Short-term rentals, also known as vacation rentals, have gained a lot of attention and popularity through popular platforms such as Airbnb and Vrbo. Most short-term rentals offer temporary accommodations for less than 30 days. They can be a private room in an apartment or an entire house or property.
Many states and cities are increasingly enacting rules and regulations for short-term rentals, including penalties for operating without a short-term rental license.
The U.S. short-term rental market is forecast to grow to approximately $81.63 billion by 2033.
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Nearly 2.5 million rental listings and over 785,000 individual hosts enabled 207 million nights in U.S. short-term rentals in 2023.
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Due to increasing demand and availability, the short-term vacation rental sector is expected to add around 8 million users within the next five years.
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The average cost per night for a short-term rental in the U.S. was over $300 in 2023. However, prices can be lower for smaller accommodations, such as a single room.
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People ages 25 to 34 (30%) and 35 to 44 (27.6%) are most likely to rent a short-term property in the U.S. in 2023.
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Short-term rental statistics
Short-term rentals have seen incredible growth in recent years, boosted by post-pandemic demand. Lower inflation and higher wages in the coming years will allow more consumers to opt for vacation rentals.
- In 2023, Americans showed great interest in international short-term rentals. Demand for international locations increased 17% this year, while domestic short-term rentals increased only 4.5%.
- The most popular sales channel for short-term rentals is online. Only about 21% of short-term rental transactions occur offline.
- Although urban locations for short-term rentals saw a sharp increase in demand in 2023, that growth is expected to slow in 2024. At the same time, short-term rentals in coastal, mountain, suburban and other locations are expected to see an increase in demand this year.
- The largest companies in the short-term rental market include Airbnb, Vacasa, Sonder and Lyric.
Short-term rental market size by year
In the US, the short-term rental market size was estimated at $29.09 billion in 2023. Between 2023 and 2024, the market is expected to grow by over $3 billion and is expected to reach $32.25 billion.
In 2023, North America dominated the global short-term rental market with a 37% market share. North America, especially the US, owes this in large part to the success of companies like Airbnb and HomeAway.
By 2033, the U.S. short-term rental market is expected to reach $81.63 billion, a significant increase from 2024 estimates and will represent a compound annual growth rate of 11%.
What are the main benefits of short-term rental?
A 2021 survey conducted by Cinch Home Services revealed several interesting insights into customer service preferences in the short-term rental space.
For example, the average guest booking a short-term rental places more importance on price, location and cleanliness than amenities and decor. Short-term rental landlords cited enhanced cleaning and generous cancellation policies as features most likely to attract guests to short-term rentals, with 70% and 49% of landlords citing these two features, respectively.
When it comes to common problems with short-term rentals, guests reported five main problems with bookings. 39% of short-term rental guests reported poor internet connection, while poor property maintenance (38%), lack of cleanliness (33%), poor parking (23%) and difficult landlords (23%) rounded out the top five complaints. For a successful listing, it is therefore especially important for hosts to pay attention to these areas:
- Internet connection
- maintenance
- Cleanliness and hygiene
- Parking and availability
- Customer Service
Potential short-term vacation rental guests also appreciate price comparison tools like Google’s Travel Comparison feature. While not all short-term rental platforms integrate their properties with Google’s vacation rental comparison tool, it’s still a useful way to quickly compare prices for multiple listings in the same area.
How many people participate in short-term rentals?
Short-term rentals are a popular accommodation option for many people in the United States. In 2023, there were 2,459,260 vacation rentals available and over 785,000 unique U.S. hosts. Travelers spent a total of 207 million nights in all of these properties in 2023.
In the U.S., the total number of vacation rental users dropped dramatically in 2020 during the height of the COVID-19 pandemic and related restrictions, falling to nearly 20 million year-over-year. However, by 2022, the number of users had already increased beyond pre-pandemic levels to 60.92 million. Forecasts suggest that short-term rentals in the U.S. will add nearly 8 million more users over the next five years.
How much does a short-term rental cost?
Prices for short-term vacation rentals vary depending on location and size, and other factors such as events or attractions near the property can also drive up the price.
On average, a guest in a short-term rental in the US will pay just over $300 per night. However, renting a single or shared room is more affordable, costing on average less than $100 per night. Costs typically increase with the size of the property.
Demographics of short-term renters
Consumers aged 25 to 34 make up the majority of short-term rental customers, representing 30% of all short-term rental customers in the US. Close behind the 25 to 34 age group are those aged 35 to 44, accounting for 27.6% of bookings.
The gender of short-term renters in the U.S. in 2023 was fairly evenly distributed, with 55% male and 45% female. However, a majority of 57% of short-term rental guests in 2023 were high-income. The share of high-income guests in the short-term rental market exceeded the combined share of low- and middle-income guests.
Frequently Asked Questions
Why are short-term rentals popular?
Short-term rentals are popular for several reasons. Many short-term rentals offer amenities not found in hotels, such as fully equipped kitchens, which appeal to travelers who prefer to prepare their own meals rather than eat out.
Additionally, short-term rentals can be suitable for traveling families seeking more space and privacy than a hotel can offer. They can also serve as temporary housing for migrating families looking for long-term rentals or waiting for a moving company to deliver their furniture and appliances.
Are short-term rentals still profitable?
The profitability of short-term rentals depends heavily on location. Consumers may be more attracted to rental properties in prime urban locations, particularly near nightlife and cultural events. Property managers can expect to charge higher prices for these types of locations, while properties in suburban or rural areas outside of major urban networks are likely to command lower rental rates.
Short-term rentals also have unpredictable occupancy, which may not make them a good investment for those looking for a steady source of income. Occupancy rates of short-term rentals can fluctuate reliably by season, but they can also change dramatically from year to year.
Is the short-term rental industry affected by recessions?
Based on historical trends, the short-term rental industry has proven resilient during recessions. Many consumers view short-term vacation rentals as more affordable than hotels. They may also focus on domestic destinations during a recession, rather than international destinations.
Why are short-term rentals regulated?
As rental prices continue to rise in the U.S., regulating short-term rentals helps prevent the decline of long-term housing. A reduced supply of long-term housing can drive rents even higher for a city’s residents. Regulation also promotes the safety and health of guests and surrounding communities.
Are short-term rentals good for the economy?
Despite assumptions about the impact of short-term rentals on rental costs, they may actually have only a minimal effect on rent increases, according to the Harvard Business Review. And short-term vacation rentals offer financial benefits to both travelers and hosts. Travelers can benefit from a wider choice of accommodations and lower nightly rates, while hosts’ property values tend to increase due to the greater investment required to maintain and upgrade short-term rentals. Finally, short-term rentals also increase tax revenues.
References
- “Short-term vacation rentals.” City of Hermosa Beach. Reviewed July 21, 2024.Link here
- “2024 US Short-Term Rental Outlook Report.” AirDNA. Evaluated on July 21, 2024. Link here
- “Vacation Rentals – United States.” Statista. Evaluated on July 20, 2024. Link here
- “What are the largest short-term rental property management companies?” HelloData. Evaluated on July 20, 2024. Link here
- “Short-term rental market size, share and trends 2024 to 2033.” Precedence Research. Evaluated on July 20, 2024.Link here
- “Survey: Dreams and nightmares of short-term rentals.” Cinch Home Services. Evaluated on July 21, 2024.Link here
- “Short-term rental statistics you need to know.” AirDNA. Evaluated July 20, 2024. Link here
- Miller, K. “3 Pieces of Advice You Can Give Short-Term Rental Investors.” National Association of Realtors. Reviewed July 20, 2024. Link here
- Hernandez, A. “STRs: How Short-Term Rentals Can Weather a Recession.” REIA of Oakland. Reviewed July 20, 2024.Link here
- Calder-Wang, S., Farronato, C., & Fradkin, A. “What does banning short-term rentals really achieve?” Harvard Business Review. Evaluated on July 21, 2024. Link here
- “Economic Impact of Short-Term Rental Restrictions.” Isle of Palms Chamber of Commerce. Reviewed July 21, 2024. Link here
- “Friend or foe? Understanding short-term rental regulations.” AirDNA. Reviewed July 21, 2024. Link here
- “Airbnb vs. Hotels: What’s the difference and which is better?” Skyscanner. Reviewed July 24, 2024.Link here
