Vacation Rental Market Profile: London – Europe’s largest market

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The first in a series of profiles illustrating the major destinations in our industry; this article is London. We’ll add some colour to the picture of Europe’s largest vacation rental market.

How many properties are advertised? Which OTAs are they advertised on? What is the average rate achieved? When are bookings made? Who is making the reservations? Read on to find out…

Supply

London is home to nearly 68,000 vacation rental properties, compared with Paris’s 48,474 and Madrid at 25,605. Of London’s advertised listings, 1 beds account for 37,957 short term rentals. See the supply breakdown by number of bedrooms in the pie chart below.

London’s professional presence is fairly substantial as it is a mature short term rental market. Of its supply, 55% is managed by professional property managers – a percentage which has grown by 3% over the last year.

Of London’s 32 boroughs, the top 3 most significant are Westminster, Tower Hamlets and Kensington & Chelsea, which combine to make up 36% of the supply. Below you can see breakdown by supply, average daily rate (ADR) and % of total reservations by borough. Note the discrepancy of Tower Hamlets; second highest vacation rental supply and number of reservations, yet much lower in ADR. This is due to a higher percentage of private room listings relative to entire home listings.

Distribution

There are 85492 short term rental listings registered in London on our top 3 OTAs. Market share by OTA differs hugely from market to market, but in London Airbnb makes up 51,552 of the total, while Booking.com totals 20,518 and HomeAway hits 13,422. While the ADR for HomeAway listings is £217, Airbnb sits 7% lower at £203 per night. This is just one example of how hosts should tailor their pricing to listing-specific rates. Of Transparent’s tracked, professional listings, the listing review score breakdown can be seen below. 29.4% of listings are achieving a 4.6/5 or higher.

Rates & Occupancy

As you can see from the above chart of occupancy and average daily rate over 12 months, summer months average highest, both in terms of occupancy and rate.

Where rate is concerned, London’s average of £158 is a chunk over the European short term rental ADR of £122. July sees the peak, with December in 2nd place due to the major peaks of Christmas and New Year. Beyond that, June and August make up the 4 months a cut above the rest. September sees the lowest average. It is important that property managers us market intelligence to align their rates with seasonal demand and take market averages into account to ensure prices are contextualised.

Occupancy, interestingly, does not mirror this trend. June sneaks into 1st place by a whisker, with September and October not far behind 2nd placed July. January is in fact the lowest ranked month by occupancy.

If you’re thinking that average occupancy looks kind of low, you could be forgiven. Since the 2017 introduction of the 90 day regulation – no more than 90 ‘short term rental’ nights (those comprising stays of under 30 days) may be sold at each property in a calendar year – things have changed. Effectively this ruling means that no listing may exceed 25% occupancy annually, meaning that on any given night, there are many listings unoccupied to bring this average down.

Guests & Reservations

Below is an analysis of guest nationality and the average advertised rates of their properties. As is typical, British visitors are most common to their captital, and pay a similar rate to their French counterparts who make up 8% of guests. The 2nd most frequent guest however, is American, and their ADR is highest at £184.

Market intelligence can paint a picture of which nationalities are most common and which are most profitable, allowing you to market accordingly. It stands to reason that these guests also visit at different times, and again, data can help here. Canada’s most popular OTA is Airbnb, with Booking.com second. Spain meanwhile, favours Booking.com, with HomeAway also ranked more highly. Make sure you are marketing to the right people in the right place and at the right price to maximise your revenue!

So let’s talk reservations. The average London booking in 2019 was 3 guests staying for 4 days, booked 27 days in advance. This numbers are fairly typical of European capitals, with the length of stay slightly above average, and the booking window slightly below. It makes sense for property managers to ensure that their prices are appropriate for the demand through a booking window: in this case, 27 days being the peak.

 

So that’s it, our round up of London. It boasts the largest supply of any European market and also sits above average in terms of price! June is the most visited month, while July achieved the highest rate. The average guest is British and staying with 2 others for 4 nights. Rates and distribution strategy should be as nuanced as they are complex. Using market intelligence sheds some light on these complexities and enables property managers to select, price, distribute, market and operate stock effectively to maximise their revenue.

If you’re interested in learning more about the power of market intelligence, click the button to book a demo.