Short-term Vacation Rental Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, 2019-2029F

The Global Short-term Vacation Rental Market was valued at USD 110.2 Billion in 2023, and is expected to reach USD 178.3 Billion by 2029, rising at a CAGR of 8.40%.

The growth of the global market is being fueled by increasing demand for staycations, higher spending on travel and tourism, and travelers' preference for budget-friendly accommodations. However, the pandemic blurred the lines between work and leisure, leading to a surge in the popularity of remote work. This flexibility in employment has resulted in a notable increase in environmentally conscious travelers opting for eco-friendly holiday rentals. Moreover, the presence of fake listings for apartments, condos, and homes is impeding industry growth. Nonetheless, consumer awareness of services and offerings is increasing due to the widespread use of the internet and social media platforms. To capture a larger market share, key companies are introducing various services, exotic destinations, and amenities, particularly targeting female travelers.

Key Market Drivers

Economic Considerations

Economic factors have also played a significant role in the growth of the short-term vacation rental market. Both property owners and travelers often find short-term rentals to be more cost-effective than traditional hotel stays. Property owners can generate additional income by renting out their spaces, while travelers can often find more affordable and spacious alternatives to hotels. In times of economic uncertainty, individuals may turn to short-term vacation rentals as a means of optimizing their spending without compromising on the quality of their travel experience. This economic advantage has contributed to the resilience of the short-term vacation rental market, making it an attractive option for various segments of the population.

Globalization and Increased Travel

The globalization of businesses and the ease of international travel have led to an upsurge in the demand for short-term vacation rentals. As people increasingly traverse borders for work or leisure, the need for flexible and convenient accommodation options has grown. Short-term rentals provide a suitable solution for travelers seeking temporary housing in diverse locations, ranging from business trips to leisure vacations. Additionally, the rise of digital nomadism has further fueled the demand for short-term vacation rentals, as individuals opt for longer stays in various destinations while working remotely. The global nature of modern lifestyles has thus become a major driver for the expansion of the short-term vacation rental market.

Regulatory Environment and Legislative Changes

The regulatory environment has undergone significant changes in response to the rapid growth of the short-term vacation rental market. Many cities and regions have adapted or implemented regulations to address concerns related to zoning, safety, and taxation. As regulatory frameworks become clearer and more accommodating, property owners and travelers gain confidence in participating in the short-term rental market. Some areas have embraced short-term vacation rentals as a means of boosting tourism and local economies, leading to more favorable regulatory environments. The adaptation of regulations to accommodate short-term vacation rentals has thus contributed to the market's expansion by providing a more stable and predictable operating environment.

Rise of the Experience Economy

The experience economy, where consumers prioritize experiences over material possessions, has significantly influenced the short-term vacation rental market. Travelers are increasingly seeking unique and memorable experiences, and short-term rentals align with this trend. Vacation rentals often offer distinctive features, such as themed interiors, picturesque locations, or local cultural immersion, providing travelers with a more enriching experience compared to standard hotel accommodations. The ability to live like a local and create lasting memories has become a major draw for consumers, propelling the short-term vacation rental market forward.

Flexible Accommodation Options for Various Traveler Segments

Short-term vacation rentals cater to a wide range of traveler segments, from families and solo travelers to large groups. The flexibility in accommodation options, including entire homes, apartments, and shared spaces, makes short-term rentals appealing to diverse demographics. Families can benefit from the added space and amenities, while solo travelers may appreciate the affordability and local connections offered by renting a room in a host's home. This versatility in meeting the distinct needs of different traveler segments has been a driving force behind the sustained growth of the short-term vacation rental market.

Millennial and Generation Z Travel Trends

The travel habits of younger generations, specifically Millennials and Generation Z, have played a crucial role in shaping the short-term vacation rental market. These demographics prioritize experiences over possessions, seek authenticity, and value the sharing economy. Short-term vacation rentals align well with these preferences, offering unique and personalized experiences that resonate with the younger traveler. The influence of social media in showcasing travel experiences has further fueled the desire for distinctive accommodations, driving the demand for short-term rentals among Millennials and Generation Z.

Key Market Challenges

Impact on Local Housing Affordability

The growth of the short-term vacation rental market has raised concerns about its impact on local housing affordability. In popular tourist destinations, the conversion of residential properties into short-term rentals can reduce the available housing stock for long-term residents. Property owners may find it more lucrative to rent their homes on a short-term basis to tourists, potentially driving up rental and property prices in the local housing market.

This phenomenon has led to debates in various communities about the social and economic implications of short-term vacation rentals. Local residents may face difficulties finding affordable housing, and the sense of community can be disrupted when residential neighborhoods transform into transient tourist hubs. Balancing the economic benefits of short-term rentals with the need for affordable housing poses a significant challenge for policymakers and community stakeholders.

Strain on Community Infrastructure and Services

The popularity of short-term vacation rentals can strain local infrastructure and services. Residential neighborhoods not designed for high levels of transient occupancy may face challenges related to increased traffic, noise, and demands on utilities and waste management. Local governments may find it challenging to allocate resources effectively to accommodate the influx of short-term guests while maintaining the quality of life for permanent residents.

Balancing the economic benefits of tourism with the need to preserve community well-being requires thoughtful planning and collaboration between local authorities and the short-term vacation rental industry. Addressing these challenges involves developing sustainable strategies to manage the impact on community infrastructure and services, ensuring that short-term rentals contribute positively to the local economy without compromising the living conditions of permanent residents.

Quality Control and Guest Experience

Maintaining consistent quality control and ensuring a positive guest experience pose significant challenges for the short-term vacation rental market. Unlike standardized hotel accommodations, short-term rentals vary widely in terms of amenities, cleanliness, and overall quality. Property owners and managers face the challenge of meeting guest expectations and delivering a high level of service consistently.

Issues such as misrepresentation of properties in online listings, inadequate cleaning standards, or unresponsive hosts can result in negative guest reviews and damage the reputation of both individual properties and the entire short-term rental industry. Striking a balance between the unique, personalized experiences that guests seek and the need for standardized quality control presents an ongoing challenge for property owners and platforms alike.

Implementing effective quality control measures, setting clear expectations for both hosts and guests, and providing transparent and accurate property listings are crucial steps in addressing these challenges. The industry's reputation hinges on its ability to offer reliable and enjoyable accommodations, requiring continuous efforts to enhance and maintain service standards.

Key Market Trends

Sustainable and Eco-Friendly Practices

As global awareness of environmental issues continues to rise, the short-term vacation rental market is experiencing a trend towards sustainable and eco-friendly practices. Property owners and managers are adopting measures to reduce the environmental impact of their accommodations, incorporating energy-efficient appliances, utilizing renewable energy sources, and implementing waste reduction and recycling initiatives.

Eco-conscious travelers are increasingly seeking accommodations that align with their sustainability values. Listings highlighting environmentally friendly features and practices are gaining popularity, and some platforms are introducing eco-friendly badges or certifications to identify and promote sustainable properties. This trend reflects a broader shift in consumer preferences towards responsible and sustainable travel, with short-term vacation rentals positioned to meet the growing demand for eco-friendly accommodation options.

Flexibility in Booking Options

The short-term vacation rental market is adapting to changing consumer behavior by offering increased flexibility in booking options. The traditional model of fixed check-in and check-out times is evolving to accommodate the preferences of modern travelers, who seek flexibility in their travel itineraries. Many property owners are now implementing flexible check-in/out policies, allowing guests to tailor their arrival and departure times to better suit their schedules.

Another aspect of flexibility is the emergence of short-term rentals as suitable options for various types of trips, including last-minute getaways, weekend stays, and longer-term stays for remote work or extended vacations. This trend is reflective of a shift in the market towards catering to diverse traveler needs, providing more options beyond the conventional seven-day rental model.

Segmental Insights

Accommodation Type Insights

The global industry is segmented by accommodation type, including homes, apartments, resorts/condominiums, and others. In 2023, the home accommodation type segment emerged as the leader, capturing the highest share of overall revenue. This segment is expected to maintain its dominant position, growing steadily at a Compound Annual Growth Rate (CAGR) during the forecast period. The surge in family travel trends has notably boosted the demand for vacation home rentals worldwide. According to HomeAway's 2019 report, millennials are transitioning from solo backpacking to traveling in larger groups with friends and family. Conversely, the resort/condominium accommodation type segment is forecasted to achieve the fastest CAGR.

The increasing popularity of short getaways has made rental resorts a preferred choice due to their various advantages and luxurious services. These benefits include upfront pricing, efficient employee service, secure tourist locations, access to spa and wellness amenities, organized recreational activities, and opportunities for positive social interactions. The growing appeal of short vacations has elevated rental resorts as an attractive option, offering a multitude of benefits and comfortable services.

Regional Insights

In 2023, North America held a dominant position in the market, accounting for the highest share of overall revenue. This trend is projected to continue throughout the forecast period. A growing number of travelers, particularly millennials, are seeking to redefine their exploration of new destinations and seek out unique experiences, leading to the rising popularity of glamping. With increasing income levels among this demographic and a desire for novel vacation experiences, North America's regional market is anticipated to benefit positively in the forecast period. Conversely, the Asia Pacific region is expected to experience the fastest Compound Annual Growth Rate (CAGR) during this period.

Key Market Players

• 9flats PTE. Limited
• Airbnb, Inc.
• Booking Holdings Inc.
• Expedia Group, Inc.
• MTCH AG (Hotelplan Group)
• MakeMyTrip (India) Private Limited
• Awaze A/S (NOVASOL)
• Oravel Stays Limited
• Tripadvisor LLC
• Wyndham Destinations Inc.

Report Scope:

In this report, the Global Short-term Vacation Rental Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

Short-term Vacation Rental Market, By Accommodation Type:

• Home
• Apartments
• Resort/Condominium
• Others

Short-term Vacation Rental Market, By Booking Mode:

• Online
• Offline

Short-term Vacation Rental Market, By Location:

• Urban
• Rural
• Beach
• Mountain
• Others

Short-term Vacation Rental Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia-Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE
• Turkey
• Egypt

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global Short-term Vacation Rental Market.

Available Customizations:

Global Short-term Vacation Rental market report with the given market data, the publisher offers customizations according to a company's specific needs. The following customization options are available for the report.

Company Information

• Detailed analysis and profiling of additional market players (up to five).

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