The Lay of the Vacation Rental Business Landscape
The United States vacation rental market, according to Research and Marketing, was valued at $14.32 billion in 2021 and is expected to reach $21.53 billion by 2026. The market is made up of various rental properties – from homes to apartments, condos, and villas – that property owners, managers, and real estate investors rent on a short-term basis to local and international visitors.
The vacation rental business has grown over the last few years due to its affordability when compared to hotels, comfort, and kid- and pet-friendly accommodations. COVID has also given a boost to the market, with some travelers preferring vacation rentals over hotels because of safety reasons.
Average Short-Term Stays at Vacation Rentals Are Longer in 2022
According to Research and Marketing, other factors behind the vacation rental market growth over the last 10 years include the advent of the sharing economy, the rise in internet users and booking online, growing business leisure travel, and millennial influence in the market. Millennials, according to Lodgify, prefer cozier options, like vacation homes.
Travelers are also looking to make up for lost time with COVID restrictions lifted. Renters are gravitating to countryside and coastal vacation properties. In addition, according to Lodgify’s “U.S. VacationRental Industry Report: Q2 2022 Forecast,” property owners can expect longer stays from renters, especially in the summer and with remote work no longer a big deal. Mid-length stays of four to seven days, according to the report, show the biggest jump, representing nearly half of the total number of bookings for the second quarter of 2022. The average daily rate (ADR) for vacation rental properties is also up by 23%. For June, the expected average ADR is $295.
Properties typically are featured and booked on online travel platforms such as TripAdvisor, Airbnb, Vrbo, HomeAway, and Booking.com. Owners with multiple properties may opt to have their own websites for bookings and feature their listings and use social media platforms for marketing and promotion.
Insuring Vacation Rentals
Integrated Specialty Coverages (ISC) offers property and liability insurance to real estate investors who own multiple rental properties through our Investor Property Program (IPP). Properties include vacation rentals and are covered under a master policy.
IPP offers several features that distinguish it in the market. Because there is no maximum limit, you can insure multiple properties on the master policy (the minimum number of properties is five). The total insured value available per location is up to $2 million. The policy form includes ordinance or law coverage, with full coverage on A and shared coverage on B and C. The general liability (GL) limits per location are $1 million/$2 million. You can provide property coverage alone or in conjunction with the GL.
Submissions may be sent to: property@iscmga.com.