Vacation rental industry forecast for 2023:

Although much of today’s economic talk revolves around the possibility of imminent recession, the outlook for the Short Term Rental market remains full of potential. Simply put: consumers will continue to prioritize travel. Compared to one year ago, almost all travel indicators have shown consistent improvement, from travel spending to overseas arrivals. Both STR and hotel stays have noticeably improved since 2021—a sign of the increasing interest in experiential consumption and travel specifically.

A look at future booking confirms travel enthusiasm for the very near term, with small city and rural bookings leading in year-over-year demand growth. Comparing 2022 bookings to 2019 bookings also sheds light on the incredible transformation the STR landscape has experienced since the onset of the pandemic. Small town and rural locations have more than doubled their demand. The STR market—originally centered on a small number of dense, urban cities—is now seeing the most dramatic growth in widespread, less populous areas often underserved by traditional lodging. We expect continued development in this area throughout 2023, although cities will see strong growth numbers as they continue in their recovery.

2022 marked an important turning point for the STR market. 2021’s uptick in STR interest could have been waved off as a result of social distancing. But the fact that the STR market handily exceeded demand levels throughout 2022, as traditional lodging regained its pre-pandemic traction, speaks to the enduring nature of this sector.

The many upward trends in the vacation rental space paint a picture of an inspiring future, particularly as consumers’ appetite for travel shows no signs of slowing.

AIRDNA December 12, 2022