Lower occupancy, higher prices and different seasonal trends differentiate holiday rentals from hotels across the UK

Holiday rentals in the United Kingdom showed lower occupancy, higher prices and different seasonal trends than hotels in the market, according to a STR analysis of SuperControl proprietary data.


Summary:

  • Holiday rentals in the United Kingdom showed lower occupancy, higher prices and different seasonal trends than hotels, reports a new STR analysis;
  • The analysis from the benchmarking specialist compares 2015, 2016 and 2017 data from STR’s own database with holiday rental data from SuperControl;
  • In 2017, UK hotel occupancy was 35.5 percentage points higher than holiday rental occupancy, while UK holiday rental rates were 25% higher than hotel average daily rate;
  • Holiday rental demand is heavily leisure-oriented and therefore seasonality disproportionately affects the holiday rental sector.

The performance analysis of the two largest accommodation sectors in the United Kingdom from benchmarking specialist, STR, a leading provider of data and analytics for the global hotel industry compares three years of data (2015-17) from STR’s proprietary database with holiday rental data from SuperControl, a leading provider of booking and management software.

Key findings from the analysis include:

  • UK hotel occupancy was 35.5 percentage points higher than holiday rental occupancy during 2017. However, both accommodation types saw similar moderate growth in occupancy over the last three years.
  • Conversely, U.K. holiday rental rates were 25% higher than hotel average daily rate in 2017. This is a result of holiday rentals offering more bedrooms than hotels.
  • Holiday rental demand is heavily leisure-oriented, while hotels show a mix of business and leisure demand.
  • As a result of the leisure nature of its demand, seasonality disproportionately affects the holiday rental sector. Low season for holiday rentals occurs during the winter months when occupancy ranges from 20-30%, while the highest periods of demand correspond with holiday and school breaks.
  • Compared to holiday rentals, demand spikes in hotels during holidays are much less dramatic. During school breaks, hotels even saw demand drop in some cases.

Holiday rentals are a subset of the larger home rental sector. Home rentals are defined as furnished residential properties available for short-term accommodation rental. Holiday rentals are typically entire homes, traditionally available in resort markets. A large amount of these properties in the UK have been available to rent for decades.

CHART – ADR for holiday rentals with one bedroom is more comparable to hotel ADR with UK hotels recording an ADR £3 higher than one-bedroom holiday rentals in 2017. However, all other listings charge much higher rates than hotelsSource: STR’s Accommodations in the UK: a comparison of hotels and holiday rentals

STR has previously conducted research on home rentals in urban areas using data provided by Airbnb, but in this latest report is has chosen to focus on the more traditional side of the home rental sector, holiday rentals. “It’s becoming increasingly difficult to distinguish between traditional holiday rentals and newer home rentals as listing sites start to converge,” notes STR.

The home rental sector has gone through significant changes in recent years due to growth in accommodation platforms like Airbnb and Expedia Group’s HomeAway. These platforms have grown in popularity as more and more people are using them to list their homes for rent. Many of these newer types of rentals tend to be located in more urban areas.

CHART – While average hotel occupancy remains relatively consistent throughout the year, holiday rental occupancy follows the ebbs and flows of leisure demand, spiking around major holidays and peaking during the English school summer holiday periodSource: STR’s Accommodations in the UK: a comparison of hotels and holiday rentals

STR says in concluding that after analysing the data provided by SuperControl,
“it’s clear that holiday rentals and hotels perform at very different absolute levels”. Of particular note, it says the research has identified concentrated periods of high performance in holiday rentals that could push hotels to adapt to take advantage of the market.

“It’s clear that there is a substantial market for holiday rentals, particularly during holidays and school breaks. We expect to see more hotel companies explore the holiday rental sector to start taking advantage of these opportunities,” STR says.