Italy vacation rentals: the impact & the recovery

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Italy was the first European nation to feel the full force of COVID-19. Now, we analyse the damage & understand how demand is recovering for vacation rental property managers.

Impact

Our first chart describes the progression of demand for Italian vacation rentals throughout the course of 2020 so far. See the % difference in reservations made each week between 2020 and 2019 in Italy, compared with other large supply nations.

Reservations made for Italian vacation rentals fell first and steeply, and remained significantly depleted for one of the longest periods compared with other countries. However, reservations are recovering and are currently only 25% lower than they were at the same time last year, with only France experiencing a more significant recovery.

In the following two maps we see the percentage difference in revenue made by Italian vacation rentals in 2019 and 2020.

In the lefthand chart you can see year on year revenue difference through weeks 10-21. Weeks 10-21 ran from 2nd March to 24th May in 2020, and represent Italy’s lockdown period. On the righthand side meanwhile, we see the year on year difference in revenue made through weeks 27-30, or 29th June to 26th July – summer so far.

During the lockdown, vacation rental revenue was down 70% on average across Italy when compared with the same period of 2019. Veneto experienced the most severe downturn with over 75% less revenue. Even the least impacted region of Bolzano saw it’s revenue tumble by 60%.

When we turn our attentions to the righthand map, the improvement is immediately noticeable. In July, the average revenue loss was only 18%, with all Italian regions seeing a marked recovery. The least recovered region – Lazio – took 42% less revenue than last year, but improved from -75% during the lockdown weeks. The regions of Molise and Valle d’Aosta even returned more revenue than the same weeks in 2019 with 3 and 2% increases respectively.

Recovery

So summer so far has seen some recovery in the Italian vacation rental industry – what does that recovery look like?

The above chart shows how occupancy has been impacted during summer. Week 30, starting 20th July in 2020, saw lower occupancy in 2020 than 2019 in all regions except Molise and Valle d’Aosta, with the average occupancy in Italy -17% year on year. Again reflecting the revenue recoveries above, Lazio clocked the worst impact to occupancy in week 30. Bolzano showed the strongest 2020 occupancy at 58%.

So how have property managers been reacting through the recovery – what is the relationship between occupancy and average daily rate (ADR)?

Below we look at how ADR has changed from summer 2019 to summer 2020. It would be easy to assume that the fall in demand and occupancy has forced property managers to drop their rates, but we see that all bar 3 regions, Valle d’Aosta (negligible change), Trento and Bolzano have actually increased prices. This is likely a result of property managers trying to recover more lost revenue from the recovering demand.

Whilst Trento and Bolzano were amongst the regions of highest occupancy in 2019, in the last week of July they claimed more occupancy than any other regions. They were also the only regions with any significant rate drops, despite being amongst the least affected areas in terms of lockdown revenue losses. However Molise, enjoying a the largest gain of 3% increase in revenue over last year through the summer so far, saw its average rate increase from €61 to €65; the 3rd most increased region.

So what are short term rental property managers working with? How can they maximise the opportunity from this recovering demand?

Current demand

Demand has evolved rapidly in the wake of peak pandemic, and Italy, being the first significantly hit western nation has been amongst the first to hit the milestones of recovery. Several trends have emerged from this recovery that should be considered in order to convert demand, one of which is a tendency towards non-urban inventory.

Many non-urban markets across the world are currently enjoying more than their share of demand, and Italy is no different. Whilst all location types have fallen short of last year’s occupancy levels in the summer so far, the discrepancy between the types is considerable. Non-urban stays (beach, lake, rural, ski) are down 18% in occupancy, while urban areas are still 38% down on 2019.

Whilst this is a clear and understandable direction for demand, as an urban property manger, this information will not be actionable unless you are in a position to expand your non-urban supply. One other trend that is actionable for everyone, however, is the uptick in domestic travel.

With travel restrictions drastically reducing international travel opportunities and the general uncertainty hanging over would-be guests, people are showing their preference for trips in their home countries. In Italy this preference has seen a shift from 19% of all 2019 vacation rental guests being Italian, to 39% in 2020. The strongest contingents of international guests, the US, France, the UK and Germany have all seen their proportion of guest in Italy fall except the lesser affected Germany. American guests especially have fallen from 18% of all vacation rental guests in Italy last year, to 8% in 2020.

Looking at the whole of 2020 does also not convey the depth of this swing. Looking just at July this year, guests staying in Italian short term rentals were up to 47% domestic, while German and French visitors had also increased to 12% and 11% respectively. These trends can and should impact a property manager’s strategy, especially in terms of marketing and distribution.

What’s next?

Clearly we are all in the dark about how things will continue to change – in every aspect not just short term rentals! We’ve yet to see how transient the above examples of demand trends will be. What we do know however, is that demand is fickle and very changeable, and making your strategy adaptable and optimised to these changes is critical to your outlook.


As a property manager, altering your processes and management strategy will see you reap more from the demand that is out there. As a hotel, staying aware of how the alternative accommodation surrounding your stock is behaving will give you some insight into how you can adapt and improve. For investors too, it will pay to understand which stock will allow you to capitalise on the current state of things.
Ultimately, data and insights will keep you on top of the demand and one step ahead of the competition.


You can learn more about how Transparent’s data solutions can support you by trying our free dashboard, booking a free, personal market demo or visiting seetransparent.com.