Short-Term Rental Market

The global Short-Term Rental Market is valued at USD 100.8 Billion in 2022 and is projected to reach a value of USD 228.9 Billion by 2030 at a CAGR (Compound Annual Growth Rate) of 10.8% between 2023 and 2030.

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In recent years, there has been a significant increase in the number of eco-friendly vacation rentals among eco-conscious travelers. Short-Term Rentals in natural environments are becoming increasingly popular in the rental market. According to a TripAdvisor survey conducted in 2022, Americans increasingly seek vacation rentals with sustainable amenities. Nearly 46% of survey respondents would prefer to stay in a property that consumes less energy and water, and 43% would select an environmentally-friendly rental if available. Also, according to a recent survey carried out by booking, 81% of travelers are interested in staying in sustainable accommodation.

In 2020 there is a decline in demand for short-term vacation accommodations due to the COVID-19 pandemic. According to data published by the World Tourism Organization (UNWTO), the COVID-19 pandemic it has resulted in a 71% decline in international tourist arrivals in 2022 and a 72% decline in 2020 compared to 2019, representing a combined loss of 2.1 billion international tourists.

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• North America has generated more than 30% of revenue share in 2022 and is expected to grow at a CAGR of 10.7% during the forecast period.
• Asia-Pacific is expected to witness fastest CAGR between 2022 and 2030.
• Based on Booking Mode, the online segment dominated the market and contributed more than 61% of the total revenue share in 2022.
• The home-based accommodation sector held a substantial share of the accommodation type segment in revenue in 2022.

In addition, key participants are listing a variety of Short-Term Rentals, including private homes, villas, beach houses, and apartments, to attract millennials and travelers seeking aesthetically pleasing accommodations. In 2022, Airbnb hosted a competition, giving away $10M to hosts with the most unique properties, proving that new, unexpected experiences are the future of Short-Term Rentals. This is anticipated to stimulate the growth of the real estate industry, thereby sustaining market expansion. Since the pandemic, there has been a decline in travel due to cost considerations. As of April 30, 2020, a decrease in real Personal Consumption Expenditures (PCE) reflected a decrease of USD 829.9 billion in spending on services and USD 104.9 billion on commodities, according to the U.S. Bureau of Economic Analysis. Despite an impending recession, Oxford Economics predicts accommodation will be one of the least-affected industries. People will seek flexible, affordable, and comfortable accommodations as travel continues, making Short-Term Rentals popular.

Economic Insights

There has been a growing push to regulate the Short-Term Rental (STR) industry in recent years. For example, a traditionally business-friendly city, Dallas, just implemented a new regulation banning all STRs in single-family residential zones. As cities and towns grapple with the impact of Short-Term Rentals on local communities, more rules and regulations to address issues such as housing availability, zoning, and safety may come in 2023. The Council of National Multifamily Housing said that, in multifamily dwellings, around 65% of all Airbnb rentals were found, suggesting that a large part of the market came from urban apartments. Also, Before the COVID-19 pandemic, 10% of Short-Term Rental reservations were made in rural areas, 13% in mountainous areas, and 34% in coastal regions. Bookings in the above areas rose to 18%, 42%, and 22% in the summer of 2022. These regions had the best Short-Term Rental markets.

Top Market Trends

1. Frictionless Pay to Augment Growth: One of the most prominent pandemic trends is that guests prefer tech-facilitated, frictionless accommodations to more intimate human interactions. To meet the demand for a more seamless stay, proprietors of Short-Term Rentals are now embracing the benefits of technology. They offer keyless entry, detailed guidebooks upon arrival, and constant digital communication channels to interact with guests and answer their inquiries. If social media was previously considered significant, ensuring that your visitors feel cared for in the absence of in-person contact is essential. Before the COVID-19 pandemic, 10% of reservations for Short-Term Rentals were made in rural areas, 13% in mountainous areas, and 34% in coastal areas. In the summer of 2022 , bookings in the regions increased by 18%, 42%, and 22%, respectively. These regions had the strongest markets for Short-Term Rentals.
2. Rising Tourism: Two crucial factors are the expansion of the tourism industry and the popularity of Short-Term Rental properties. Growth drivers for the global Short-Term Rental platform market. The baby boomer generation has significantly expanded the travel and tourism industry. Short-term vacation rental properties are in particularly high demand. These properties generate greater returns than long-term rental properties when properly marketed. In addition, the increased comfort and affordability of Short-Term Rental properties will attract consumers, which is anticipated to contribute to market expansion in the future. The ability of online vacation rental sites and other channels to facilitate real-time bookings is a significant factor driving the growth of the global market for Short-Term Rental platforms. This added value will facilitate booking vacation accommodations, resulting in increased consumer satisfaction. On the global market for vacation rentals, the availability of immediate reserving options has increased the degree of product or service differentiation. To save time and money, many current market vendors have invested in autoresponder technology. This technology enables automated responses to inquiry emails and repetitive inquiries, resulting in a different user experience that is anticipated to influence market growth over the forecast period positively.

Market Segmentation

The global Short-Term Rental market can be categorized on the following: Accommodation Type, Booking Mode, and Regions. Based on Accommodation Type, the market can be categorized into Home, Apartments, Resort/Condominium, and Others. Additionally, based on the Booking Mode, the market can be split further between Online and Offline. Likewise, based on Region, the market is segmented into North America, Europe, Asia Pacific, Latin America, and Middle East & Africa.

Based on the Accommodation Type

Home-Based Accommodations to Account for Largest Market Share due to Rising Amount of Travellers

Based on the revenue, the Home Accommodation segment dominated the market in 2022. This is due to the popularity of residences among travelers due to the availability of space, safety, and proximity to amenities. In addition, the low cost of lodging in rural and travel destinations is a significant factor in the segment's growth. The resort/condo segment is projected to have the highest CAGR during the forecast period. The segment is primarily propelled by millennials, who are more inclined to spend on amenities such as barbecue grills, games, swimming pools, clubhouses, and tennis courts. Twelve percent of millennials plan to remain in a villa/estate in 2022 , compared to only 6 percent of Baby Boomers and 9 percent of Generation X.

Based on the Booking Mode

Online Bookings to Express Dominion owing to Better Integration of Technology

Regarding revenue, the online reserving mode segment dominated the global industry in 2022. The segment will continue to expand at the highest CAGR, maintaining its dominant position throughout the forecast period. Technology simplifies everything in the Short-Term Rental industry, and businesses must keep up with consumer expectations for a pleasurable experience. Short-Term Rentals typically have a high turnover rate with numerous guests. By streamlining reservations, automation maximizes efficiency, provides a positive experience for travelers, and enables businesses to obtain a market advantage. In addition, the offline segment is anticipated to experience a significant growth rate during the forecast period. Baby boomers and Generation X, who make up the majority of consumers, have a strong preference for offline booking.

Based on Region

North America to Lead Global Market due to an Ongoing Trend of Glamping

North America led the global industry in 2022. During the forecast period, the region will continue to dominate the industry. Glamping has become a popular trend as many travelers, particularly millennials, seek to change how they explore new locations and obtain unique experiences. The rising income levels of this group of travelers, coupled with their desire to experience new types of excursions, are anticipated to positively impact the North American regional market over the forecast period.

In contrast, the market for short-term accommodation in the Asia Pacific region is anticipated to expand at the highest CAGR over the forecast period. The region's rapid development can be attributed to the swiftly expanding tourism industry, demographic characteristics, and disposable income levels of consumers. The expansion can also be attributed to rising consumer expenditures on travel and lodging. It is anticipated that the increasing expenditures of tourists from other developing nations, such as Australia, will contribute to the expansion of this region.

Competitive Landscape

The industry is comprised of a handful of established companies and new entrants. Numerous significant actors are focusing more on the rising popularity of short-term vacation rentals. Participants in the industry are diversifying their service offerings to preserve their market share. In December 2020, for instance, Airbnb and Nasdaq will announce a new joint campaign to host a New Year's Eve stay in New York. A one-night lodging in a private dome with a view of the Times Square ball descent was arranged.

The key players in the global Short-Term Rental market include - 9flats.com Pte. Ltd. (Singapore), Airbnb Inc. (U.S.), Booking Holdings Inc. (U.S.), Expedia Group Inc. (U.S.), Hotelplan Management AG (Switzerland), MakeMyTrip Pvt. Ltd. (India), NOVASOL A/S (Denmark), Oravel Stays Pvt. Ltd. (India), TripAdvisor Inc. (U.S.), Wyndham Destinations Inc. (U.S.) among others.

Recent Market Developments

• December 2022: Booking Holdings Inc. paid USD 1.2 billion to acquire Getaroom from Court Square Capital Partners. This acquisition is intended to increase the value of the brand's pipeline.
• October 2020: Tripadvisor introduced two new technology solutions for hotels: Spotlight and Reputation Pro. Both entities seek to enhance their hospitality businesses by boosting traveler confidence, attracting new consumers, and increasing profitability through data-driven decisions.
• October 2019: Booking Holdings, Inc. invested in Serko, a travel and expense technology company based in New Zealand. Booking Holdings will assist Serko's online platform Zeno in expanding its global presence, while Serko will integrate Booking.com content into its Zeno travel booking utility.

Segmentation of the Global Short-Term Rental Market