Updated May 2024
With summer fast approaching, we have been receiving calls from some homeowners who ask about the state of the rental market and how they can fill their remaining available weeks.
This year has continued to see a return to the demand of pre-pandemic times, resulting in less traffic compared to the 2020-2023 years. The reduced demand has also created greater availability and some recent softening of prices.
Bookings
Overall, bookings for May through October 2024 remain positive in comparison to last year. They are up 3% from 2023 and 12% over 2019.
By region, bookings for Cape Cod remain ahead of pace from 2023, whereas the Islands are behind:
Much has been reported recently on the large increase in inventory and available homes on the Cape and Islands, some even claiming a "flooded market." We believe these numbers to be overstating the situation and misleading.
While there is greater rental availability than in recent years, this has more to do with the pullback in demand from the peak pandemic years along with the sharp increase in prices.
A lack of a single source for inventory numbers is partially responsible for the conflicting calculations. When the lodging tax for short-term rentals (STRs) went into effect in 2019, rental owners were required to register with the Massachusetts Department of Revenue. The DOR does not distinguish between those STRs that are actively renting vs. those that are no longer renting.
This is key.
There have been reports of anywhere from 18,000 to 19,000 STRs on Cape Cod (per Cape Cod Commission and Cape Cod Chamber of Commerce who receive their data from the DOR) equating to a 11-12% increase in inventory from 2023. WeNeedaVacation numbers show only a 4% increase from last year and we are now on par with 2018-2019.
Availability
It is not surprising to see higher availability for the first week of summer (June 22) when schools are just completing, and at the end of August, when kids are beginning to return to school. Another week that reflects high availability this year is the week after July 4th. Many families already have time off around Independence Day and will be less likely to start a vacation right after the holiday.
Pricing
Since 2021, homeowners have been aggressive with their pricing at a record-setting level, and with this year’s cooling demand, it was inevitable that prices would reduce on average. However, heading into the new year, we reported that the average price increase was still aggressive at +9% higher than last year! Owners adding their initial pricing since January 1 have been more realistic, with only a 2% increase from 2023 in reaction to the reduced demand.
Not all homeowners increased their prices. In fact, nearly 14% reduced their rates from 2023. During the 2022-2023 years, we saw that only 3-6% reduced their rates from the prior year.
Lastly, at this time of year, owners start to reduce prices to secure bookings. This spring has seen an unusually high reduction of 10% or more for the remaining summer weeks, especially on rentals that had aggressive pricing over the last few years.
Demand
We've seen that demand has dropped from the record-setting levels of the past few years but remains stronger than where it was prior to the pandemic. In addition to our own website traffic, we've analyzed search trends across Google and Bing, and they show less search volume for vacation rental search terms for the Cape & Islands.
The level of demand over the past few years was not sustainable, so this is not surprising. Our goal will be to utilize our marketing strategies, including enhancing our SEO and PPC efforts, to capture more of the existing demand.
As we head into June, it is important to note that demand picks up in the summer months for last-minute bookings. June, July, and August always outpace the spring months. We've already seen a 15% increase in inquiries in the past week vs. the week prior!
The Cape & Islands is still, and will always remain, a desirable destination for travelers. The outlook remains positive for those that offer a short-term rental that is competitively priced.
Our Advice
- If you have increased your pricing over the past season or two and you still have availability this Summer season, NOW is the time to lower your rates.
- Consider offering 2-3 night minimum stays in the shoulder seasons. Shorter stays are gaining in popularity.
- Do your research! With your competitors reducing their rates, compare your prices with those of similar homes and amenities on a regular basis. Lack of inquiries might mean vacationers are finding comparable homes at a lower rate.
- Take a second look at your photos. Vacationers have more options and you have only one shot at a first impression. 10-15 high-quality photos are a powerful way to attract potential guests.
- Communicate effectively. To appeal to all generations, utilize all three forms of communication: Call, Email, Text. Respect for a vacationer's time is essential. A phone call during work hours is not ideal. Often a quick acknowledgement or request via text can be just as effective (and quicker) than returning a phone call.
- Take advantage of offering a free Owner Special or Purchase a Last-Minute Availability Alert. Both of these features highlight your listing in a search!