“Even owners with properties in destinations where summer is typically an off-season have reported a good season in terms of occupancy.”
If you capitalized on news about the recovering vacation home market earlier this year and invested in a vacation rental, there’s a good chance your return is shaping up to be larger than you expected.
The summer peak season was a blast, vacation rental occupancy rates are up and many owners expect a banner year-end holiday season, according to a survey from Austin, TX-based Home Away Inc.
“Even owners with properties in destinations where summer is typically an off-season have reported a good season in terms of occupancy,” says Brian Sharples, Home Away CEO.
The recent “HomeAway Vacation Rental Marketplace Report” reveals 72 percent of those who consider summer to be their peak season said occupancy rates were 76 percent or higher, up from 68 percent last summer.
Also, 87 percent of vacation rental owners said 2012 summer business was the same or better than last summer, up from 84 percent last year.
Among 900 responses in the Aug. 30 to Sept. 3 survey, 30 percent of owners also say “it’s going to be a jolly holiday” for their year-end holiday vacation rental business – up from 22 percent in 2011.
Lower rents may be driving some of the demand. Nationwide, owners reported an average weekly rental rate came at $1,493, down from $1,685 last year, according to Home Away, an online marketplace for 735,000 vacation rentals in 168 countries.
The good news shouldn’t come as a surprise. Research commissioned by Home Away as part of the National Association of Realtors’ (NAR) “2012 Investment and Vacation Home Buyers Survey,” released earlier this year, reported the re-emergence of vacation property investments.
Watching the market
Nationwide, vacation home sales rose 7.0 percent to 502,000 in 2011 from 469,000 in 2010 as owner-occupied home purchases fell 15.5 percent to 2.78 million.
Timing also has been a favorable factor for those who recently took the vacation property investment plunge.
After 2009′s dismal, recessionary 9.4 percent drop in total travel expenditures in the U.S., the travel industry roared back with a 6.8 percent increase in expenditures in 2010 and 8.8 percent in 2011.
Another 5.2 percent year-over-year increase is expected this year, according to the U.S. Travel Association.
“It’s clear that owners…can generate valuable income.”
In another recent report by Navis Research LLC for Vacation Rental Managers Association (VRMA), travelers’ bookings with professional property managers have risen more than 18 percent nationwide in the past year and are expected to rise up seven percent over the next six months.
According to the Home Away report, vacation rental owners spend an average of 8.6 hours per week marketing and managing their vacation rental properties, and that time is well spent, considering owners generate an average of about $26,000 per year in rental income, down from $28,000.
“That’s about $58 Home Away vacation rental owners are making an hour, which is a nice supplemental salary. It’s clear that owners who invest just a minimal amount of time marketing their vacation rental can generate valuable income,” said Sharples.
About 43 percent of owners use the income generated from vacation rentals just as they would use a salary – for everyday living expenses, discretionary spending, and savings for the future.
The report says 47 percent of owners also use rental income to help pay the mortgage on the property and, among owners who have a mortgage on their vacation rental home, 49 percent generate enough income to cover at least three quarters of their mortgage payment.
Also 59 percent use the income to maintain or make upgrades to their rental property. New linens, furniture, electronics, exterior maintenance, and interior painting/wallpapering were among the most common improvements owners made in the past 12 months.