Wednesday, May 22, 2024

Los Cabos surpasses Mexico City in short-term rentals revenue

According to data from the property management company Alterhome, Los Cabos, Baja California Sur, now beats Mexico City in revenue from short-term rentals. 

 While Mexico City generates US $290 million per year, Los Cabos generates US $320 million. Together,  both markets could generate around US $600 million per year. Along with Mexico City and Los Cabos, Cancún and Tulum in Quintana Roo are next as Mexico’s largest markets for short-term rentals on the Spanish platform.

Founded by siblings Chema and Patricia González, Alterhome manages more than 300 apartments for short-term rental — both to tourists and to companies — and seeks to grow that figure to 2,000 in 2025. 

As part of a global expansion plan, the company arrived in Mexico in February 2023 with an investment portfolio of 1.4 million euros to deploy its business in 12 regions across the country. Its goal is to accommodate up to 12,000 travelers in its properties. In the near future, they plan to expand to Panama, Colombia and Miami. 

Mexico is a very large market that’s growing even more than the European one,” Chema, Alterhome’s CEO, told the newspaper El Economista in an interview. “With what is going on with nearshoring and the behavior of the peso against the dollar, years of good economy are forecast that will benefit vacation rentals.” 

According to Chema, an average home in Cancún or Mexico City can generate an average annual income of US $33,000 through short-term rentals, even with a property manager taking a commission of 9% to 12%. 

With Alterhomes, Chema said, anyone can benefit from the rental business by managing up to 100 homes in a year, even if they don’t own property.

“We have created technology that allows anyone to set up a business to manage from 30 to 100 homes in a year. To achieve this, we provide training and digital tools specialized in property management,” Chema said.

 The Alterhome digital platform uses Big Data for strategic factors such as pricing, digital keys to access homes and agreements with OTAs (online travel agencies).

Short-term rentals are a profitable business, but they’ve also garnered complaints by local residents in places like Mexico City, who say these rentals have caused a decrease in traditional rental inventory as well as rent inflation. 

In December 2022, Mexico City Mayor Claudia Sheinbaum expressed her intention to regulate Airbnb in the city after concerns put forward by residents of neighborhoods that have experienced a rise in prices. 

 To fix the problem, Chema suggests regulation of the market to relieve the pressure on inventory and to “improve coexistence between neighbors and travelers.”

 “Surely Mexico will come up with a similar regulation,” Chema concluded.

 With reports from El Economista

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