May 06, 2019
A just released Engel & Völkers data report giving the latest information on The Bahamas’ vacation rental market, also references a respected industry source that predicts by 2020 it will surpass the traditional hotel booking business.
"We ļ¬nd it interesting that people 'do a 180' in their preferences once they use P2P (peer to peer) lodging. They move directly from preferring traditional hotels to preferring P2P accommodations,” noted Goldman Sachs referencing their data.
Further, an internal study by a Washington State based company, Seattle Oasis Vacation Rentals, revealed that 52% of visitors "would NOT have even come to Seattle if vacation rentals were not an option," trends that are beginning to impact the world's greatest destinations.
Engel & Völkers’ ground breaking research data gives credence to the general impression throughout The Bahamas’ hospitality industry that a highly successful and lucrative secondary homeowners’ market has opened up with many variations and operators nation-wide.
The Engel & Völkers Bahamas ‘2019 Vacation Rental Report’ follows on the heels of other industry market studies, the ‘New Condo & Amenity Report’ which was released in February and listed for consumers the leading blue chip properties and their amenities in Nassau and on Paradise Island, and the real estate market report which tracked real estate values from 2014 to 2018.
Engel & Völkers is recognized as one of the world’s leading service companies specializing in the brokerage of premium residential property, commercial real estate, yachts and aircraft. Mr. Lightbourn also drafted the synopsis now available with the full report on their website: www.bahamas.evfinehomes.com
Engel & Völkers License Partner Colin Lightbourn explained.
“The purpose of our report is to provide The Bahamas real estate industry, comprising renters and owners, buyers, sellers, developers, lenders, agents and its associate professionals, with a baseline study of the vacation rental market in The Bahamas.
The information in this report is extracted and analysed from AirDNA which is comprised of rental data from Homeaway and AirBNB.
“Over 4,200 properties comprising of the entire home have been used in this report and it is important to note that NOT ALL vacation rentals in The Bahamas are reported through AirBNB and Homeaway, however, at the present time this is the most centralized public data system of which to comprise a market report.
The key data extracted for this report for all transactions are average daily rate, monthly occupancy rates, annual income, average bedrooms and average guests per rental.
The Engel & Völkers Bahamas ‘2019 Vacation Rental Report’ includes The Bahamas’ Central Bank March 2019 report statistics: “Preliminary indicators for the short-term rental market in January were also improved, as data from AirDNA showed a 37.0% advance in total booked listings, relative to the same period in 2018, with gains in both entire place bookings (34.9%) and private room bookings (44.9%).
Meanwhile, the ADR (average daily rate) for hotel comparable listings - which is more comparable across periods - ļ¬rmed by 5.0% to $142.40; however, the ADR for entire place listings decreased by 1.7% to $330.35.”
The Central Bank also noted that the breakdown of the short-term rental data revealed that the dominant New Providence market noted gains in both the entire place and private room bookings, of 23.7% and 25.8%, respectively; although increased competition contributed to the decline in the respective ADRs by 9.0% and 2.1% to $266.46 and $118.18.
Away from the capital, the majority of the listings relate to the entire place category. In Exuma, the inventory for this segment rose by 43.8%, while the associated ADR ļ¬rmed by 19.0% to $406.0.
Similarly, in Abaco and Grand Bahama, entire place listings advanced by 32.7% and 50.0%, respectively. Conversely, the ADR for Abaco and Grand Bahama contracted by 26.6% to $264.49 and by 5.8% to $171.01, placing them at the more aļ¬ordable end of the spectrum.
Mr. Lightbourn explained that the research was due to the obvious growth of the industry not just in The Bahamas but internationally in the last few years, and the disruption that it’s bringing to the hospitality and real estate markets in general.
“We did a market report in January on Bahamas property prices and growth over the last five years and this vacation rental industry goes hand in hand with the real estate services we provide.
I believe there’s certainly more vacation rental rooms in the Family Islands than there are hotel rooms, in fact, I believe that’s true for the entire Bahamas.
And that’s factoring in Baha Mar and Atlantis. I’m talking here total bedrooms in house, not total houses, just in this sample alone we are looking at over 11,000 bedrooms and this does not include all the homes available in the market. Although it is the vacation rental of the whole house that our Report deals with in this instance.”
The realtor said that he was surprised to see from the Report the number of inner city vacation rental properties in Nassau.
“That’s interesting, especially when you’re looking at the Bahamian market overall. In the Family Islands Bahamians can purchase properties that have ocean access for reasonable prices.
When we did our market report in January the average price point for somewhere like Treasure Cay was $370,000, and Treasure Cay had the most unit sales in an out island location. –
Most investments there are used for the Vacation Rental market because of, one, the price point, and two, the demand for vacation rentals in an area that has a marina, a beach, and access to other islands.”
“Our Report on the income side shows gross income numbers, so this is not what somebody is putting in their pocket. This is the gross rental income; I’d say you have anywhere between 30 to 60% of expenses related to the running and operating of that property.
You have your basics like utilities, insurance, property tax, and maintenance, management fees, house-keeping - it mounts up.”
Mr Lightbourn said that looking forward, all of the trends point to continued growth, and that this is what the market is demanding. He advised that hotels look outside of their walls at incorporating homes into their portfolio and making deals with private homes.
“Small hotels will need to look at offering services from their hotels to the private homes. And I think in the future that’s where the market is.
The new buzzword is ‘bespoke,’ and that’s going to be the experience people are looking for, which is going to really fuse the private homes and the resorts together in some capacity.”
The realtor said that it was the government’s Hotel Encouragement Act from the 1950’s amended in the 1990’s that promoted the vacation rental trend that we see exploding today.
The model was designed to encourage developers to build resort communities and created incentives for the sale of private rental homes. In many cases these resort homes built under the Hotel Encouragement Act are exempt from property tax and have no duty on construction material.
“People are coming here to have a very personalized, unique, authentic experience in the island and it opens up opportunities for younger people to get into all kinds of businesses catering to this.
I believe our government regulators should safeguard this burgeoning industry that is obviously meeting a need in the travel experience. It offers tremendous economic benefits to a new type of entrepreneur.”
CLICK to read Bahamas 2019 Vacation Rental Market Report