Austin, Texas, has been a burgeoning hotspot for short term rentals (STRs), thanks to its vibrant culture, booming tech industry, and a steady influx of tourists and business travelers. As we look ahead to 2024, let's delve into the future of Austin's STR market, focusing on the key metrics and what outside forces we predict will affect these metrics in 2024.
1. Occupancy Rates: Riding the Wave of Popularity
Occupancy rates are a vital indicator of the health and demand of a STR market. According to airdna.com, Austin's occupancy rate is currently at 54%. In Austin, these rates are down about 4% year-over-year, a trend that's expected to continue into 2024. Austin has historically had favorable occupancy rates. The low seasonality in the Austin STR market and several other factors contribute to this forecast:
- Increasing Tourism: Austin's appeal as a travel destination continues to grow, fueled by its renowned music scene, festivals like SXSW, and its status as a culinary and cultural hub.
- Business and Tech Growth: The city's expanding tech industry and startup culture are attracting a steady flow of business travelers seeking short-term accommodation.
- Major Events: Annual events such as SXSW and Austin City Limits Music Festival consistently draw large crowds to Austin, ensuring high occupancy rates during these periods. in 2024, we expect the "Joe Rogan affect" to bring in more tourists with increased comedy and UFC events.
2. Average Daily Rates: Balancing Affordability and Profit
Average Daily Rates (ADRs) are a crucial component of the STR market's profitability. Austin's ADR currently hovers around $300/night. This is a slight dip from last year, but interestingly, those STRs that are professionally managed are seeing a slight increase in ADR. In 2024, ADRs amongst STRs that are properly managed in Austin are predicted to see a moderate increase, influenced by:
- Market Demand: With a growing number of visitors, property owners are likely to leverage this demand to increase rates, especially during peak seasons and events.
- Enhanced Offerings: As STRs become more sophisticated, offering amenities like high-speed internet, work-friendly spaces, and unique local experiences, hosts can justify higher rates.
- Economic Factors: General economic conditions, including inflation and the cost of living, will also play a role in shaping ADRs.
3. Number of Active Short Term Rentals: Growth with Challenges
The number of active STRs in Austin is expected to grow, but not without its challenges. Key factors affecting this growth include:
- Regulatory Environment: City regulations and zoning laws play a significant role in determining the growth trajectory of STRs. With the current relaxed regulations in the City of Austin, an increase in STRs is likely. However, there may be more regulatory changes in Austin in 2024, that could change the ease for investors to purchase STRs in Austin.
- Market Saturation: As more properties enter the market, there might be a point of saturation, which could stabilize or even decrease the number of active rentals.
- Investor Interest: Austin's market potential continues to attract investors, which could lead to an increase in professionally managed STRs.
Conclusion: A Promising but Complex Future
The short term rental market in Austin in 2024 is poised for growth however, this growth will be navigated through a landscape of regulatory challenges and market dynamics. Property owners and managers will need to stay agile, adapting to the evolving demands of travelers and the regulatory environment. Austin's STR market presents a landscape rich with opportunity but requires a nuanced approach to capitalize on its potential fully.
Investors and hosts venturing into Austin's STR market in 2024 should focus on understanding the unique needs of their target guests, whether they're here for the city's famed festivals, its burgeoning tech scene, or its rich cultural tapestry. By offering tailored experiences and maintaining a keen eye on the pulse of the market and regulatory changes, success is not just a possibility but a probable outcome in this vibrant city's STR landscape.
