It is officially two years into the COVID-19 pandemic – vaccination is widespread, restrictions have lifted, and life has reverted to a new version of normal. Frankly everyone is tired of hearing about COVID, but if there was one industry that was most affected across the globe by the pandemic it was travel and tourism. Flights were grounded, borders were closed, hotels shuttered, and we all spent more time at home. The question was, which home? As people adapted to working remotely, many persons decided to temporarily make their home elsewhere and throughout the pandemic, the villa market benefited significantly from this.
To add a little context – according to the World Tourism Organisation, international tourist arrivals declined globally by 73% in 2020 with 1 billion fewer travelers compared to 2019. Tourist arrivals in Barbados dropped sharply following the onset of the pandemic in March 2020. While it began to recover in 2021, overall arrivals were still 79.9% behind pre pandemic levels.
As is always the case following traumatic experiences, travel has evolved. The reasons we travel have changed, how we view travel has changed, and this has been well reflected in the performance of the villas here in Barbados. Many of us have learned we can work from anywhere, so why not take the opportunity to explore somewhere new for longer than a typical holiday?
In July 2020 Barbados launched the 12 Month Barbados Welcome Stamp. The first digital nomad visa offering qualified individuals and families the opportunity to live and work (remotely) in Barbados for up to 12 months. The program was such a success it was renewed in July 2021. As of 31 December 2021, over 3,200 applications were received and 2,163 have been approved to date. The effect was felt in our villas with notable changes in the length of stay as guests began thinking about travel differently. Whether guests were coming on The Welcome Stamp or simply coming with the idea of working remotely and staying longer, length of stay increased substantially and many of the traditional short term rental villas began renting for periods of up to six months. Traditional average length of stay of between 8-10 nights grew by over 30% while the number of bookings in excess of 21 days in length, doubled for 2021 relative to pre-pandemic levels. In 2021 more than 12% of guests stayed for longer than 3 weeks compared to only 2-3% pre-pandemic.
While there was a slight softening in 2021, transactions still paced ahead of 2019 by 11%.
However, uncertainty over travel restrictions had a marked effect on lead times for bookings with the percentage of bookings made within 30 days of travel ballooning to represent over 50% of all 2020 bookings, compared to 18% pre pandemic. In 2021, bookings arriving within 30 days declined to 29% but are still higher than pre COVID averages as shown in Figure 3 below:
According to data collected by STR , hotel occupancy in Barbados fell 54% in 2020, improving to 46% below pre pandemic levels in 2021. Villas on the other hand suffered a similar decline in occupancy of 51% in 2020, but 2021 occupancy was only 14% below 2019 levels in villas. Many tour operators who traditionally only sold hotels have begun investigating the launch of a new villa product for the first time. While the volume of villa bookings fell to 42% of pre-pandemic levels in 2020, by August 2021 we had begun to see booking volumes returning to normal. For the past three months December 2021 through February 2022, bookings were 3x the volume experienced for the corresponding prior year period, only falling short of the last pre-pandemic period by 15%. With a desire for privacy, less interaction with people and longer stays, villas have been in high demand for the post pandemic traveler, as highlighted in Figure 4 below:
Booking patterns have always followed seasonal patterns with the peak booking period in January following Christmas holidays and a fall off thereafter in February. With the effects on travel being felt in February 2020 worldwide, booking volumes dropped off sharply. Looking forward, we are experiencing a surge in demand with booking volumes outperforming pre pandemic levels for January and February 2022 by 7% as illustrated in Figure 5 below. With the UK and Canada relaxing testing requirements for entry on return home, booking volumes have remained at record levels and continued to peak through February. It is clear everyone is ready to get back to traveling.
The spinoff in the real estate market has been extremely positive as well with the volume of sales transactions up 27% on pre COVID levels, and the pipeline for sales healthier than ever. When Terra Caribbean completed its Market Sentiment Survey in October 2021, the market outlook was very positive with 34% of persons expecting the Barbados economy to return to pre COVID-19 levels in 2023.
From where we sit, it’s all looking up, but if there is one thing, we have learned, it is not to take things for granted. The villa market in Barbados has been resilient in the past year, withstanding a pandemic, volcanic ash all and the first hurricane in decades in Barbados. Our property managers are our superheroes and we are thrilled to welcome our guests back to our homes.
*The data in this report in respect of the villa market is solely from transactions completed and statistics recorded by Blue Sky Luxury as the largest villa manager in Barbados.