Looking beyond the obvious can reap dividends for holiday home investors

With holiday homes set to claim around a quarter of all holiday bookings in Australia within a few years, a wide range of locations are emerging as potential investment hotspots.

Demand for holiday homes in some of the country’s top regional destinations is up by more than 90 per cent..
Demand for holiday homes in some of the country’s top regional destinations is up by more than 90 per cent..
Demand for holiday homes in some of the country’s top regional destinations is up by more than 90 per cent..
Demand for holiday homes in some of the country’s top regional destinations is up by more than 90 per cent..
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Demand for holiday homes in some of the country’s top regional destinations is up by more than 90 per cent.. (Image source: Shutterstock.com)

When it comes to investing and staying in holiday homes, there are the heavy traffic big-ticket names that attract most of the attention.

The Sydney CBD, Surfers Paradise, Noosa, Maroochydore-Mooloolaba, and Brisbane City are the usual suspects in a privileged line-up of preferred holiday home destinations being searched – and booked - by international travellers seeking the quintessential Aussie summer getaway.

While that perception is reinforced by recent research by Expedia Group’s holiday letting platform Stayz, the data also revealed some viable opportunities in lesser known regional and non-coastal destinations.

Tim Rosolio, VP of Partner Success, Vacation Rentals, Expedia Group

Tim Rosolio, VP of Partner Success, Vacation Rentals, Expedia Group

In an exclusive interview with Australian Property Investor Magazine, Expedia Group’s VP of Partner Success, Vacation Rentals, Tim Rosolio said during his visit to Australia that the post-Covid world was an interesting time for holiday home investment.

“The example I would give is this; in America, imagine your family live in Dallas, Texas, and you typically would go to Florida for a holiday, but you couldn’t get on a plane, so you needed to find a new place to enjoy a great family holiday.

“There are examples in America, like Broken Bow, Oklahoma, which is not a traditional holiday home hotbed, however, because it was a drive-to destination that has a beautiful landscape, people started going there.

“Once Expedia saw the demand, we started seeing more people interested in getting supply and that really got the fly-wheel going for us.

“I’m positive that we have examples like that which would apply to this area of the world as well.”

A report released this month by Expedia Group, Unexpected Travel Trends for 2023, has found that in Australia customer demand for holiday homes in some of the country’s top rural destinations is up by more than 90 per cent.

“Interest for mountainside destinations with views of lakes and rivers are also up by 50 per cent,” the report says.

Chart toppers

Dubbed, Hay-cations, the top five properties in the regional and rural sector are found in Robertson (NSW), Bungonia (NSW), Karridale (WA), Upper Colo (NSW) and lakeside Taylor Bay (Victoria).

Stayz number one property, the Maple Lodge in Robertson NSW, inland and south of Wollongong offers a luxury, seven-bedroom farm stay experience and averages over $800 per night.

Maple Lodge, NSW

Listed as Stayz top regional property, the Maple Lodge south of Bowral, NSW meets the trending criteria in luxury amenities, privacy, outdoor and farm stay experiences.

Converted barns, farmhouses, rustic cottages and beautiful lodges are at the top of the list for Expedia’s main demographic of travelling families looking to tick the specific criteria boxes of privacy, abundant space and “exhilarating views”.

The top 10 regions identified by the report are in Victoria (Bright in the high country, Halls Gap in the Western Grampians, Marysville in the Yarra Valley, Wodonga on the Murray East and Echuca in the Central Murray region): New South Wales (Crackenback in the Snowy Mountains, Goulburn in Capital Country and Tamworth in New England); Queensland’s Capricorn Coast town of Yeppoon; and Tasmania’s Nietta, in the north west of the Apple Isle.

“The dynamics are all the same.

“For somewhere that’s maybe not a traditional holiday home destination, what we’ve found is that people found those destinations during Covid, and even in a post-pandemic world they’re still going, so these places are still here to stay,” Mr Rosolio said.

Investor advice

Research released earlier this year showed that short-term private rentals represented 20.1 per cent of all accommodation bookings, with forecasts it would hit 24.3 per cent by 2026.

Mr Rosolio said the guidance he would provide to holiday home investors would be to do the requisite research.

“I think there probably are examples of places that became particularly hot during the pandemic and now they’re slowing down, while there are examples of others that remain quite hot and are clearly here to stay.”

Before purchasing a home with the intention of renting it out as a holiday home, Mr Rosolio says prospective investors must first understand the local laws.

“Make sure the house you’re buying is going to be legal to rent for the amount that you need to actually make the finances work.

“The second thing is to make sure that the property, when you’re taking pictures of it, is going to remain quite enticing to a traveller.

“Very often, what makes a great holiday home, at times might not be the sort of house that you want to live in for 365 days of the year.

“My holiday home was built in 1946, it was the first home that was in its small lake town. “There are a variety of things about this house that are a little bit off, however, it’s incredibly charming in pictures.

“When people are really trying to do that investment, try to think about what is that place in which someone would want to have that unique holiday experience for a week.”

90 per cent of consumers are looking for sustainable options when travelling

90 per cent of consumers are looking for sustainable options when travelling. Source: Expedia Sustainable Travel Study.

Taking stock

Mr Rosolio manages the supply side of Expedia holiday home rentals, including all inventory seen on Stayz, Wotif, Expedia or Hotels.com.

“The way I think of it is, those websites are our stores and its my job to make sure we have great things on the shelves of those stores to sell, which means acquiring new holiday homes, and once we have holiday homes, to make sure they’re providing a terrific value proposition to the traveller.”

To capture a variety of traveller types, from individuals to family or friend groups, Mr Rosolio recommends creating a holiday home that offers flexibility.

“It might mean one of the bedrooms has bunk beds or multiple twin beds that are appropriate for children, maybe toys or books for children to play with.

“Other rooms might have king and queen sized beds that offer the ability to cater to a variety of group travellers.

“You’d be surprised, however, sometimes couples will stay in a four-bedroom house because they’re excited to stay in a four-bedroom house - it’s something different.”

Inflation and motivation

An alternate study into consumer behaviour also just released by the Expedia Group, the 2023 Traveller Value Index, found that one in two consumers say inflation will impact their travel plans over the next 12 months and are motivated to travel for physical and mental health (49 per cent of 11,000 respondents), change of scenery (49 per cent) and making up for lost time (46 per cent).

Only 34 per cent of vacation rental hosts and property managers expect travel budgets to increase, compared to nearly three in five (58 per cent) of all industry professionals.

Mr Rosolio isn’t convinced by the pessimists.

In the second quarter of 2022, bookings were the highest in Expedia Group history, up 8 per cent from the second quarter in 2019.

“It’s on; we find when there’s downturns in the economy, people still want to travel.

“Maybe the experience people buy might change, for example, in the financial crisis of 2008, what we saw was that people would go to a drive-to location rather than fly, or perhaps maybe they would get an individual hotel room rather than a suite.

“There’s something about the power of travel and even in challenging times people still do it, they just do it in a responsible, cost-conscious way.”

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