The weaker U.S. companies in the short-term rental industry, those valuing growth over profits, are running into a difficult moment at the start of the summer.

Inflation soared, fuel prices led to are-you-kidding-me moments at the gas pump, and occupancy rates in the U.S. in the third quarter are currently at 39 percent, down from 45 percent during the same period in a standout 2021, according to Melanie Brown, director of analytics at Key Data Dashboard, which tracks vacation rental data.

Although there has been a dramatic falloff in third quarter occupancy compared with last year, it is still four percent higher than in pre-pandemic 2019, she said.

Revenue per available room for vacation rentals in the U.S. in the “third quarter is down by 7 percent,” Brown said. “Revenues are still substantially higher than in 2019. Supply has increased over the last 12 months, contributing to lower occupancy rates.”

Key Data Dashboard estimates occupancy in U.S. vacation rentals in the fourth quarter will be down 5.3 percent year-over-year.

Deteriorating average daily rates and occupancies will make for a difficult August, September and beyond, forcing some companies to redo forecasts for the remainder of the year, said Steve Milo, founder and CEO of Vtrips, a property manager.

There has been a flurry of recent developments:

• Newly public companies Sonder and Vacasa are trading at $1.04 and $2.77, respectively.
• BTIG reported that Airbnb’s traffic was down 2 percent in June compared with the same period in 2019, and Vrbo’s fell 16 percent.
• Wanderjaunt, a Phoenix-headquartered property manager that had received $26 million in funding, abruptly shut down June 30, leaving hosts and guests flummoxed.
• Property manager Avantstay reorganized operations under a new chief operating officer, and trimmed 43 jobs roughly in the June period.

Master Lease Issue

There are some in the industry who believe one element in current pressures is property managers stuck with burdensome long-term leases. The short-term rental companies still have to make lease payments when demand slows, as so many found out during the beginning of the pandemic. Sonder, Avantstay, and the now-defunct Wanderjaunt had some of these master leases, or long-term leases, but have reworked some to provide more flexibility or have altered their business models toward fee revenue or commissions in some cases.

A handful of short-term rental companies, such as StayAlfred, Domio, and Lyric, that were saddled with these master leases went out of business during the pandemic.

WanderJaunt Gave Some Managers Almost No Notice of Shutdown

Mila Bahamolski, founder of Hostkeyper, which performed cleaning services for Wanderjaunt in 300 units, Lyric, Sonder and Landing, much of it in Texas, said: “The way they shut down was so bizarre. No warning, and from one day to the other.”

Bahamolski claimed Wanderjaunt owes her company $12,000, and she had to pay her employees out of her own pocket. Wanderjaunt didn’t respond to a request for comment about closing its business.

A former WanderJaunt employee, who declined to be identified, said Wanderjaunt didn’t provide any explanation for why it was ceasing to operate other than broad statements about the state of the economy.

In hindsight, the former employee said, two months earlier there was a sign that the WanderJaunt business was in trouble when the company said it wasn’t getting additional funding, shut its growth department, and fired about seven people in Houston and perhaps 30 people across the country from that unit, promising the company would then have more resources to focus on current operations.

“They kind of lied to us then,” the former employee said.

The ex-employee added that “operationally we were fluid” with around an 80 percent occupancy rate in Houston, and attracted great customer reviews.

WanderJaunt informed lower-level managers that it would shutter its business on the day that it ceased operations, and merely told higher-level managers a day or two earlier, the former employee said.

AvantStay Reorganizes

Skift reported a week ago that AvantStay said its employee roster experienced 43 “job reductions” in the previous 30 days.

These weren’t layoffs because they came as part of a “gradual reorganization,” the company claimed. There actually was a net reduction of 19 employees during that period because the company, which has around 600 staffers, also did hiring, AvantStay said.

“Our brand’s restructuring is due to a reorganization under new leadership,” founder and CEO Sean Breuner said in a statement. “As we shared, we hired a new chief operating officer in May, which brought clarity to employees’ roles and responsibilities, removed layers of leadership and simplified our org structure.”

Breuner said AvantStay acquired six property management companies in the last three months, and none of these came with long-term leases.

“The very large majority of AvantStay’s portfolio is on a management fee partnership with owners, as is customary across the industry,” Breuner said. “Most of our leases were signed 2+ years ago, many of which have converted to partnership fee contracts as our owners earn more money under this structure.”

The company likely has ample cash. It raised $160 million in a Series B round in December, and a “$500 PropCo funding round, which has secured more than $100M in real estate,” Breuner said. “The brand is growing rapidly as we are now in more than 30 markets nationally and we will continue to launch new markets this year and grow our team accordingly to support.”

Sonder Strives to Get to Cash Flow Positive in 2023

With Wall Street hammering unprofitable companies, Sonder, which went public in January, announced last month a cash-flow-positive plan. That plan features cost-cutting, slower growth, and the desire to have real estate partners cover some of the up-front costs involved in open buildings. The goal is to achieve positive quarterly free cash flow sometime next year.

“Moreover, in June, we reaffirmed our second quarter 2022 guidance of revenue growth better than 140 percent year-over-year compared to $47 million in Q2 2021, driven by robust RevPAR recovery and moderate bookable nights growth,” the company said in a statement.

Like Sonder, Vacasa is deep in the red. Vacasa recorded a net loss of $56 million in the first quarter, for example. The two companies are in somewhat different businesses, and Vacasa uses commission-based models rather than long-term leases in managing both whole homes, and multi-family units. Vacasa declined to comment for this article.

The major booking sites, Booking Holdings, Airbnb and Expedia are schedule to report their second quarter earnings next month. They will undoubtedly provide commentary on how the current softness in short-term rentals has impacted their businesses.

Skift Take

The company has set up a new digital membership platform with more affordable prices to let beginners test the waters before committing to a month-long trip. But the question is whether that’s enough to convert digital nomad wannabes into actual bookers.

Matthew Parsons

Remote Year, a travel company that lets employees work in a different global city every month, has launched three new membership packages in a bid to encourage more beginners to join its programs.

The significantly lower priced “Remote Year Membership Platform” also includes a revamped digital platform and marketplace to help it grow its online community.

The company, which was bought by Selina in 2020, offers guests curated stays of a month, four months or a year.

Those guests previously could only really gain access to its 4,000 strong community after making a booking — that involved an advance payment of $850 for a one-month program, which costs $2,000 in total. Remote Year’s 12-month long program required a deposit of $5,000 and monthly payments of at least $2,250.

However, the company has now lowered the entry barrier in a move it hopes will encourage beginners as more employees contemplate working remotely.

Its new “community membership” now costs $19 a month, while its explorer pass costs $49 a month and top-level nomad pass costs $99 a month. These new subscriptions then offer various discounts on its “travel passes” — its work-from-anywhere trips that cover 80 destinations around the world, as well as other perks.

Existing Remote Year customers will be “gifted” either a community membership or a travel pass based on their level of travel with the company.

Making the Leap

Remote Year is the latest travel brand to evolve its subscription model. CitizenM recently launched a low-cost plan called M+ that starts at $12 a month, which provides a 10 percent discount on its hotel stays among other features and offers.

Luxury vacations club Inspirato meanwhile intends to target corporations with a new “Inspirato for Business” platform.

Remote Year’s CEO said the company decided to launch the new membership platform after customer feedback.

“A lot of people really wanted to try this lifestyle, but were a little bit ‘where do I start, how do I get connected? I’ve never done anything like this so how do I step out of my comfort zone?’” said Shaun Prime.

Its contact center also received requests from people asking if there was a way to join its community, while customer success teams were quizzed over whether they could talk to someone in the “RY nation” about their experiences, Prime added. 

A revamped “RY Nation Hub” will now provide access to a “vast network of professionals who travel, centralized resources and connection-maintaining events,” the company said.

The platform includes resources like destination guides, job boards, apartment rental boards, and 150 curated work and travel resource groups related to location, identity, interests and profession. The hub will also stream digital series and workshops with subjects relevant to traveling professionals, like how to lead a remote team or manage finances on the road.

A new “RY Travel Marketplace” will also sell things like airport transfers, SIM cards, apartment cleaning, gym passes, language classes and Covid testing to members, as well as the trips.

Quarterly festivals are also planned in destinations like Morocco, Greece, Brazil and Thailand.

Prime, who was previously chief operating officer and chief product officer at Selina, claimed no other company had managed to combine a community-based membership platform with a marketplace for traveling.

Remote Year also believes the membership packages will now appeal to companies wanting to offer remote work opportunities as an employee perk.

CORRECTION: A previous version of this article stated Remote Year had 8,000 members.

Skift Take

Now more than ever, we need to focus on the future leaders of our industry. Here’s how we’re giving back.

Alexx Mattox

This is a transformative time in travel, from COVID concerns and unexpected hotel mergers to pilot shortages and the rise of short-term rentals. Every month seems to provide a new challenge and opportunity for the industry, and we’re watching it unfold firsthand.

As our research team analyzes up-and-coming trends, and our reporters cover all the latest breaking news, we can’t help but want to do more. 

That’s why we’re thrilled to be rolling out a student and educator program for all of our subscription products. 

Whether you’re a leader in the classroom, or a future leader of travel, we want to make sure you have what you need to  facilitate classroom discussions, study for exams or interviews, and keep up with the industry.

Here’s how our subscriptions can help:

1. Facilitate discussions on topical issues

Skift Pro is our all-access pass to award-winning, round-the-clock journalism. 

Think of it as the ideal homepage bookmark, to stay in-the-know on all things travel. We’re talking hundreds of stories each and every month, plus exclusive interviews and deep dives like The Definitive Oral History of Short-Term Rental, a three-part series on the history and future of vacation rentals. These deep dives come out regularly, and are the perfect opportunity to spark classroom discussion on the most timely topics.

Sometimes you don’t want to read a longform article, though. We get it.

Enter Daily Lodging Report, expertly packaging all the must-know hospitality sector insights and delivering them straight to your inbox every day. So you can share blurbs, discuss the current economic climate and understand the ins and outs of the accomodations world. 

2. Discuss trends and data in the classroom

Skift Research offers in-depth proprietary research analysis and real-time measures of global travel performance – that you can’t find anywhere else. With access to reports on content like consumer insights, market size and forecast, B2B intelligence and travel tech, the learning opportunities will quite literally be endless. 

We publish 40+ new reports annually, plus provide a library of 200+ historical insights, along with three exclusive data dashboards (like the Skift Travel Health Index)  – and you’ll be in good company with readers from global companies like Marriott, Booking.com, and Google. As a subscriber, you’ll be able to see firsthand why industry leaders rely on our data to analyze current trends – and you’ll be able to mimic the boardroom meetings where decision-makers discuss future strategy.

3. Analyze what’s happening in the global aviation industry 

Airlines are facing new challenges every day. Whether it be side effects of the ongoing war in Ukraine, staff disruptions, or the rising cost of gas, there’s always something new to discuss. Airline Weekly makes it easy to keep up with the latest news. Every Monday, we report on who’s flying where, new marketing approaches, fleet, finance, and key airline and airport data. Meaning you don’t need to be an aviation executive to understand what’s going on.

4. The cherry on top: Exclusive Skift event access 

We saved the best part for last – with our new academic program, students and educators will get free virtual access to all of our events. From our flagship Skift Global Forum, to the Sustainable Tourism Summit, Future of Lodging, Aviation Forum, you can count on livestream viewings of multiple events.

And if you want to take it a step further, we’d love to see educators in-person. Simply apply for a 50%-off education discount here.

Thank you – for everything

From the bottom of our hearts, thank you. The future of travel starts in the classroom, and the team at Skift appreciates everything you do.