Northwest Florida maintains stronghold as a must-own vacation home destination
In the newest industry research from its “HomeAway Vacation Rental Report: Owner Edition,” HomeAway, Inc. (NASDAQ: AWAY), the world’s leading online marketplace for vacation rentals, highlights the strong performance of its vacation rental owners during the summer season. The case for vacation home owners to rent their otherwise vacant properties to travelers grows more compelling when examining the number of bookings and increased rental rates compared over last year.
A Strong 2013 Summer Season
The Labor Day holiday brings a welcome conclusion to a lucrative summer for many vacation rental owners. This summer’s report finds the average occupancy rate for vacation rentals is 77 percent for vacation rental owners who consider summer their peak season. These owners reported an average weekly rental rate of $1,778 ($254 per night), a 19 percent increase over the same time period in 2012.
Comparatively, Smith Travel Research, Inc. reports the average occupancy rate for U.S. hotels for the summer season was approximately 70 percent (a slight two percent rise from the same period last year) with an average room rate of $110.21 per night, representing just a 3 percent increase over the same time period in 2012. Even though the nightly rate of a hotel is lower than that of a vacation rental, vacation rentals still hold a much higher value than a single hotel room, offering multiple bedrooms and bathrooms, allowing for comfortable and convenient family and group travel.
For the second consecutive year, nearly nine in 10 vacation rental owners (86 percent) report their summer business was about the same or better than last summer. And 95 percent of vacation rental owners said they did not lower their rental rates from last summer — 23 percent even increased their rental rates.
“It’s clear from this year’s report our owners are utilizing their vacation homes as assets to help pay their expenses and even turn a profit,” says Brian Sharples, co-founder and chief executive officer of HomeAway. “Nothing makes me more proud than aiding our owners and property managers in filling their vacation rentals.”
Overcoming the Concerns of Renting a Vacation Home
Taking the Leap of Faith to Fortune
One of the top concerns of vacation homeowners prior to opening their homes to travelers includes concern of losing money on the endeavor (23 percent). But the survey debunks this myth: among those owners who have a mortgage on their vacation rental home, more than half (51 percent) are able to cover at least three quarters of their mortgage payment — an increase of six percent year-over-year from summer 2012. Additionally, nearly three-quarters (70 percent) cover at least half of their mortgage payment — an increase of six percent over last year.
Time Well Spent: The ROI of Managing a Vacation Rental
Prior to renting, vacation rental owners (35 percent) also worry if they can balance managing the home as a rental with a full-time job or family obligations. In actuality, vacation rental owners spend only an average of 8.4 hours per week marketing and managing their vacation rental properties. With an average weekly rate of $1,778, a vacation rental owner is grossing approximately $71 per hour of work.
“If the owner optimizes the time and effort put into managing their vacation rental, the return on investment is substantial,” says Sharples.
A Family Vacation or Retirement Retreat = Income Generator
Thirty-nine percent (39 percent), of owners originally purchased their vacation home for personal use. As such, there is a concern among 35 percent of owners that once the home begins to rent, they aren’t able to utilize the property for personal use any longer. However, nearly two-thirds of owners (66 percent) spent up to 28 days in their vacation rental in the past twelve months, and the majority (76 percent) of owners cites personal or work reasons for not being able to spend more time in their vacation rental, not guest bookings.
Another 15 percent of owners classify their vacation rental as a future retirement home. The average age in which owners purchased their vacation homes was 48 years old — six years younger than owners in 2012—and the average age in which owners began renting their vacation homes was 50 years old — also six years less than owners in 2012.
“Consistent with what we have seen from the National Association of Realtors year after year, vacation home buyers are getting younger, realizing the benefits of purchasing their future retirement home early and paying down the mortgage by renting it,” says Sharples.
Hot Vacation Home Markets
For those considering making an otherwise vacant vacation home available for rent, or purchasing a vacation home, traveler demand to fill these homes is rising in the Florida Panhandle. Compared to this same time last year, the growth of inquiries and new vacation rental listings in the Florida Panhandle is rivaled by its neighbors Captiva & Sanibel Island and North Carolina’s Outer Banks region, which shows strong performance from Duck, Kitty Hawk, Corolla, and Kill Devil Hills.
Although, it’s not just beach destinations increasing in both supply and demand. Ski spots Keystone and Durango, Colo. are peaking along with Park City, Utah. Perhaps a dark horse in these burgeoning vacation rental markets is Sunriver, Ore., boasting a 77 percent growth in vacation rental listings and complementary traveler demand growth as well.
This report was provided by HomeAway, Inc.