As travel season heats up, R.I.’s vacation rental market cools

THIS SUMMER, many short-term rental owners in Rhode Island are seeing a dip in booking rates for the first time since the COVID-19 pandemic. /PBN FILE PHOTO/K. CURTIS

CHARLESTOWN – At Randall Realtors Compass, sales manager Kristen Holloway’s office line has been buzzing with short-term rental owners anxious to fill their vacation properties.

“We have had a high number of calls every single week from people unable to rent on Airbnb and VRBO, stuff like that, and they want us to list their property,” Holloway said. But with July approaching, the realty company, which specializes in coastal vacation rentals, can’t provide much relief.

“We are now hesitant, because we’re not going to be getting (the property) rented either at this point,” Holloway said.

This influx of late-season pleas isn’t unique to Randall. After a string of lucrative summers post-2019, short-term vacation owners are experiencing a cooler rental market in 2023, with their listings staying open longer and renting at lowered rates.

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Business was “crazy high in 2020 through 2022,” Holloway said. “We were booked solid the summer of 2020. We did not have another reservation we could possibly take … Now, we have a ton of reservations where we have listings open by the week.” 

In fact, bookings are down 18% year-over-year company-wide, Holloway said – a stark contrast from 2020, when bookings surged by 27%, though that year was far from the norm as well. Typically, Holloway said, these fluctuations sit at around 5%.

This slower market didn’t come out of the blue: Airbnb, an international short-term rental management platform that’s name has become near-synonymous with individually-owned vacation accommodations, in May predicted fewer bookings and lower rental prices year-over-year for summer 2023, Reuters reported. The company partially attributed this anticipated drop-off to competition from similar platforms such as VRBO and Booking.com.

But other factors are dampening the industry as a whole, Holloway said, such as financial stresses from inflation and increased comfort with international travel following COVID-19 anxieties. According to AAA data, international trips have risen 200% over 2022 rates.

“I think what’s happening is a mix of two things: the economy being down, and people taking big trips, rather than going a state over for the weekend,” Holloway said. And those who have managed to accumulate savings amid economic uncertainties “are going on more lavish vacations,” she noted, speculating they may be more interested in resorts and higher-end hotels once they get to their destinations.

“They haven’t been able to take trips since 2020, so now they’ve saved all this money and they’re going full-out,” Holloway said. 

Airbnb did not respond to a request for booking trends in Rhode Island. But Haven Thorn, a spokesperson for the company, said Airbnb remains optimistic about a strong summer 2023.

“Last year, more guests traveled on Airbnb than ever before, and this year, we’re expecting over 300 million guest arrivals, as we look forward to another strong travel season,” Thorn said.

But if guests are swaying to more luxurious destinations with their savings, as Holloway suspects, short-term rental owners are proceeding cautiously in their expectations compared to the past few years, and sometimes adjusting prices accordingly.

In response to a PBN inquiry, all but one of approximately 15 to 20 respondents with the Rhode Island Short-Term Rental Association (RISTRA) said that they were experiencing lower demand for their rentals this year, said Greer Gagnier, executive director of the recently-formed group.

The association formed in May with a goal of providing “a unified voice for the legislature” around short-term rental policies, Gagnier said, and currently has around 40 members, many of whom rent their properties through Airbnb or VRBO.

In summer of 2021 and 2022, members reported occupancy rates of around 95-100%, Gagnier said, with most summer stays booked months in advance. This year, short-term rental owners in the association have recorded an average occupancy rate of 93% for June, with 70% to 80% of availability booked out for July. 

Gagnier expects that number may still rise, if not to the heights of summer 2022, when some members reported their best year on record. 

“Last year, I would say our summer was booked out in advance a lot more,” Gagnier said, usually around January. Currently, many owners “will see their occupancy rates go down, but then last minute, people will book them,” she said, adding that she expects final occupancy rates will settle at around 90-95%.

Like Holloway, Gagnier expects more people are now taking international vacations, and possibly using up lingering vacation credits from trips canceled due to the pandemic.

The membership hasn’t reported that they’re significantly lowering their rates, Gagnier said, but she’s decreased the prices on some of her own short-term rentals in Pawtuxet Village, where she rents out three vacation homes. And those who do lower their rates are still seeing less demand, she noted.

Jacquelyn Voghel is a PBN staff writer. You may reach her at Voghel@PBN.com.

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