Diving into the Data: Analyzing Aussie STR Trends

This episode of the Hospitable Hosts podcast features Sally Henry, Vice President of Business Development at Key Data, a business intelligence company that provides real-time vacation rental data and performance insights for the short-term rental industry.

Sally joins Ethan Brown to discuss the latest Australian short-term rental market trends. She shares Key Data insights that can help vacation rental property managers, investors, and hosts better understand the market dynamics and optimize their rental strategies to respond to the market trends.

Press Play now to discover the latest STR trends in Australia and learn how to use data to make informed decisions and optimize your revenue to grow a successful business.

Do you prefer to read the highlights? We've got a summary of the key takeaways below.

How Key Data Is Different from Other Data Companies

Sally begins by explaining what Key Data does and points out it's different from other data companies. Key Data directly integrates with property management systems and large property management companies worldwide.

"We take daily reservation data. For property managers connected with us, we offer access to a dashboard with a wealth of business intelligence tools. It is a view to your business to understand what is happening." Key Data also scrapes data from OTA sites like Airbnb and Vrbo daily to get a broader sense of the market.

Sally joined Key Data over two years ago to help internationalize the business. She has been leading a team to build the expansion outside the US. "We've worked across EMEA and Australasia, and then we're going into LATAM. So effectively, we work with partnerships through property management systems, find the large property management companies, and build almost a global co-op of data so we know exactly what is happening in the short-term rental markets."

Surprising Trends in the Australian STR Data

Sally points out that although it's now peak season for the Australian STR market, they see that the paid occupancy remains flat. She thinks that's because the supply has grown significantly.

"You can look at some headlines going “Great news; there's more people in the industry!” But what that means for you as a property manager is that your share suddenly got harder to get," she explains. And there's pressure on the pricing, which results in lower nightly rates.

At the same time, they've seen a late-booking market in Australia, which also causes pressure on the prices to come down. "On the plus side, going through peak, there will be an opportunity for property managers set there because we are seeing a late-booking market. So there is still time to bring in those later, last-minute booking guests," Sally underlines.

Advice to Hosts

Sally recommends hosts and property managers understand their local area's supply and competitive landscape. She emphasizes that supply figures can be broad, but you should pay attention to the supply that is relevant to your portfolio.

"That's what's going to have the biggest impact on you. Supply figures can be overinflated or underinflated. But if you happen to be in an area where somebody's come in, that is directly competitive to you, even though overall the supply might be flat, it could be hurting your business and vice versa."

It's also important to pay attention to a property type. "Unless you have a relatively small portfolio, make sure you segment both your portfolio and the portfolio of the data you're comparing. So you can compare against property type. So there's a house, an apartment, you can obviously bring in a number of bedrooms, but you can also add or exclude amenities," Sally recommends.

Key Metrics to Track

Sally points out that RevPAR and the length of stay are other key metrics STR operators should be tracking in addition to occupancy and rates, which go hand in hand.

"When you multiply your rates by occupancy, you effectively get your RevPAR. This is the most important metric in your business because it's what revenue you're taking home for yourself and your owners. It's really what you're judged on."

Sally notes that during the COVID pandemic, the length of stay contracted in most markets, but it settled down this year. The average length of stay in Australia is about 3.8 days, although it differs by region and property type. Ten years ago, the average was about 7 nights.

"If the length of stay does contract in your area, you're just going to have to sell more to stand still with your revenue. You'll have to potentially spend more or have different operational support around your business. So it's one that you need to understand to operationalize your business to the optimal level and ensure you're pricing right for those shorter breaks because your costs might be higher," Sally explains. Still, there's an opportunity to earn more money by upselling and offering early check-ins and late checkout for an additional fee.

Sally also discussed how she saw the Australian short-term rental market evolving over the next few years. She explained the role data would play in that evolution and identified some top-performing markets in Australia that offer good opportunities for investors.

Listen to the full episode of the Hospitable Hosts podcast to get valuable insights that can help you better understand the Australian STR market dynamics and stay ahead of the competition.