
In 2023, short-term rentals in America comprised a $64 billion market share, with over 2.4 million listings managed by 785,000 hosts, per AirDNA, a data and analytics company. Individual listings raked in an average of $26,024 annually, and average daily rates hovered just over $300.
Over 200 million overnight stays were booked in 2023, the lion’s share taken by houses, flats, villas and condominiums that offered travelers flexibility as well as food prep and laundry amenities.
AirDNA’s 2024 Outlook Report shows that after short-term rental occupancy rates spiked to 61.3% in 2021 and increased profits, many entrepreneurs sought to cash in on this lucrative business model.
Yet, per AirDNA’s report, the flood of newcomers only served to dilute the market and lower profits.
For the first time since 2014, the revenue per available room (RevPAR) decreased by 4.9% and short-term rental growth slowed to 6.7% year-over-year, according to the 2024 Outlook Report.
“Popular locations include small and midsize cities, which have maintained double-digit demand growth due to healthy listing growth,” said Bram Gallagher, AirDNA’s director of Economics and Forecasting. “Nationally, daily rates [ADRs] are expected to increase by about 2.0% as inflation stabilizes. Profitability has seen fluctuations, with RevPAR declining by 8.3% in 2023 but projected to rise slightly, between a half and one percent, in 2024 due to steadier occupancy and rate increases.”
Natural disasters and changing travel wanderlust created multiple headwinds for short-term rental owners. Data from AirDNA’s report suggest raging wildfires in Hawaii and Canada, hurricanes in the South and sweltering summer temperatures put a damper on tourist activity.
The popularity of cruises increased by over 78% in 2023 despite high demand for short-term rentals in small and midsize cities and correspondingly low demand for coastal and mountain destinations. While luxury and upscale bookings for short-term vacation rentals in the U.S. saw a drop in demand, international destinations increased by 17% as travelers either went abroad or selected more modest accommodations.
Vacation rental industry trends
Although travelers booked the majority (70%) of short-term rentals offline in 2022, online bookings surged in 2023. Offline booking methods were most popular among Baby Boomers and Generation X. Travelers sought out online booking methods largely due to convenience and the ability to research potential destinations in search of an authentic experience.
Successful short-term rental owners secured profits by distinguishing their services from competitors through immersion, seasonally adjusted pricing and custom touches. Distinctive experiences that went the extra mile support a strong brand presence.
Many Real Estate Leaders look at the future of Short Term Rentals as very Robust, for example Real Estate Wealth Institute (REWI) has now launched a Short Term Rental Community to assist Investors in building long term Wealth in Investing in the STR Business (rewistr.com)
Cities with Largest Increase in Demand in short-term rental
Increase in Demand from 2023 to 2024
Jersey City/Newark, New Jersey 35.7%
Grays Harbor, Washington 31.5%
San Juan, Puerto Rico 26.5%
Rochester, New York 26.1%
Columbus, Ohio 22.9%
Buffalo/Niagara Falls, New York 21.7%
College Station, Texas 21.3%
Oxford, Mississippi 20.6%
Gainesville, Florida 19.9%
Reno, Nevada 19.4%
According to AIRDNA these Cities look like the best places to invest in 2024
Columbus, GA
Ellsworth, ME
Logan, OH
Spring Hill, FL
Sneads Ferry, NC
Winter Haven, FL
Stanton, Ky
Port Angeles, WA
Akron, OH
Fairbanks, AK
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