Short-stay accommodation offering longer-term rewards
Short-stay accommodation offering longer-term rewards
Investment property owners in key tourist markets have responded to a huge hike in demand for short-stay accommodation by turning to tourism over long-term rental leases.
Since the onset of the COVID epidemic, short-stay accommodation platforms have benefited from the impact of travel restrictions and lockdowns across the nation.
Darren Karshagen, director ANZ Vacation Rentals, Expedia Group, said demand for short-term rental on their Stayz booking platform was up by over 50 per cent in the first six months of 2021 against pre-pandemic 2019.
“The reality of a COVID-era is that there is a real pent-up demand for travel and subsequently there's a prime opportunity for investors to generate revenue from the short-term rental market,” he told Australian Property Investor Magazine.
“Holiday rentals serve as a rare bright spot amid the prolonged economic downturn, as families and newly minted digital nomads have sought out socially distanced lodging options.”
Mr Karshagen said the biggest advantage over traditional long-term rentals, along with income, was flexibility.
“Owners are able to decide the weeks or weekends during which they want to rent their property while always keeping control over the schedule,” he said.
“Ultimately, the strengths of what holiday rentals have to offer are the possibility to social distance, being convenient drive-to destinations, with potentially a private pool, a lot of open private space, and the ability to host families easily.”
Shift from populous states
The pandemic has not only impacted the volume of people seeking short-term private accommodation but also the destinations they are drawn towards.
According to statistics from Stayz, destinations across Queensland, Western Australia and South Australia have become more highly sought after, while Sydney and some New South Wales and Victorian locations have slipped down the list.
Stayz’s top 10 most searched destinations (based on September of each year)
|1||South West, WA||South Coast, NSW||South Coast, NSW|
|2||Tropical North Queensland, QLD||North Coast, NSW||North Coast, NSW|
|3||North Coast, NSW||Central Coast, NSW||Tropical North Queensland, QLD|
|4||South Coast, NSW||Tropical North Queensland, QLD||Gold Coast, QLD|
|5||Perth, WA||South West, WA||South West, WA|
|6||Gold Coast, QLD||Hunter Valley, NSW||Sydney, NSW|
|7||Adelaide, SA||Sydney, NSW||Central Coast, NSW|
|8||Central Coast, NSW||Gold Coast, QLD||Hunter Valley, NSW|
|9||Mornington Peninsula, VIC||Adelaide, SA||Mornington Peninsula, VIC|
|10||Brisbane, QLD||Perth, WA||South Coast, NSW|
Stacey McLean, founder of Guest Concierge, a Perth-based boutique management platform for Airbnb properties, said demand for properties had overcome the absence of international travellers.
“What may come as a surprise to many is that demand is still at the same levels as pre-COVID,” she said.
“Even with our international borders closed and the frequent opening and closing of Western Australia’s and other states’ domestic borders, we are still averaging around 85 per cent occupancy across our portfolio of properties and prices remain largely unchanged.
The strong demand was a lure for investors, with Ms McLean saying it was still beneficial to list a property on a short-stay website even when a tight traditional rental market was delivering high yields.
“None of our properties would have been more profitable as a long term rental,” she said.
“Clients achieve a better return on investment compared to the traditional long term leasing model, even after the costs associated with short-stay leasing, such as utilities, Wi-Fi etcetera.
“Aside from the higher returns, probably the second motivating factor for having your property as a short-stay is the way the property is managed and maintained.
“On average our properties are inspected and cleaned four times per month, which over a six-month period would be 24 times, compared to twice if the property was leased long term, so for clients who want peace of mind knowing their property will be looked after, short stay is a no brainer.”
“Short-stay also allows more flexibility in a time of uncertainty, with owners having greater control over, and access to, their property should their situation change unexpectedly.”
Mr Karshagen said that in places free from restrictions, Stayz was seeing markets sell out much earlier than usual.
“Pent up demand, vaccinations and the desire to reunite with loved ones has caused families to book earlier than ever, with many hosts offering discounts for week-long or month-long stays,” he said.
“To make up for lost time, travellers are finally using their full holiday leave allocation and taking advantage of more flexible working conditions with ‘flexcations’ - a longer stay mixing work and play.”
This is resulting in longer trips, as well as a strong increase in holiday rental demand quarter-over-quarter, he said.
“While travellers are booking more holidays of at least seven nights at Stayz holiday rental homes, the largest growth in Australia compared to pre-COVID levels is still between three to six nights.”
Investors with larger premises are seemingly best positioned to capitalise on the rush for short-stay accommodation.
“When it comes to our top destinations, 95 per cent of the revenue is generated by two or more bedroom homes.
“Our top revenue driving areas often have the same thing in common — leisure destinations within an easy drive from urban cities typically catering to families looking for larger holiday homes that are easily accessible.”
Investors are also urged to have a full range of facilities and features that appeal to a prosperous, mature and professional demographic.
“Our travellers are typically affluent and family-orientated, with 71 per cent aged above 35 and 50 per cent having a household income above $140,000, so making sure there’s all the amenities of home — multiple bedrooms, Wi-Fi and on-demand entertainment services, fully kitted kitchens etcetera — are going to offer the greatest appeal," Mr Karshagen said.