may have to settle for alternative vacations: 'It’s slim pickings right now'

Planning to travel to your favorite ski resort this holiday season? You may want to start booking already.

The average daily room rate for hotels and short-term rentals surged in the summer of 2021 fueled, in part, by pent-up demand and shifting travel trends as travelers swarmed to beach resorts and other popular outdoor destinations. Experts say elevated demand should continue this upcoming holiday season, which could result in travelers facing higher average daily rates and more competition when booking in key markets.

“If you haven’t booked your Christmas, New Year’s Eve beach vacation or a ski resort vacation … you gotta get to it,” said Patrick Scholes, a lodging analyst for Truist Securities, a corporate and investment banking company. “There is incredible demand right now, and it’s way ahead of comparative levels of 2019. … You’re going to get sticker shock.”

‘More demand than ever’

Last summer’s busy domestic travel season drove up room rates across the lodging industry.

The average daily rate of U.S. hotels rose 6% between July 2019 and July 2021, according to data from STR, a firm that analyzes hospitality industry data. While the overall average daily rate was dragged down by a lack of travel in major metropolitan markets, leisure destinations like Miami saw rates jump nearly 45% the week of July 4 compared to 2019.

Meanwhile, the average rate that a guest paid for a short-term rental jumped 20.3% between July 2019 and July 2021, according to findings from vacation rental data company AirDNA.

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“Year-to-year, you generally don’t see that much change (in short-term rental average daily rate),” said Jamie Lane, AirDNA’s vice president of research. “The past 18 months, we’ve seen pretty dramatic changes.”

There are a few reasons why the short-term rental average daily rate has been on the rise this year, according to AirDNA.

Many travelers have been opting to splurge on larger units with nicer amenities (think: hot tubs, pools and pet-friendly locations) that cost more but allow them to spread out and social distance, according to Lane. They have also migrated toward destination markets near the mountains or coasts, which tend to charge higher room rates during peak travel seasons.

Supply and demand also play a role. Lane said while there is “more demand than ever” for short-term rental stays, the number of available nights among listings has declined.

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“What it looks like to us is that people are just using their second homes more for their own use, (now that) they can live and work remotely,” Lane said. Additionally, “many of the top destinations were sold out months in advance which allowed them to raise rates on their available inventory.”

At Airbnb, average daily rate hit $161 in the second quarter, a 41% increase from the same period the year prior. And over at Vrbo, the average daily rate for vacation homes booked in the first half of 2021 increased over 15% compared to the first half of 2020, according to spokesperson Alison Kwong.

Airbnb says while certain hosts in high-demand segments have been raising prices due to increased demand, the higher average daily rate has more to do with shifting travel trends as more travelers book entire homes in non-urban areas, which tend to be more expensive.

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Kwong added that families may be spending more on short-term rentals because they’ve saved in other areas, whether that’s not having to pay for an international flight, opting for a less expensive outdoor vacation instead of splurging for tickets to a crowded amusement park or putting money from a canceled 2020 trip toward their 2021 vacation.

The elevated average daily rate is expected to continue later this year for many of the same reasons, with short-term rental demand shifting to popular winter destinations like ski resorts or popular beaches.

Scholes saw this first hand himself in March after he booked a Miami beach vacation rental for the week of Dec. 26 with a hunch that demand would eventually drive up prices in that area. He was right; he’s found similar properties are now going for at least three times the rate he purchased.

‘It’s slim pickings right now’

Scholes said travelers looking for a getaway at a popular beach town or ski resort may have to settle for an alternative destination this year.

“It’s slim pickings right now,” he said. “I think this is going to be a record season for popular holiday vacation spots.”

Certain warm destinations, like the Florida Keys and Naples, Florida, have more than 70% of their Vrbo listings already booked during Christmas week. Kwong suggested travelers lock in their vacation homes soon and look for “off-the-beaten-path destinations” or slower weeks that may have more availability.

A Colorado ski resort operated by Aspen Skiing Co. Credit: Jeremy Swanson

While the hospitality industry data firm STR doesn’t have a forecast for the upcoming holiday travel season, senior vice president of consulting Carter Wilson expects demand to drive U.S. hotel average daily rate to 2019 levels, if not higher.

“Travelers are going to want to look early and not expect to find a lot of great deals,” he said. “It’s going to be, probably, fairly pricey (in the top markets).”

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Those markets are already seeing holiday demand start to pick up. Aspen Skiing Co., which operates ski resorts in Colorado, is seeing demand outpace 2019 levels, according to spokesperson Jeff Hanle.

“People are, even with the delta variant, more comfortable traveling,” Hanle said. “That demand is going to drive the room rate and the ADR up as well. That’s just more reason to book now if you can.”

Average daily rate trends going forward

Lane expects the short-term rental average daily rate to remain elevated throughout the rest of 2021 but said the rate of growth has been settling.

The highest short-term rental pricing surge over the summer was a 23% jump between May 2019 and May 2021, Lane said. That difference dropped to 19% between August 2019 and August 2021. He expects the price difference will continue to hover around 20% around the Thanksgiving travel period.

“It doesn’t appear that (the price jumps between 2019 and 2021 are) increasing any further,” Lane said.

He added that the average daily rate should start to come down “a bit” as more travelers visit cities again, but he doesn’t expect rates to reach pre-pandemic levels again any time soon.

Follow USA TODAY reporter Bailey Schulz on Twitter: @bailey_schulz.

This article originally appeared on USA TODAY: Why travelers need to book now or settle for alternative vacations