Introduction:
Whether you’re new to the vacation rental business or have been an owner for years, you’ll notice that something about the Scottsdale vacation rental market was markedly different this summer.
If you’re just now entering the market, you might have observed a slower summer than expected. If you’re a seasoned pro, you’ll have already guessed that the “boom” period associated with the COVID-19 pandemic is dying down and that there’s a new normal on the horizon. And although we are not yet in the high season, a slower summer may indicate a unique period ahead.
There are a variety of dynamics – both at the macroeconomic and local levels – that have contributed to and continue to impact our return to normal. According to Airdna, there are between 9,000 to 10,000 active short-term rentals in Scottsdale as of Q2 2023. This figure represents a year-over-year increase of ~20% in supply compared to the year prior. Overall, this is typically a good sign, showing that there’s money to be made in this market and that many, many people view the Scottsdale vacation rental market as a long-term opportunity (after all, you have to acquire your property, set it up, market it, the whole thing!).
The kicker here is, although vacation rentals have been present in Scottsdale for decades, the level of saturation in the market requires a closer view of what constitutes a healthy market outlook and what you, as a property owner, should do in the coming months in response.
Thus, the first takeaway is clear: supply has increased, but demand for rebound travel is flattening as consumer confidence shows signs of wavering. In addition, with a tight labor market and inflation’s persistence knocking on the door of consumers’ budgets, there is now less money for vacation rental owners to go around. Additionally, based on ExceptionalBNB’s observations, the increase in supply in vacation rentals is a result of not only one-off property owners but also local and national real estate investor groups that view Scottsdale as a treasure chest. These investors have come in and purchased and marketed million-dollar properties, effectively operating as “Big Fish” in the market, listing multiple properties with higher investment figures and amenities, seeking to capitalize on the growth of the market.
This, in and of itself, doesn’t necessarily pose challenges. After all, investors and a growing supply of offerings are a sign of a maturing market that is here to stay. However, this trend is also reflective of changing competitive dynamics for both one-off owners and investors.
As a property owner or investor, it’s imperative to get ahead of the curve. This means understanding the unique value proposition of your property and communicating that to travelers! The process of doing that, along with integrating it with technology and analytics, is exactly what ExceptionalBNB specializes in. With our properties, we’ve been able to outpace the market by up to 50% using techniques we’ve refined for almost 13 years in a range of markets.
