The Covid-19 pandemic has heavily impacted the travel industry, and the villa market in the Asia Pacific region is no exception.
Due to the total travel shutdown the overall Asia Pacific market reduced by 38% in 2021. The market size has reduced to US$271 million from US$440 million in 2019. We see a downward trend in villa supply, occupancy and average rate across markets, apart from some exceptions where there was a boost in domestic travel demand.
Despite the lockdown, we see some positive signs for domestic travel in Australia. Byron Bay, Perth & Sydney saw a double-digit increase in villa supply. Sydney is now the biggest market, reaching US$58 million (an increase of 13% from 2019). ByronBay grew by 80%. The number of listings, rate, as well as occupancy went up. This growth is due to the fact that many people listed their home or second home for vacation, and the government also has several initiatives to boost domestic demand like the Regional Tourism Recovery initiative, NT Tourism campaign and subsidies for domestic regional routes.
Bali market has decreased by 66%, and is now the second largest market after Sydney. There are still holiday villas in Bali, although average rates have gone down 34% to less than US$150 per night.
Danang's demand has dropped the most (79%). According to the General Statistics Office of Vietnam, in March 2020 the number of international travellers coming to the country amounted to 450,000, a 68% decrease from the previous year. After March, there were almost no international travellers.
APAC villa owners’ response to Covid-19
Fast response to the changing environment
Despite the initial shock APAC villa owners have quickly adopted new safety measures such as social distancing, mask and new hygiene standards.
Focus on the domestic market
In destinations, like Niseko, where travel is heavily seasonal villa owners are now appealing visitors to travel during off-peak periods as well.
In Bali, while the destination was closed to foreign visitors, we saw domestic travel gradually picking up. I Gusti Ngurah Rai Airport recorded significant growth from June to November 2020. On average, the number of flights grew by 56.1%, and the passenger growth was 101.4% (source).
“Corona-deals” for digital nomads and long-term tenants
In 2020, many villas offered what we called “Corona-deals”, targeting digital nomads and international visitors who were stuck in the destination. They opened the villas for long-term rentals at a fraction of the usual rate. Airbnb also recorded 6 million global listings available for monthly rental, many offering a discount for extended stays (source).
H2 Life, which manages more than 200 luxury vacation rentals in Niseko, is optimistic to have international guests from some parts of the world joining before the end of 2021.
Perspectives on 2021 and the future of post-pandemic travel
Expectation of a domestic travel boom
When travel restarts we will see recovery for domestic travels first. While international borders remain closed many countries, such as Australia and Vietnam, are easing restrictions for domestic trips. The Australian government, for example, halves the price of nearly 800,000 flights to encourage people to spend more on their trips. (source)
Uncertainty of when international travel will reopen
Jack Eden, CEO of Eden Villas, a specialist in luxury villas in Sri Lanka said: “[W]hilst we will try our best within the allowed parameters, gladly accepting the business we can secure, our budgeting has always been focused on 2022. There will be some nervousness to begin with as the world reacquaints itself with travelling and individuals slowly regain confidence outside the safe confines of their home country.”
Said Libby Spears, sales and marketing manager of H2 Life, manager of over 200 luxury vacation rentals in Niseko: “We know that skiers and snowboarders are adventurers at heart, and that they are getting more and more impatient to travel, so we expect that snow lovers will be among the first to take the plunge and resume travelling abroad. We are lucky that Niseko and Furano are located in the stunning Hokkaido countryside and we believe guests will be seeking out destinations outside of the busy cities when they initially return to travelling."
Different travel expectations from consumers
Safety measures such as mask-wearing, social distancing and disinfection of public spaces and flexible cancellation policies will be fundamental rather than a nice-to-have. Having a travel insurance policy that covers Covid-19 has also become mandatory in many countries like Cambodia, Laos and Thailand. On top of that, some expectations remain unchanged.
“[G]uests still crave sensational experiences as they always have. Their desire for outstanding accommodations, memorable activities, attentive and personalised service, and the normality of being able to do what you want, when you want, while on holiday will still exist. In fact, it will be more important than ever,” Spears said.
Optimism about the future of travel
Experts remain optimistic about the villa market, especially after the pandemic. Post-covid will be a very interesting time for the villa market, traveller behaviours are shifting. There is still demand for travel.
“[T]here is demand out there for long-haul travel and so once we can all travel without hindrance the industry will recover,” Eden Villas’ Eden remarked.
“It’s the golden question and predicting when travel will come back with certainty is a challenge. But we are optimistic to have international guests from some parts of the world joining us before the end of the year,” commented Spears.
A shift from hotels to villas and other alternative accommodations
The post-Covid world will also bring an interesting opportunity to the villa rental market. Experts believe that the demand for villa rentals will return stronger than ever. Travellers will want a smaller place, away from the crowd and avoid sharing facilities with other guests. This makes villas the best choice of accommodation.
According to a research by AirDNA, short-term rentals are weathering the Covid-19 impact much better than hotels. Although it’s still too soon to consider any upward trend a rebound, it is worth noting that the alternative accommodations are showing more resilience. Larger properties (4-bedroom villas, etc.) have the strongest performance.
“Villas will recover well and will be the first choice of accommodation. Villas offer a ‘home from home’ experience whilst being looked after by a team dedicated to that villa including a private chef, butler and housekeeping staff. With a dedicated concierge service arranging everything villa guests can enjoy the variety of what a country can offer within the private setting of their own villa. Compare that to a hotel and what is there not to like?” Eden concluded.
Source: Web in Travel