Apartment Rental in Rome – Cheap?
(3 votes, average: 4.67 out of 5)
Loading...Many people are wondering, as they plan their next trip or holiday, what is really going on with accommodation prices. Whether they are looking for B&B, hotels or apartments, there is a lack of real understanding about the current market situation, beyond 2010.
The first thing to understand, is that there is no general trend. Due to the overall reduction in travel, different markets have fragmented to establish their own economic rules. This means that figures published by the Wall Street Journal indicate that hotel prices have dropped by 14% world wide (click here), or figures quoted in The Times indicate a drop of 20% (click here), they are very misleading.
First, they are misleading for a basic reason that applies to all economic indicators being flung about now. Almost all basic indicies and rates of change take an y-o-y (this years figures against last years figures) as their comparison. But these comparisons now compare to probably the most shocking figures anyone with a heartbeat has ever seen. Investments, asset prices, economic activity generally plummeted from mid 2008 to at least March 2009. So all figures published now are being compared to the very pit of the market.
In addition, 2008 was not a good year either, which is often forgotten. The UK was suffering from fairly dramatic house price reductions starting in late 2007 (at the time when most world borses also peaked before beginning a slide through 2008), and the US housing market was already some way into a major correction.
Overall, these figures need to be kept in context. They are worse than they seem. Air travel in general had its worst year since WWII (worse than 12 months following 9/11).
So, this leads to the assumption that accommodation prices must be great (for the traveller)… But we are making the point in this article that, even for the traveller, they are not always great.
What seems to be happening is that the market is finally adjusting to the new reality. Off season travel in Italy and Spain has really plummeted, and so, through the winter months, there is a big oversupply of accommodation. But the summer market for 2010 seems to be stronger than in 2009, perhaps back to 2008 levels. In addition, a lot of the inventory of apartments has been removed from short term rental – those that were marginal anyway. This leaves the final result of having a lot less apartments (than 2008) being sought by about the same number of people as 2008. So in peak periods, prices have actually gone up. The same has happened in the UK, for example, with a lot more domestic travel holding up demand to a level where many private apartments are actually sliding prices up gently to test the upside.
The last factor that is messing up the ability to do an “overall” calculation is the fragmentation: Strong, historic markets are maintaining their share, whereas the more borderline destinations seem to be “not worth the risk” for many travellers. In watching their money, clients are wanting to take few risks even if they pay a little more. This has really benefited destinations such as Rome, Barcelona, London, Greek Islands etc.
In addition, inflation in some of the key areas associated with running apartments (and to a degree, other types of accommodation) is really making things hard. The very cold winter can mean power/heating bills around 10-15 euro per day certain cases, and much more when clients don’t respect the costs.
So what to expect in booking your travel through the rest of 2010? Don’t expect great deals in the strong destinations.
A good example of the fragmentation is presented in the following article. 42% off long haul 5 star?
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[...] These prices, and the extent to which the are rising, is causing significant inflationary pressure on all goods and services – the impact of which is also discussed in the article on Apartment rental in Rome and what is happening to prices. Click Here to read [...]