Short-term rental demand for 2023 holiday period

Lighthouse has diligently examined the demand and pricing dynamics of five pivotal winter holiday cities in the United States and Europe– Berlin, London, New York City, Paris and San Francisco. These cities, each boasting distinctive offerings for visitors, not only attract millions of guests during the festive season, but are also at the behest of shifting preferences and behaviors of today's travellers. 

Against the backdrop of the December holiday season, we explore demand and property manager pricing strategies in place across the key Christmas markets of Berlin, London, Paris, New York and San Francisco.

Demand evolution for short-term rentals in key Christmas cities

The Lighthouse team reviewed average booked rates over December 2019, 2022 and 2023 with the same booking window for 2-bedroom short-term rentals in each market. In December 2022 short-term rental occupancy on-the-books across all analyzed markets remained higher than in 2019– +27% on average. However, December 2023 numbers have decreased in 2022, teetering back around 2019 numbers. This comes out as a -4% average decline in 2019 over the 5 markets, with Berlin dropping marginally, but London and New York City actually experiencing growth (7% and 16% respectively).

Paris showed the highest occupancy on-the-books at 57% in December of 2022 compared to other cities,  a remarkable +46% growth in booked reservations rate than December 2023. Paris once again tops the occupancy on the books for this year, where, along with Berlin, 39% of availability is booked up currently. While the rest of the 5 markets are experiencing just below 40% occupancy, San Francisco sits lowest at 28%. 

Short-term rental booked ADRs in key Christmas markets

As demand for Christmas destinations continues to evolve dynamically, so do booked ADRs. In the context of hot December markets, pricing reflects interplay between demand, supply, strategy and even regulatory changes.

Advertised ADRs for 2-bedroom short-term rentals in December across all cities are ascending with higher rates when looking at 2019, 2022 and 2023 side by side. The average booked ADR in December 2019 stood at €212, increasing by +21.4% by 2022 with an average of €258. From 2022 to 2023, booked rates rose by a further +19.6% at just above €305. That brings the total increase over the past 4 years to a huge 45%.

Paris is expected to bring tighter regulations in preparation for holding the 2024 Olympic Games. Sometime in the first several months of next year, twelve regulatory proposals that can influence short-term rentals will come into effect. This includes rules such as channels like Airbnb alerting renters when Paris listings are priced remarkably higher than those of a smaller size for stays during the Olympic Games (July 26th - August 11th, 2024). We would anticipate this impacting the booked prices seen, both now (as destinations strive to book up higher in advance) and post-implementation.

Berlin's advertised ADR growth stood the highest growth out of the markets measured December 2023 over December 2022–at 42%. New York City and London entire-home short-term rentals are also getting more expensive since the same period the same year period at 30% and 18% respectively. 

Track Q4 2023 demand and pricing performance into Q1 2024 in your destination 

It is imperative that DMOs remain vigilant to the changing dynamics in demand and pricing performance. Tracking Q4 2023 metrics, particularly against the backdrop of the regulatory landscape we dissected, will be instrumental in anticipating the trajectory of the industry. All destination stakeholders alike are encouraged to stay informed about the impact of the changing market conditions regarding short-term rentals and hotels holistically. So, utilize the information that will empower decision-making and contribute to a more transparent and resilient accommodation ecosystem: