Study Finds Vacation Rental Owners Making More Money
By Bobby Freeman, Realtor // April 2, 2014
cape canaveral 4th in rental demand
ABOVE VIDEO: The top vacation markets with the highest traveler demand are, not surprisingly, in Florida, HomeAway says. It claims 39,159 vacation home listings in the Sunshine State. More than eight in 10 vacation rental owners (84 percent) report that this year’s bookings are about the same or better than the previous year.
BREVARD COUNTY, FLORIDA — In industry research from the “HomeAway Vacation Rental Report: Owner Edition,” HomeAway Inc. reports strong performance of its vacation rental owners during the 2013-2014 winter season, and predicts a strong 2014 summer season.
The top vacation markets with the highest traveler demand are, not surprisingly, in Florida, HomeAway says. It claims 39,159 vacation home listings in the Sunshine State.
“Our vacation market is extremely demanding” says Sal Burke, Realtor & Property Manager for RE/MAX Elite’s McCoy Freeman Group. “Units are being reserved at a record pace as more and more people discover what the Space Coast has to offer” says Burke. “We are even getting daily calls for 2015 reservations.”
BOOKINGS AND PROFITS
• More than eight in 10 vacation rental owners (84 percent) report that this year’s bookings are about the same or better than the previous year.
• 93 percent of owners says they did not lower rental rates from last winter, and 21 percent of owners raised their rates.
• Owners who say winter is their peak rental season had a 70 percent occupancy rate. In comparison, Smith Travel Research reports that overall U.S. hotel occupancy rates averaged 57.5 percent booked in the fourth quarter of 2013 and 60.2 percent thus far in 2014 1.
• More than half (54 percent) of the owners surveyed who had a mortgage covered at least three quarters of their mortgage payment from renting their home – an increase of nine percent year-over-year from 2012. Additionally, about two-thirds (65 percent) cover at least half of their mortgage payment.
“What stands out to me from this year’s survey the most is not only the consistency we see year-over-year with successful bookings, but those bookings are taking place at gradually higher rental rates each year,” says Brian Sharples, co-founder and chief executive officer of HomeAway.
VACATION RENTAL PROFITS
• On average, HomeAway vacation rental owners charge a weekly rental rate of $1,520 ($217/night) and make their home available to guests for an average 36 weeks each year – an annual rental income of $27,360 for the average owner.
• 65 percent of owners says their goal for renting the vacation home is to “cover some” or “all of my expenses.” A profit is especially important to 19 percent of those owners.
Expenses and time
• The average owner spends $961 per year to market their vacation rental, which includes costs for listing site subscriptions, local print advertising, property manager fees and paid search efforts.
• Assuming an average annual income of $27,360, the cost to market a vacation rental is 3.5 percent of total rental revenue.
• Vacation rental owners spend an average of nine hours per week marketing and managing their vacation rental properties.
“It’s interesting to note just how much profit is made from the work our owners put into their vacation rental operations,” says Sharples. “With ROI as strong as $84 per hour, the efforts you’re putting into the marketing and management of your property reflect in your bottom line.”
FUTURE RETIREMENT HOMES
• 14 percent of respondents purchased their vacation rental as a future retirement home.
• The average buyer age was 47 years – a drop of seven years compared to two years earlier.
• The average age when owners started renting their vacation home was 50 years – the same as in 2013 but six years younger than owners in 2012.
• 65 percent of owners spent more than two weeks in their vacation home over the last year.
• 59 percent of owners cite the location of their homes in beach communities.
• Guests typically book a vacation rental 90 days before their trip, making March and April the prime summer booking months.
• Currently, more than half (52 percent) of owners have booked 50 percent or more of the upcoming summer season.
• A few smaller Florida vacation markets have emerged on this summer’s list including, Mexico Beach, Cape San Blas and Cape Canaveral – all favored for families and groups.
This summer’s top growth markets for increases in vacation rentals stretch from coast to coast. Appearing on both the top markets for travelers and for increased vacation rental listings is Cape San Blas, Fla. and Lavallette, N.J., showing a strong rebound from Hurricane Sandy nearly a year-and-a-half ago.
TOP 10 MARKETS FOR OVERALL RENTAL DEMAND
• Mexico Beach, Fla. (Panhandle)
• Cape San Blas, Fla. (Panhandle)
• Lavallette, N.J.
• Cape Canaveral, Fla.
• Moonridge, Calif. (Big Bear)
• Balboa Peninsula, Calif.
• Manteo, N.C. (Outer Banks)
• Cocoa Beach, Fla.
• Point Pleasant Beach, N.J.
• Crested Butte, Colo.