Last year around this time life as we knew it came to a screeching halt. One minute all was normal with kids in school, people planning their summer vacations, and going about their daily lives. And then seemingly overnight what was once “normal” had changed indefinitely. We’ve learned a great deal over the last 12 months. How to protect ourselves and loved ones from possibly getting sick, finding new ways to work, and from our experience rediscovered the joys of “local” travel right in our own backyards.
As a travel and hospitality company, we felt the blunt impacts that COVID had on our economy almost immediately. However, as things started to become clearer and states slowly started opening back up, vacation rentals in drive to markets, and specifically the Cape Fear region, bounced back almost immediately. For many of our property owner clients, even with the shutdowns over about a 6 week period during the spring, it was the best year that they have had on record.
So, what does this say about 2021 and beyond for our area and vacation rental property owners throughout our region?
In our last article we discussed “The Big Three: Occupancy, ADR, and RevPAR” and the importance of these KPI’s when tracking booking performance. Let’s look at these KPI's for Carolina Retreats and how they are shaping up so far for 2021:
Carolina Retreats YTD Booking Pace - 2020 vs. 2021
Occupancy %: Up 30%
ADR: Up 21%
RevPAR: Up 57%
Occupancy % gives us a quick snap shot of how quickly our available properties are booking vs. last year. So far our booking pace for available nights is up 30% year over year at this time. Keep in mind, the real effects of COVID shutdowns did not start until mid-March and this data is through the beginning of March, thus giving us a little better apples to apples comparison.
ADR, or Average Dailey Rate, is another key metric we use to gauge how well our rate algorithms and revenue management team is maximizing not only occupancy, but more importantly revenue. To date, ADR is up 21% compared to the same time last year. We view this as a pretty sharp increase in broader demand this year as we have been able to incrementally push up rates for peak time periods.
RevPAR, or Revenue Per Available Rental Night, takes into account both Occupancy % and ADR to give us a better overall indicator of revenue performance. This is an important key performance indicator to track as it directly indicates how well we are maximizing revenue, not just ADR or Occupancy % alone. Our RevPAR for our clients are up approximately 57% on average to date.
More broadly it’s also good to look at the market as a whole, and not just rely on internal data when trying to forecast demand for the upcoming year. As an example, let’s look at one of our larger markets, Topsail Island, where we manage over 200 vacation rental properties. For bookings scheduled to arrive from April 1st through October 31st, adjusted paid occupancy % was 28% in 2020 vs. 45% to date for 2021. Adjusted paid occupancy % takes into account owner stays and other non-paying guest bookings to give us a true snapshot of paid demand, and so far so good!
If the early booking data is any indication of the strength and popularity of our markets, then it should be another strong tourism year for the Cape Fear region as a whole.
There are a lot of variables that go into maximizing revenue for a vacation rental investment property. Whether you work with a professional management organization such as Carolina Retreats, or self-manage via a third party OTA platform, keep an eye on these key metrics starting as early as possible in order to capitalize on shifts in demand to your advantage. As local, experienced vacation rental professionals with documented success of increasing revenue opportunities for our clients, we’d be happy to help analyze your property and help you reach your revenue goals.
Mike Harrington is the CEO & Owner of Carolina Retreats, a specialty lodging and vacation rental management firm serving more than 300 vacation property owners throughout the Cape Fear region. Before founding Carolina Retreats in 2015, Mike spent 10 years on the Outer Banks as CEO and General Manager of Resort Realty, a high end real estate sales and vacation rental company with 600 properties under management, five offices, and more than 100 full-time employees and real estate agents. Mike is a Past-President and Board Member of the Vacation Rental Manager's Association (VRMA), the largest international trade association for the vacation rental industry, as well as Past-President for the North Carolina Vacation Rental Manager's Association (NCVRMA). He is frequently asked to speak at seminars and trade conferences on the latest vacation rental management trends in marketing, operations, and strategy. Mike holds a MBA from East Carolina University, as well as a Bachelor's Degree in Business Management and serves as an Advisory Board member for East Carolina's School of Hospitality Leadership.
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