Key Takeaways

  • Puerto Vallarta vacation rental occupancy softened this summer, with July at 22.5% versus 28.2% a year earlier
  • Longer stays are helping offset some of the decline in reservation counts, especially during peak winter months
  • Rental supply has grown more than 80% over the past decade, giving travelers more choices and increasing competition for hosts

Puerto Vallarta’s short-term rental market is giving U.S. owners and investors a reminder that fewer bookings do not always mean fewer occupied nights.

Vacation rental occupancy in the popular Mexican resort city fell to 22.5 percent in July, down 20 percent from the previous year, according to local outlet Out & About Puerto Vallarta.

August also slipped 20 percent, while September reservations are currently about 36 percent lower than the previous year.

But those numbers do not tell the whole story.

Guests are staying longer, particularly during Puerto Vallarta’s peak winter season, and that can help make up for a lower number of individual reservations.

Longer winter stays are changing the math

January was a solid month for Puerto Vallarta vacation rental hosts.

The average vacation rental stay has climbed to 26.5 nights, up from 20.7 nights before the pandemic.

Other winter months are moving in the same direction. October stays increased from 7.6 to 10.8 nights, December rose from 11.7 to 13.5 nights and February jumped from 12.7 to 17.5 nights compared with pre-pandemic levels.

Eight guests staying 10 nights can produce more occupied nights than 10 guests staying for a week, even though the property records fewer reservations.

The report also found some travelers are booking extended winter stays two or three years in advance, including stays lasting three to six months.

At the other end of the booking window, last-minute demand still plays a meaningful role. Between 16% and 27% of bookings in recent years have arrived close to the stay date, which means September and other forward occupancy figures can still move higher.

Cancellation rates for the key October-through-March season have remained below 5 percent, according to the report.

Related: Pet-friendly Gulf Coast rentals command 24% revenue premium, guide finds

There is one big force putting pressure on existing STR hosts in this tourist hotspot, though – competition.

Vacation rental inventory in Puerto Vallarta has grown more than 80 percent over the past decade, spreading demand across more properties and neighborhoods.

That helps explain why summer and shoulder-season operators are seeing more price sensitivity even as the winter market remains much stronger.

Despite the increased saturation, the popular Mexican market is worth following closely.

Puerto Vallarta remains one of the country’s best-known vacation rental destinations for U.S. travelers.

July’s 22.5 percent occupancy was still above the pre-pandemic benchmark of 19.6 percent, even though August and September were off to a slow start.

The final September number is not set yet.

Last-minute bookings could still close part of the gap before the month ends.

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