U.S. Short-Term Rentals

What comes after a boom?

Despite marketplaces like Airbnb reporting healthy growth, there has been chatter about an “airbnbust” among hosts noticing a drop in bookings. Does this indicate a maturing market with slowing growth or is it a short blip before another growth spurt? This study will tackle that question from the perspective of both consumers and providers. Are STR guests loyal to the category, or is it just another lodging option?

Are STRs preferred for domestic travel only, or a serious consideration for international travel too? How has press coverage on issues like chores, cleaning, services or pricing affected travelers’ relationship with the category?

Suppliers and distributors are grappling with much more competition since the pandemic, shifting consumer tastes and constant changes in regulation. Have professionalized PMs really perfected the management process, or is there still a long way to go? Which players will flourish in the new normal? 

Growth of global short-term rental bookings slowing as significant volume shifts back to hotels

After two plus years of remarkable expansion fueled by booming pandemic-era demand, during which time travelers experienced the category's strengths and flaws, growth of global short-term rental bookings is slowing as significant volume shifts back to hotels. According to Phocuswright’s latest travel research report on the segment Global Short-Term Rentals 2023-2027, the slowdown can be attributed to the following:

• Rebounding demand for hotels, which were hit harder during the pandemic
• The recovery of business travel, which tends to be hotel-centric
• A return to offices, resulting in fewer people working while traveling - a trend which was conducive to STR stays
• Increasing regulations on STRs in many key markets

Funding for short-term rental startups cooling but more resilient than other verticals

Funding to the STR space is cooling dramatically in line with the rest of the travel industry, but has stayed more resilient in comparison to other travel categories. An analysis of Phocuswright's Travel Startups Interactive Database reveals that when comparing 2022 through 3Q23 to the past 10 years, the STR category has clearly been one of the strongest verticals across both time periods (see figure). That said, while there are typically multiple $100 million-dollar-plus funding rounds that occur in the short-term rental space in a given year, 2023 only featured one, when property management company Hostmaker raised $175 million in private equity in May.

Economic uncertainty is increasingly a reason for cautiousness, in addition to the restrictive factors outlined in this report. Yet 2023 was another record year for Airbnb on the wave of persistent demand, indicating a resilient market for what is still an emergent product with plenty of room for growth. In the coming years, STRs will continue to attract investment, reach new audiences, implement new technologies, and provide an increasingly high-quality guest experience on par with hotels on the path to mainstream travel adoption.