Hotel, Airbnb, VRBO demand, costs skyrocketing for summer vacation

When Allison Reilly decided to rent a beachtown cottage on Cape Cod in Massachusetts last June after months of being cooped up at home during the pandemic, she found a six-bedroom house almost immediately.

The Andover, Massachusetts, resident loved the vacation experience so much that she decided she was going to spend the next few summers renting homes in different parts of the Cape to get a feel for the area and eventually buy a place there.

By September, the real estate agent who had helped her find the rental in the Cape town of Harwich was asking her to consider booking a house for summer 2021.

“She said … you better book something now,” Reilly recalls. “I knew I had to act because she knows the Cape market really well.”

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Reilly found a place in Eastham, Massachusetts, farther out on the Cape. By December, she’d put down a 50% deposit.

It turned out to be a good idea. In the first week of January, the owner of the property where she’d stayed last summer contacted her to let her know that he had only one week available for the summer.

“In 2017, you might have gotten a place for $2,300. And now they’re up to like $4,500 a week,” says Wendy Allyson, Reilly’s real estate agent.  

It’s a problem travelers are facing across the country as they book summer getaways: high lodging rates, driven by the millions of Americans who are ready to hit the roads now that COVID-19 cases have dropped. Whether they’re looking for a hotel room in Miami or a VRBO in Myrtle Beach, demand and prices for many destinations are back to 2019 levels, or even higher, experts warn, following a dip last summer. 

“If you haven’t booked your summer vacation and you don’t want to spend an arm and a leg, it might be too late,” says Patrick Scholes, an analyst at Truist bank.   

When Phil Dengler traveled to Cape May, New Jersey, last June, he was able to book a hotel room near the beach for just over $300 a night. 

In April, the Deptford, New Jersey, resident looked to reserve a room at the same hotel this summer. But rates started around $500 a night, and other spots had already filled up.  

Phil Dengler

“I’m just surprised how much everything is going up,” says Dengler, co-owner of travel tip website The Vacationer. “Everybody wants to get out there and take a trip. … (and) everything is so much more expensive.” 

The average U.S. hotel room rate rose to $110.34 in April, up 51% year-over-year but still below the pre-pandemic rate of $131.40 in April 2019, hotel industry data firm STR found. 

Nationwide rates for short-term rentals from platforms like Airbnb have already surpassed pre-pandemic pricing, according to data collected by vacation rental data company AirDNA. The average U.S. short-term rental stay in May cost $244.42, up 21% from the same month in 2019. 

The price increase has been driven by a surge in demand.

Airbnb CEO Brian Chesky told USA TODAY last month that he expects demand over the summer holidays to be “huge” this year.

Alison Kwong, a spokeswoman for vacation rental platform VRBO, says families booked summer vacation homes on the platform “much earlier” and for more nights in 2021, making rentals for popular destinations unavailable on certain dates.

“Hosts have paid attention to the travel boom for this summer and set their prices for their vacation homes accordingly,” Kwong said in an email. “Pent-up demand, vaccinations and the desire to reunite with loved ones motivated families to book as early as February, and many of Vrbo’s most-popular destinations were scooped up quickly.”

Overall, 40% of Americans are expected to take at least one leisure trip between Memorial Day and the end of September compared with 42% in 2019, according to an April survey of more than 2,000 people by Deloitte Insights. 

Steve Hart, CEO of Property Management Inc., which franchises with property managers across the country, said  the company’s affiliated short-term rental properties are filling up fast. More than 80% are already booked throughout the summer. 

“It’s going to be hard for travelers to find great deals right now,” he says. 

U.S. short-term-rental rooms will remain pricey through the busy summer travel season, with the average rate expected to peak in July at $288.94, AirDNA data forecasts. The national average short-term rental price is up over 20% between May 2019 and May 2021, while listings in similar markets are seeing prices jump anywhere from 10% to 15%, according to Jamie Lane, vice president of research. 

“Properties are scarce, and that has allowed owners (and) operators to raise those rates,” Lane says. 

Many locations in cities like Boston, Chicago, New York, San Francisco and Washington, D.C., have low summer rates because they have plenty of rooms and are still waiting for business and international travel to return, says Scholes of Truist bank. 

But a cheap getaway at a beach this summer? Forget about it. 

Some of the costliest and least-available spots are in popular warm-weather destinations with camping or beaches, where it’s easier to socially distance. 

“We’re seeing demand that’s higher than (in) 2019, essentially all-time records,” in warm-weather spots, says Chad Beynon, an analyst with Macquarie, an investment bank and financial services company. 

The average nightly rate for VRBO rentals in its top destination markets has jumped more than 25% this summer compared with the same period in 2019. Despite the price hikes, most, if not all, short-term rentals in destination resort markets will be sold out for summer 2021 travel, says Lane of AirDNA. 

“The market’s already 80% occupied for the summer months,” he says.  

Occupancy rates at the popular beach destination of Myrtle Beach, South Carolina, stood at 78% for the week spanning May 31 through June 6, compared with 48% in the same period in 2019, according to Key Data, a data analytics company which tracks data for 100,000 active vacation rentals from 680 property management companies in the U.S. for the Vacation Rental Management Association. Average daily room rates also edged up to $270.27 from $252.19. 

“Our hotels are reporting vigorous bookings through the fall,” says Julie Ellis, public relations manager for Visit Myrtle Beach, the marketing arm of the Myrtle Beach Area Chamber of Commerce.

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In Cape Cod, a popular summer vacation destination, the rental occupancy rate is currently at 85%, compared with 62% for the same time in 2019. Allyson, the real estate agent, says there’s a lack of inventory, with owners not willing to rent.

“Some people say their children are home from college or working remotely,” she says. “Normally they would rent it out for rental income, but now they are letting their children use it or maybe they’re even selling it.”

Even nontraditional summer destinations are seeing demand pick up.

Rob Hampton, general manager of the Palm Springs Convention Center and Bureau of Tourism, says the Southern California city is seeing “quite an increase” in demand – even with temperatures regularly above 100 degrees.

From local vacation rentals to hotels, “everyone reported that they were expecting a record-breaking summer this year,” Hampton says. “If you look at some of the hotel websites, they’re already sold out. Weekends are very, very strong. … People just want to get out.” 

So what can travelers do to avoid sky-high room prices this summer?

If you’re in the market for a getaway, branching out of some of the traditional destinations could help, says Melanie Brown, director of data & analytics for Key Data.

► Alternate getaways: These destinations are great for less-crowded vacations. Here’s why you should consider a ‘second city’ trip

“If people are willing to go back to cities, their rates and occupancy are generally more flexible than some of those like beach or mountain destinations,” she says. “Just staying flexible on the dates and the type of destination you’re looking for could help.”

Some cities where you can still find spots include Washington, D.C., where the summer vacation rental occupancy rate stands at 51% in 2021, compared with 47% for the same time in 2019. In Austin, Texas, the occupancy rate has risen to 37% from 31% in 2019.

Kwong of VRBO says some of the “hidden gems” on the platform include Cherry Log, Georgia; Bella Vista, Arkansas; and Slade, Kentucky. All of those locations tend to see fewer crowds but still have vacation homes available near lakes and mountains.

She also suggests those who are set on traveling this summer book their vacation as soon as possible, before the selection and available dates become even more limited.  

Airbnb has also been working to provide users more options when searching for stays, and recently updated its platform to allow for more flexible searches.

For Reilly, who has four children, three of whom are in their 20s and living away from home, the chance to get away to Cape Cod for a week as a family was possible because she moved quickly.

“I felt like everybody really mentally needed it. I have my oldest daughter living by herself,” she says. “I feel that it’s been a long year, and we need to be together as a family.”

Allyson, her agent, says she saw the writing on the wall.

“People are realizing there’s so much (more) to life than work,” she says. “And if you are able to work remotely, why wouldn’t you want to work out of Cape Cod?”