Naya Homes
Homeowners     17 Apr 2024

Short-term Rental Market Landscape | Cabo | Q1 2024

Cabo San Lucas and San José del Cabo (Los Cabos) have been coveted tourist destinations for years. However, like any market, their dynamics are subject to change. In this post, we delve into analyzing the first quarter of 2024, examining the trends shaping the short-term rental landscape in this region and our predictions for the next quarter.

Penthouse en Vista Vela, un alojamiento de Naya Homes en Nayarit

The Numbers: What’s Happening in Cabo?

The first quarter of the year has left its mark on Los Cabos, with a significant 12% decrease in occupancy compared to the same period last year. This decline is attributed to a market imbalance caused by a substantial increase in unit supply, while demand has seen a decrease in booked nights.

A key factor is a slight change in international travel preferences, favoring more budget-friendly destinations like Oaxaca or Manzanillo. This shift is propelled by the strengthening of the Mexican peso, which has appreciated by 11% compared to the previous year.

Market Factors: Supply and Demand

The supply of units in Cabo has maintained an upward trend, despite a slowdown in growth during the first quarter.

With an 11% year-on-year increase, this ongoing expansion puts pressure on occupancy rates, contributing to the decline in demand.

On the other hand, international tourism shows post-COVID adjustments, and the strengthening of the Mexican peso has negatively impacted the purchasing power of these tourists, reflected in a 4% decline in the arrival of international tourists to Cabo.

Sources: Internal data, Transparent, Wheelhouse, AirDNA

Forecast for Q2 2024

  • A slowdown in international tourism is anticipated due to the strength of the Mexican peso; however, continuous growth in domestic tourism is forecasted. According to Deloitte data, 47% of Mexicans plan to travel this year, with an annual increase of 5% in interest in short-term rentals.

  • International travelers will continue to seek more budget-friendly alternatives, either by opting for more accessible units in Cabo or exploring cheaper destinations such as Oaxaca or Manzanillo.

  • Additionally, the return of many “snowbirds” to their homes during the summer months is expected to free up more rental nights, creating additional opportunities in the short-term rental market in the region.

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