Cabo San Lucas, a gem on the Baja California Peninsula, is a destination celebrated for its stunning vistas and vibrant lifestyle. In the world of short-term rentals, the market in Cabo has encountered its own set of fluctuations and opportunities. Join us as we delve into the crucial insights of Q3 2023, shedding light on the current landscape and the road ahead.
See our full report below followed by a detailed recap.
The last two quarters of 2023 have brought with them significant changes for Cabo's short-term rental market. Occupancy rates have dipped by 9 percentage points compared to the previous year. This decline can be attributed to two key factors: an increase in property listings by 7% and a decrease in traveler demand by 6%. As a result, revenues have experienced an 8% reduction, while average nightly prices have held steady compared to 2022.
Understanding Cabo's market involves dissecting the interplay of supply and demand.
Supply: The number of active listings on online travel platforms has witnessed a notable 7% increase compared to the previous year. This growth has been fueled by the expansion of areas like El Tezal and Punta Arena, which have experienced a remarkable 30% uptick. The increasing supply presents fresh opportunities for property owners to tap into the thriving short-term rental market.
Demand: Reservations in Cabo have demonstrated a steady performance in Q3, showing minimal fluctuations compared to the previous year. This stability indicates consistent traveler interest in this sun-kissed destination.
Cabo's short-term rental market is not an island unto itself, as external factors play a pivotal role in shaping its trajectory.
End of Home Office: The enforcement of mandatory office days by American companies has brought about a significant decrease in remote workers. This transition has reverberated through travel patterns, impacting demand and occupancy rates (The Guardian).
Return of Business Travel: The comeback of business travel, reaching 71% of pre-COVID levels, is a promising sign. Analysts even project a full rebound by the close of 2024, contributing positively to Cabo's short-term rental landscape (Deloitte).
Super Peso: The strengthening peso has affected the purchasing power of international visitors, prompting some to curtail their stays or opt for more budget-friendly destinations. Nonetheless, this has had a balanced effect, benefiting local tourism due to stable pricing (Excelsior).
Looking into the future, it's expected that occupancy rates will continue to lag behind those seen in 2022 until Christmas week. However, there's an encouraging aspect to this projection: a robust high season is on the horizon. As of now, future occupancy rates for January through March are expected to remain on par with the previous year, hinting at brighter days ahead.
An intriguing trend to watch is the growth in lower-cost neighborhoods, where price-sensitive travelers are showing a preference for their stays.
Cabo's short-term rental market is an evolving canvas filled with promise and adaptability. Whether you're an investor seeking new opportunities or a traveler planning your next escape to this coastal paradise, the insights from Q3 2023 provide a glimpse into a destination that continues to allure and evolve. Stay tuned for the full blog post, where we'll unveil the complete story and help you make informed decisions in this captivating corner of the world.
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