Short-term Rental Market Landscape | Puerto Vallarta | Q3 2024

Puerto Vallarta’s short-term rental market faced significant challenges in Q3 2024, driven by a drop in international tourism and an increase in rental unit supply. Despite these obstacles, Naya Homes has continued to outperform the competition, leveraging key strategies to navigate this complex landscape.

The Numbers: What’s Happening in Puerto Vallarta?

In Q3 2024, Puerto Vallarta’s short-term rental market saw a sharp decline in performance. International tourist arrivals fell by -17% year-over-year in September, influenced by a stronger peso and a decline in remote work, which had previously fueled demand. Additionally, an influx of newly delivered units over the past 24 months resulted in a supply surplus. These combined factors contributed to a -17% decline in overall revenue for the short-term rental market.

However, two key developments could mitigate this downward trend. The U.S. dollar has strengthened, which could make Puerto Vallarta more attractive to U.S. tourists in the coming months. Additionally, the number of active listings has remained stagnant, which could help stabilize occupancy rates. Amid these challenges, Naya Homes outperformed the market, generating 41% more revenue than its competitors.

Market Factors: Supply and Demand

Supply: Puerto Vallarta’s active short-term rental listings increased by just 1% year-over-year, a much slower growth rate compared to previous years. This stagnation is likely due to declining revenues, pushing some property owners to either switch to long-term rentals or sell their units. Despite this slowdown, the number of active listings remains 55% higher than in 2022, creating continued pressure on occupancy rates.

Demand: The drop in international tourism, down -17% in September, has been a major factor in the market’s struggles. In contrast, local tourism grew by 3%, as domestic travelers became a more prominent segment of visitors. However, this shift in the tourism base has put downward pressure on prices, as local tourists tend to have lower spending power compared to international visitors.

Forecast for Q4 2024

Looking ahead to Q4 2024, Puerto Vallarta’s short-term rental market may experience some recovery.

• Occupancy rates are expected to improve as the supply of rental units stabilizes or even decreases, and a weaker peso could drive a higher influx of international tourists.
  
• Several risks remain, including ongoing violence in parts of Mexico, which has led to the U.S. Department of State adding more regions to its “Do Not Travel” list, potentially deterring international visitors.
  
• The peso is likely to remain volatile due to judicial reforms and political changes in Mexico. If the peso weakens significantly, it could create a more favorable environment for foreign travelers, helping to boost the tourism market.
  
  

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