PKRM 2024 First Quarter Newsletter

The Gulf Coast/SE Region has experienced notable trends in the vacation rental sector during the preceding quarters. Here’s a summary focusing exclusively on the occupancy rates, average daily rates (ADR), revenue per available night (RevPAR), and guest booking behavior specific to our region.

Key Trends and Data

1. Occupancy Rates

   • 2023 End-of-Year Review:
     • The Gulf Coast faced a slight downturn in occupancy rates by the end of 2023. Conversely, PKRM was able to maintain higher occupancy than the same time period the year prior through securing extended-stay or midterm bookings in much of our inventory.
   • Q1 2024:
     • Early 2024 showed a decline in occupancy rates for the market compared to the previous year, with a drop between 10-24%. This suggests a need to reassess pricing strategies to attract more bookings for our market. The extended-stay bookings proved proved to be a good decision for our homes and this is an approach we expect to repeat after the summer season.

2. Average Daily Rates (ADRs)

   • 2023 End-of-Year Review:
     • ADRs for the Gulf Coast were generally lower in 2023 compared to 2022. Competitive pricing was a significant factor in our region.
   • Q1 2024:
     • For Q1 2024, ADRs were slightly higher, reflecting early bookings for larger units. There is potential to adjust rates closer to stay dates to ensure competitiveness and maximize bookings.

3. Revenue Per Available Night (RevPAR)

   • 2023 End-of-Year Review:
     • The Gulf Coast saw a decline in RevPAR due to lower occupancy rates, despite slightly higher ADRs. This highlights the need for a balanced approach between maintaining occupancy and optimizing pricing.
   • Q1 2024:
     • RevPAR for Q1 2024 was also pacing behind the previous year, underlining the impact of lower occupancy on overall revenue.

4. Guest Booking Behavior

   • Booking Windows:
     • 2023 Trends: The Gulf Coast experienced shorter booking windows in 2023. Perdido Key, in particular, saw one of the shortest booking windows, making it crucial to be flexible and responsive in pricing.
     • Q1 2024: Early 2024 showed slightly longer booking windows compared to last year, offering an opportunity to strategize marketing efforts to capture these advanced bookings.
   • Length of Stay:
     • 2023 Trends: The average length of stay decreased slightly in 2023. Encouraging longer stays remains a key strategy to improve overall occupancy and revenue.

Actionable Insights for PKRM

1. Occupancy Strategies

   • We continue to adjust pricing dynamically to attract more bookings during periods of low occupancy.
   • As we monitor local market trends closely we will adapt rates in real-time to remain competitive.

2. Optimizing ADR

   • Implementing flexible pricing strategies to maximize revenue while ensuring properties are booked remains paramount.
   • Our focus on high-demand periods and special events to push rates higher are working to capture pockets of higher revenue on the calendars.

3. Maximizing RevPAR

   • We will continue to evaluate the balance between competitive pricing and maintaining occupancy to optimize RevPAR.
   • These decisions are based upon data-driven insights to adjust marketing and operational strategies effectively.

4. Improving Guest Experience

   • Any opportunity to enhance property amenities to attract longer stays and repeat guests should be acted upon.
   • The expectation is that as travelers feel the pinch of tighter budgets, we will succeed by offering promotions and incentives for shorter-notice bookings and extended-stay bookings to improve overall stay length.

Conclusion

The Gulf Coast/SE Region’s vacation rental market has faced various challenges and opportunities in the preceding quarters. By leveraging data and adjusting strategies in real-time, we at PKRM are optimizing occupancy, ADR, and RevPAR, ensuring a profitable and competitive position in the market.

JD Hallam
GM - Perdido Key Resort Management
Broker/Owner - Perdido Key Resort Realty