The pulse of the ecosystem: August 2022

Welcome to our latest installment of The Pulse of the Ecosystem, our monthly recap of the biggest events that took place over the last month, and how they impact the current and future state of our ecosystem.

There’s some optimism brewing in the short-term rental industry this month, as travel ranks number one on consumers’ spending lists, and OTAs report record earnings to cap off a sizzling high season for travel. Elsewhere, PMCs are innovating to attract new market segments, talk of industry regulations hits Europe, and Airbnb takes shutting down parties to the next level.

With so much to cover in August, let’s dive right in.

‘Travel is Top Priority’ Says Consumers

According to a survey by Amadeus (who surveyed 4,500 consumers), 42% of consumers have put international travel at the top of their shopping list this year. Despite economic uncertainty, consumers estimate that they will still spend as much on travel this year as they did in 2019.

Airline Prices Fly Low in September

According to Hopper, flight costs are set to drop by roughly 25% following the summer travel season. While a post-high-season drop is commonplace, this drop is abnormally large due to the extremely high summer prices and an earlier travel peak as travelers were desperate to get out on holiday. 

This could stimulate a wave of travel before prices begin rising again in October, though many travelers have already had their post-pandemic travel fix with a summer vacation.

Big OTAs See Big Earnings in Q2

Airbnb, Booking.com, and Expedia all released their earnings for Q2. The numbers show a firm recovery for the travel industry, and signal that travel is back to pre-pandemic levels.

This graph shows the recovery of the big OTAs over the last year:

Airbnb Q2 Earnings

It’s incredible to think that only 2 years after global travel came to a complete halt, Airbnb are flying high, having just reported the company’s most profitable Q2 in its history.

They recorded $17 billion GBV (Gross Booking Value), which marks a 73% increase from Q2 2019, and had over 6 million active listings.

The future looks promising too. They had 103.7 million nights booked (their highest ever) in Q2 and are forecasting their highest quarterly revenue ever in Q3. Looking forward, they are prioritizing host recruitment, and are set to announce “exciting new product features” to attract them.

Booking.com Q2 Earnings

Business is also booming for Booking.com, who recorded a record $34.5 billion GBV, marking a 38% increase from 2019. They reported 246 million room nights, of which 79 million were in short-term rental accommodation.

Looking forward, the company is prioritizing its direct mix and growing its alternative accommodation offering.

Expedia Q2 Earnings

While Airbnb and Booking.com have fully recovered from the pandemic, Expedia haven’t quite reached pre-pandemic numbers just yet. Their numbers are slightly lower than 2019 figures, but show significant improvement on Q2 last year, giving plenty of encouragement that they will make a full recovery.

They recorded $26.1 billion GBV, which lags 8% behind their 2019 numbers, though it does show a significant 26% increase from Q2 last year. They also reported 79.1 million room nights, down 21% from 2019, but still revealing a positive 40% growth from 2021.

Moving forward, their priority is to generate more direct traffic through various initiatives, namely  by strengthening their customer loyalty program and their app.

Looking to do the same? check out our mini step-by-step guide on how to build strategic loyalty programs by Guesty Marketplace partner TallOrder.

Travel Trends Highlighted in Q2 OTAs’ Earnings: 

OTA earnings in Q2 highlighted a number of interesting industry trends to keep a close eye on.

Much of the growth has been driven by bookings across North America, Latin America, and EMEA, however, EMEA’s growth has been slower in comparison with North America, with the ongoing war in Ukraine likely having an influence.

Guests continue to flock back to cities: 47% of nights booked on Airbnb in Q2 were in high-density urban areas, surpassing Q2 2019 levels. 

International travel is bouncing back: Q2 marked the first quarter of international travel growth for Booking.com since the beginning of the pandemic.

Extended stays stand strong: Stays of 28+ days or more are still proving popular amongst travelers, accounting for 19% of Airbnb nights booked in Q2. This figure is similar to Q2 last year and shows a 46% increase from Q2 2019.

Average daily rates continue to rise: Airbnb’s ADR is $164, showing a 7% increase from Q2 last year (excluding FX).

PMCs Push into New Markets

AltoVita Launch Special Offering for Startups   

UK-based global accommodation platform AltoVita is launching a special offering for startups, affirming their commitment to ensuring businesses of all sizes can find affordable corporate extended-stay accommodation. This offering includes discounted booking fees, no transaction fees, no security deposits, and consolidated billing statements and management.

Selina and Fiverr Partner Up

As part of their push to draw digital nomads from near and far, Selina has partnered up with Fiverr to gain access to their extensive network of 4 million freelancers. In return, these freelancers will receive 15% off stays at Selina, as well as other discounts and services.

Short-Term Rental Regulations Reporter

Europe

The European Cities Alliance—which is responsible for short-term rental regulations— has called on the European Commission to move ahead with legislative action to regulate the industry in Europe and tackle illegal rental operations. They are pushing for stricter regulations following what they claim to be the ‘touristification’ of European cities.

Scotland

From October, Edinburgh is limiting the number of short-term rental listings in the city by introducing a short-term rental control zone. This change will force landlords to apply for planning permission to change the use of residential properties to short-term rentals.

Airbnb Anti-Party Algorithm Takes Off

After permanently banning parties and events on all Airbnb listings in June, Airbnb is launching new screening tools to identify potential rule breakers, and prevent bookings that may turn into unauthorized parties. It considers various signals such as the history of positive reviews, how long the user has been on the platform, length of the trip, distance to the listing, and weekday vs weekend booking.

Mergers and Acquisitions

Oyo Acquires Bornholmske Feriehuse 

Oyo have acquired Denmark-based vacation rental operator Bornholmske Feriehuse, adding 700+ homes to their portfolio and bolstering their European presence.

Alloggio Embark on Spending Spree

Australia-based PMC and Guesty customers Alloggio have continued their rapid expansion with a $16 million investment into acquisitions of various management companies along the east coast of Australia. They have also acquired Australian-owned accommodation platform Aabode.com, allowing them to tap into the Asia and Pacific markets for the first time. 

All in all, these acquisitions have brought the company’s portfolio to 1,950+ vacation rentals.

Casai and Nomah Merge 

Guesty customer Casai, the tech-driven, Mexico-based apartment rental company, and Nomah, the Brazil-based rental company, have merged to form the biggest short-term rental company in Latin America with 3,000+ units in Brazil and Mexico. Both companies are expected to keep their brands.

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There you have it— this month’s biggest, most salient news from the short-term rental industry. At Guesty, we’ve always got our finger on the pulse, so check back soon for more news and updates next month.