Mexico City, a bustling metropolis known for its rich history, vibrant culture, and thriving business landscape, is also a prominent destination for travelers seeking both leisure and business experiences. In the midst of an ever-evolving short-term rental market, let's explore the Q3 2023 Mexico City short-term rental insights that shed light on the city's current status and future outlook.
See our full report below followed by a detailed recap.
Q3 2023 has brought with it a nuanced story for short-term rental property owners and investors in Mexico City. Despite a double-digit growth of active listings on various travel platforms, monthly short-term rental revenue has only seen a slight 2% decrease compared to the previous year. The remarkable aspect of this decline lies in the fact that it's been primarily offset by substantial price increases, effectively mitigating a drop in occupancy rates. This indicates a market that has found resilience in pricing strategies, even as other challenges persist.
To understand Mexico City's short-term rental landscape, it's crucial to examine both supply and demand dynamics.
Supply: The number of active listings on online travel platforms has experienced a significant 34% increase compared to the previous year. This surge is partly due to homeowners shifting their focus to these platforms, seeking higher yields in the thriving short-term rental market. As these platforms continue to grow, they offer new opportunities for property owners to reach a broader audience.
Demand: In the realm of demand, the number of reserved nights has risen by an impressive 21%. A significant contributor to this increase has been the resurgence of business travel, which has now reached 71% of pre-pandemic levels. Industry analysts are optimistic, projecting a full rebound in business travel in the near future, adding to the city's appeal for investors.
Mexico City's short-term rental market isn't insulated from external forces that influence traveler behavior.
End of Home Office: Mandatory office days have been enforced by many American companies, leading to a significant decrease in remote workers. This change has influenced traveler patterns and preferences (as noted by The Guardian).
Return of Business Travel: Business travel, which suffered during the pandemic, is making a remarkable comeback, with recovery reaching 71% of pre-COVID levels. Analysts are optimistic about its full return, signifying a positive trend in the city's short-term rental market (Deloitte).
Super Peso: The strengthening of the peso has affected international visitors' purchasing power, leading some to shorten their stays or opt for more budget-friendly destinations (Excelsior).
Looking into the future, it's expected that occupancy rates will remain lower than 2022 levels, primarily due to the rapid growth in supply outpacing demand. However, there are intriguing trends to consider.
Demand Near Business Centers: Higher demand is expected in areas like Polanco and Reforma, as businesses increasingly opt for short-term rentals on platforms like Airbnb to reduce costs.
Supply Growth Slows Down: The growth of active listings is anticipated to slow down as assets with lower profitability return to long-term rental. This recalibration in the supply side of the market presents new opportunities for property owners to adapt and thrive.
Mexico City's short-term rental market remains dynamic, and its potential continues to unfold in Q3 2023. By understanding the current landscape and these crucial insights, investors and property owners can make informed decisions to maximize their returns in this thriving and ever-evolving urban hub. Whether you're considering investment opportunities or planning your next visit, Mexico City has much to offer in 2023 and beyond.
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