17 - Short-Term Rental Trends to Watch

Key Takeaways

  • 2024 will see stable occupancy rates in the short-term rental market, with a growing demand for luxury and unique properties like treehouses and eco-retreats.
  • Technological advancements, such as AI and virtual tours, are enhancing guest experiences, while the concept of slow travel is becoming more popular.
  • Hosts should focus on using vacation rental data to adapt to increasing competition and changing traveler preferences, including trends like solo travel and all-in pricing.

The short-term rental (STR) market is getting ready for a dynamic 2024 and hosts must keep up with the pace of change. Global economic uncertainty, evolving travel habits, and a growing desire for personalized experiences are only a few of the factors that will influence how hosts operate moving forward.

Though the next year will surely bring change, many short-term rental trends also point to signs of relief. Our data shows that 2024 will likely bring stable occupancy rates and a better balance between supply and demand, trends that many short-term rental owners longed for in 2023. Artificial intelligence (AI) and solo and sustainable travel will also continue to be opportunities ripe for the picking. 

As we talk about travel trends, keep in mind that successful STR hosting requires more than knowing what’s happening; it's about using that intel to boost your rental income. Here’s what 2024 has in store, and what savvy hosts can do to stay ahead. 

Vacation Rental Property Trends

1. Luxury Rentals Experience Unprecedented Demand

Travelers are demanding luxury rentals more and more as they develop a taste for premium amenities, privacy, and unique offerings. According to our data, luxury properties had an occupancy rate of 49.1%, the lowest of all property price tiers, in 2019. Between 2022 and 2023, though, that occupancy rate grew to 55.9%. 

Property owners ready to make the most of this short-term rental trend should consider adding luxurious touches. Upgrading amenities, investing in high-quality furnishings, and highlighting unique features can attract customers who are seeking a luxury package. If you do make updates, emphasize exclusivity and a premium experience in your listings to get more bookings. 

2. Unique Rentals Are on the Rise

Vacationers are already embracing alternative rental properties, and it's likely they will continue to do so in 2024. Adventurous travelers look for unique accommodations such as treehouses, houseboats, and eco-friendly retreats, leading out-of-the-box rentals to outperform their more conventional counterparts. During the pandemic, unique properties were the only property type to experience growth. That growth has persisted in the years following.

If you do have a short-term rental property that defies the norm, try to highlight the features and experiences that set it apart from the rest. Try using keywords like "unique vacation rentals" and "alternative accommodations" to make your rental more discoverable. Channeling a sense of adventure in your property description speaks to travelers seeking memorable and unconventional stays.

3. Slow Travel Gains Momentum

Conscientious travelers and property owners have made sustainable tourism practices a focal point. While green travel isn’t going anywhere, that preference may have a new focus: slow travel. A recent travel trend report showed that Google searches for “slow travel” increased 68% from 2018 to 2023. 

People are opting for slow travel, allowing them to visit fewer places and immerse themselves more deeply and intentionally in each one. Don’t forget Airbnb sustainability practices like energy efficiency and waste reduction, but also consider how to help your guests feel like locals. Highlight nearby attractions and walkability, and create an atmosphere where guests can truly unplug. 

Boost Your Rental Revenue

4. More Travelers Want Virtual Tours

Travelers want an immersive experience before they even make a booking. That preference is already changing the STR landscape, pushing more hosts toward virtual tours and augmented reality.  

Hosts who provide 3D virtual tours and augmented reality experiences can boost the appeal of their short-term rental listings by enabling guests to explore the property remotely. Offering immersive experiences boosts booking confidence and lowers the chances of cancellations, ultimately positioning your vacation rental property as modern and the right choice for tech-savvy travelers.

5. AI Transforms the Guest Experience

In 2023, Airbnb set the stage for AI integration by broadening host profiles to gather more information about them. This year, we can expect Airbnb to begin utilizing that information to improve host, listing, and guest matching based on past preferences.

Hosts can leverage AI tools to their advantage. Gadgets like smart locks and thermostats as well as AI-driven chatbots for guest communication can increase your property's appeal. The key is to seamlessly integrate these technologies so they provide convenience and personalized experiences—not headaches. This is an important way to cultivate positive reviews and guest loyalty in 2024.

6. Modern Travelers Seek Custom Experiences

The short-term rental trend of customizing vacation rentals is gaining traction. Airbnb already uses AI to tailor travelers’ search results, and hosts can too. Travelers want to see a touch of individuality in their stay, from personalized welcome packages to curated local experiences.

Consider leaving personalized welcome notes, local experience guides, or in-room amenities based on what guests want. You could also go the extra mile and connect them with a unique Airbnb experience, or offer one yourself. Customizing your vacation rental property's offerings to make each stay unique can lead to better guest reviews.

7. Reviews Continue to Influence STR Performance

Online reviews make a big impact on how guests perceive your short-term rental property and whether they decide to book. Airbnb CEO Brian Chesky said recently that there are 317 million reviews on the platform, and two out of three guests currently leave reviews. 

Airbnb capitalized on this attention by introducing a redesigned rating page at the end of 2023, which allows guests to evaluate hosts across a wider range of categories. This aligns with the introduction of the Guest Favorites badge, which hosts can earn by demonstrating excellence in every category. 

While we don’t know exactly how these changes impact STR performance, it’s a safe bet that they will make a difference. Hosts can stay ahead of the trend by incorporating guest feedback into their approach. Take time to identify recurring themes in reviews, which will inform improvements to common areas of praise or concern.

8. Increasing Competition Keeps Hosts on Their Toes

Growing competition has always characterized the STR landscape and pushed hosts to make their listings stand out. While this short-term rental trend has been around a long time, the many ways hosts are now appealing to potential guests are new. 

Find a unique selling point or cater to a specific niche to set your short-term rental property apart. Whether it's themed accommodations, attractive amenities, pet-friendly spaces, or eco-conscious initiatives, finding a niche draws in travelers with specific preferences. Dynamic pricing strategies are key. Hosts should embrace a strategy that fine-tunes pricing according to factors such as location, amenities, and demand.

9. Vacation Rental Managers Are More Prominent Than Ever

Partnering with a rental management company makes property management for hosts and real-estate investors easier. These companies offer expertise in marketing, guest communication, and property maintenance. Their extensive knowledge of  all things STR has contributed to their rising prominence in the STR space. 

For hosts who manage properties remotely, a vacation rental manager or management company is especially valuable. Look for rental management partners that stay up to date on short-term rental industry trends and traveler preferences; their insights can become your advantage. Make sure they’re also experts in efficiency and guest experience. You want them to streamline daily tasks like cleaning and guest check-ins without compromising the reputation you’ve built. 

Find your next investment

10. Solo Travel Continues to Surge

Solo travel has become a staple in the vacation rental landscape, and momentum will continue to grow in 2024. Internal data from Airbnb showed that solo travel increased by 33% worldwide in 2022 (2023 data isn’t available yet). Airbnb even introduced new features specifically for solo traveler safety. 

Owners and property managers can optimize their listings to tap into this solo travel surge. Highlight the safety features and solo-friendly amenities that you offer. 

Airbnb also reported that solo travelers book longer trips, so make sure your property is comfortable for a long-term stay. You can also emphasize the value of your space for solitary retreats with strategic pictures and listing descriptions.

11. Heightened Regulations Restrict STR Operations

Since Airbnb’s launch in 2008, the vacation rental industry has grown largely unregulated. In recent years, though, short-term rental markets like New York City and Aspen, Colorado have taken steps to restrict STR operations in response to housing shortages. We’re only just starting to see the impact of a complex regulatory landscape, which will continue to unfold as other areas adopt restrictions. 

Staying informed about local regulations is critical. Be aware of zoning laws, licensing requirements, and any restrictions imposed on short-term rentals before buying a new property. It’s also important to keep an ear to the ground for regulatory changes that affect active listings. This may require you to adjust lengths of stays, implement safety measures, or adhere to specific reporting requirements.

Hosts who think ahead can also foster a positive attitude toward STRs in their area. Property owners who are committed to being responsible hosts and who contribute positively to the neighborhood are more likely to earn community support.

Short-Term Rental Market Trends

The following trends are forces that we expect to shape the short-term rental space in the future. We offer a deeper dive into the need-to-know factors for navigating the year ahead in our 2024 U.S. Outlook report. 

1. Short-Term Rental Market Trends

Despite fears of Airbnbust, the U.S. vacation rental market is still a powerful force. Our data shows that, by the end of November 2023, the market boasted an impressive 1,614,040 listings, an astounding 17.4% increase from the previous year. A staggering 1.45 million of those listings were entire homes or apartments, while listings with either a private or shared room accounted for only 150,000 listings.

These listings generated $64 billion in revenue in 2023 in total—a figure that could reach new heights in 2024. 

2. Listing On Multiple Platforms is Gaining Popularity

The best vacation rental platform depends on who you ask. More hosts will likely dip their toes in both ponds in 2024.

At the end of 2023, 640,000 properties were listed only on Airbnb, while about 400,000 properties were listed solely on Vrbo. 

The number of properties cross-listed split the difference. A total of 525,000 properties were listed on both Airbnb and Vrbo. Hosts may experiment with listing on multiple platforms to increase their pool of prospective guests. 

3. Continued Inflation Will Slow Supply Growth

The Federal Reserve will likely wait to lower the inflation rate due to recent employment growth. 

As a result, mortgage rates, which are currently high, will likely stay that way. Typically, high mortgage rates negatively impact the growth of vacation rental listings. We’re already seeing a decline in the number of new listings entering the vacation rental market in response to both high interest and lower occupancy rates. 

Our forecast for total supply growth in 2024 is 10.9%. While strong, it’s less than the 12.8% growth rate we saw in 2023. 

4. Occupancy Continues to Stabilize

Occupancy rates soared after the pandemic as pent-up travelers took some much-needed trips. This has made for a tough comparison as occupancy rates after 2021 seemingly trended down. The reality, though, is that occupancy rates have simply returned to the pre-pandemic levels. 

In 2023, occupancy rates stabilized at 55%, and our data suggests that this stability will continue through 2024. This means hosts can expect more consistent occupancy rates.

5. Supply and Demand Strike a Balance

While we can expect supply to grow by almost 11% in 2024, the outlook for demand is a little less certain. Inflation dropped to 3.1% in November 2023, while average hourly earnings grew more than 4%. 

Additionally, there will be more mobility in 2024, with international travelers visiting the U.S., U.S. travelers going abroad, and an increase in affordable listings. All of these factors should contribute to a 10.7% rise in demand compared to 2023. To put it simply, supply and demand growth will be much more balanced in 2024.

6. Hosts Regain Pricing Power

Consistent occupancy rates will help hosts regain control over their pricing. As a result, average daily rates (ADR), which are the average rental income per paid occupied room in a given period, could rise by about 2% in 2024—much more than last year’s 0.5% gain. 

Revenue per available room (RevPAR), a measure of actual revenue calculated by dividing annual revenue by the nights available, is expected to show positive growth. We're forecasting a 1.9% increase in 2024, bouncing back from the 4.9% drop we saw in 2023.

Automate your pricing

Stay Ahead of Short-Term Rental Industry Trends

The trends that will shape the short-term rental space in 2024 bring both challenges and opportunities. Solo travel is on rise, luxury rentals may see unprecedented demand, and alternative property options could continue to perform well. Amid all these changes, one thing remains constant—resilience.

The data-driven trends show that the vacation rental industry remains strong and will likely get stronger, allowing hosts to strengthen their businesses as well. Yet, trends are just that: trends. While they can be a helpful tool to steer your business, responding to trends isn’t enough. 

Vacation rental data can help you position your business for sustained success no matter how short-term rental trends come and go. Sign up for a free account to take the first step toward truly mastering your market. 

Source: AirDNA U.S. Market Review

Post a Comment