Did the Super Bowl take the bloom off short-term rentals’ rose?
Valley housing market analyst the Cromford Report thinks it might – and maybe ought to.
It suggested two weeks ago that owners of such properties may find a better opportunity for making more money with the Valley’s unrelenting housing shortage and going for long-term rents before cashing in big when home prices peak.
Blame it on the Super Bowl, it said.
The Cromford Report said that while short-term rental landlords were looking forward to cashing in big time on out-of-state traffic to the big game, they scored no touchdown.
“Many owners were disappointed with their receipts from the Super Bowl,” the Cromford Report said. “We seem to have an excess of short-term rental supply which means owners are having to compete with each other on price for short-term tenants.
“As we head into the low season for holiday rentals, we may see some get sold off. More likely they will be converted to long-term rentals, where the rental prices are much lower but the percentage occupancy is likely to be much higher.
“Demand for long-term rentals is generally more reliable and consistent.”
Madeleine Parker, spokeswoman for AIRDNA.co – which measures activity on the world’s three most popular short-term rental platforms – disputes any notion of business slowing down.
“We aren’t seeing any weakening in demand for Phoenix/Scottsdale,” she said. “In fact, in March 52% more nights were stayed in the area than the year before.”
She said that looking at the whole first quarter over a million nights were booked in Phoenix Metro in the first quarter of this year – 50% more than the year before.
“Meanwhile, available listings were up 60%, pushing occupancy down a little to 64.4% from 71.3%” in the first quarter of 2022,” Parker said.
She added, “This sensation of occupancy on an individual level dropping is what is causing this feeling of weakness, especially where hosts are new to the market and are overpricing, or don’t have the great reviews to draw in guests who now have a lot of choice.”
If short-term rental landlords in the Valley aren’t discouraged by occupancy rates, their out-of-state customers might be if they see a new study by Forbes Advisor.
Forbes ranked Phoenix and Scottsdale second and third in the nation, respectively, for charging customers the highest fees.
Those fees – which are over and above the daily rent a vacationer thinks they’re spending for a short-term rental – account for an additional 47% in daily costs for a Phoenix rental and 45% in Scottsdale, Forbes reported.
“Many travelers feel this fee frustration,” Forbes said, adding that travelers this summer faced an average 36% in fees atop their daily room or house rate.
“So, for a hypothetical $180-a-night beach house, 36% in added fees would push the one-day total to nearly $245. Stretch that out over five days and you’re looking at a bill topping $1,200.”
Forbes based its analysis on a study of 32,000 listings in the 100 most popular Airbnb destination spots.
In Phoenix, it said, the average nightly rate of $202 might look good – until a renter sees an extra 20% cleaning fee, 16% service fee and 10% added for taxes.
Scottsdale was almost as bad. Forbes said vacationers pay an average $253 a night – and then shell out an extra 18% for cleaning, the 16% service fee and 11% more for taxes.
By way of a comparison, Sedona travelers pay an extra 39% in fees and taxes. But daily rental rates are an average $320, according to the report.
While the high fees might discourage some people from scheduling a few days or a week in Phoenix or Scottsdale, they might reconsider when they consider some other top destinations in the Forbes study.
It listed average daily base-rental prices that dwarfed the cost in Scottsdale and Phoenix even after fees are added.
For example, the top three most expensive out of 100 locales were Nantucket, Maine, with a daily average rent of $1,280; Mantauk, New York, $1,1029; and Telluride, Colorado, $825.
Other pricey destinations included: Key West, Florida, $640; Santa Cruz, California, $489; Jackson Hole, Wyoming, $540; Lake Tahoe, California, $501; and Aspen, Colorado, $652.
Over the 100 markets in the Forbes study, 18 showed an average daily rent at least $500. But when fees were folded in, 33 markets cost travelers at least $500 a day and four zoomed over $1,000 per day.
Forbes noted that Airbnb “now prioritizes the total cost rather than just the nightly rate” so that users won’t suffer sticker-shock when they get their bill.
But Airbnb insisted its offerings are still a bargain.
“When compared to a hotel, Airbnb often provides more space and more amenities: Travelers can get an Airbnb with two bedrooms and two bathrooms for approximately the price of one hotel room at a major chain,” company spokeswoman Cristina Calzadilla told Forbes Adviser.
Dustin Abney, CEO of Portoro, which manages vacation rentals, said Airbnb gives renters “a better understanding of how fees are tied to operating expenses.
“Most guests are charged fees when they book a stay, but they don’t know what those fees are actually going toward. Most guests also assume that property managers or hosts are trying to price-gouge them, when this usually is not the case,” Abney said.
“In reality, there are many hidden costs that go into running a short-term rental and these costs fall on property managers to pay.”
But Forbes also noted that travelers might still be shocked and confused.
“Customers may be frustrated by the fact that cleaning fees don’t always align with the length of stay,” it said. “Some even end up paying a cleaning fee that’s higher than their nightly rate for a short visit.”
Marcus Radar, founder/CEO of Hostaway, a platform for short-term rental managers, insisted that most travelers won’t be turned off by extra fees whether they’re hidden or not.
“Most vacation rental trips are booked for unique properties in unique locations where there are few hotels and by groups looking for amenities that hotels seldom offer,” he told Forbes.
“I’ve yet to stay in a hotel offering me a private backyard, a private pool and hot tub, a fire pit and a fully equipped kitchen with an outdoor barbecue.”