LUXURY VACATION RENTAL OUTLOOK 2024

2023 was a transition year, with a gradual deceleration in the number of sales transactions and bookings, continued pricing resets, and homes spending longer on the market than the previous year.

The exponential growth and profits that investors and managers enjoyed during the post-pandemic bull run of 2021- 2022 fell back to earth in 2023, and are indeed normalizing.

The demand for luxury vacation homes and transactions in top leisure destinations are projected to remain strong through 2024.

A “crash” in the luxury segment of real estate is unlikely, but not impossible.

Popular luxury vacation destinations, especially those located in markets with an exceptional high density of HNW and UHNW individuals and strong barriers to entry, are uniquely protected and less likely to see as large of a decline in comparison to mostly residential markets.

A true buyer’s market is possible, but unlikely, with the growing popularity of luxury vacation rentals as an alternative asset class for private and institutional investors alike.

Great deals are likely to be rare this upcoming year, but not out of the question, and the competition for good acquisitions will strengthen.

Occupancy rates and booking revenues for market leading properties will be mostly unaffected, while the majority of assets in the market will likely second negative y-o-y in 2024.

Much like 2023, the majority of luxury vacation rentals are likely to see a significant decrease in occupancy throughout 2024, resulting in a second negative y-o-y for most markets and operators.

Many operators and properties that previously entered the market during the 2021-2022 bull run will begin to exit, where unsustainable projections are met with a combination of larger supply and a downturn in affluent traveller demand.

The ripple effects of this market will be gradual, creating more opportunities for strong operators to generate another growth year.