The vacation rental industry has experienced significant growth in recent years, offering travelers an alternative to traditional hotels. This sector of the hospitality industry includes private residences, villas, apartments, and other lodging types available for short-term stays. The rise of online rental platforms like Airbnb, Vrbo, HomeAway, and Booking.com has fueled this growth, providing travelers with more options and flexibility.
Vacation rentals offer several advantages over traditional hotel rooms, including more space, amenities, and a more authentic travel experience. They can also be more cost-effective, especially for families or groups traveling together. This article explores the latest trends, statistics, and facts about the vacation rental industry, giving insights for both property owners and potential guests.
Key Vacation Rental Industry Statistics
The vacation rental industry continues to grow rapidly, with promising projections for the coming years. Here are some key statistics that highlight the industry’s current state and future outlook:
- The vacation rental industry in the United States will experience a compound annual growth rate (CAGR) of 1.49% over approximately the next three years.1
- By 2027, nearly 63 million Americans will be using vacation home rentals, with average revenue per user of $311.1
- In the United States, vacation rentals are projected to generate revenue of $19.3 billion in 2023.1
- Most (70%) of vacation rental companies in the United States are considered to be small businesses.2
- Only 10% of U.S. vacation rental companies are considered larger businesses and manage 100 units or more.2
- About 450 million people worldwide use vacation rental properties.2
- There are 1,985,280 U.S. vacation rental properties considered to be managed by professionals.2
- Vacation rental management companies in the United States number 25,000.2
- Globally, luxury rentals are expected to have a growth rate of 13.1% from 2021 to 2031.3
- The 2023 forecast occupancy rate for U.S. vacation rentals is 56.4% — significantly higher than pre-pandemic levels.4
Global Vacation Rental Market Trends
The global vacation rental market has transformed the way people travel — it offers more options, flexibility, and personalized experiences. Here are the current state and future projections for the global market:
Market Size and Growth
The global online travel market, which includes vacation rentals, has shown impressive growth. In 2022, the global online travel market had a total size of $475 billion. This figure was predicted to exceed $521 billion in 2023 and grow to over $1 trillion by 2030.5
The growth in market size underscores the increasing consumer preference for online travel solutions, including vacation rentals. With people becoming more tech-savvy, online booking platforms are expected to see sustained growth.
Global Distribution of Vacation Rentals
Only 20% of global vacation rental properties are located in the United States and Europe has close to twice as many vacation rental properties as the United States.2 The global distribution highlights the popularity of vacation rentals outside the U. S., especially in Europe, which has long been a favored travel destination for tourists worldwide.
Airbnb’s Global Presence
Airbnb, one of the leading platforms in the vacation rental industry, has a significant global footprint. As of 2022, there were an estimated 2.9 million hosts on Airbnb worldwide.6 As of December 31, 2022, Airbnb had 6.6 million active listings across the world.7
Vacation Rental Guest Demographics and Preferences
Understanding the demographics and preferences of vacation rental guests helps property owners and managers tailor their offerings and marketing strategies. Here are some insights into guest behavior and preferences:
Family Travelers
Families represent a significant portion of vacation rental guests. The average rental price at popular destinations for family-sized rentals is $978 per night.2
About 71% of travelers with children choose vacation rentals primarily for the ability to cook their own meals.2
Age-Based Travel Patterns
Travel habits vary significantly across age groups. Individuals over 40 are five times more likely to schedule trips lasting more than two weeks compared to travelers under 40. Gen Z is more inclined to go on trips with friends rather than choosing to travel solo or with immediate family.2
Traveler Preferences and Interests
Modern travelers have diverse interests and preferences regarding their accommodations. 53% of travelers plan their trips using materials like brochures before they arrive.2 About 18% of travelers are interested in staying with locals when it comes to lodging and almost 75% of travelers prefer a sustainable and eco-friendly stay.3
Vacation Rental Booking Trends
The rise of online booking platforms has revolutionized the way travelers find and reserve vacation rentals. Here are the current trends in the market:
The online travel market is dominated by a few key players:
- As of December 2022, Booking.com ranked as the top online travel company worldwide in terms of market capitalization.8
- Airbnb had a market capitalization of about $54. 1 billion in 2022.8
These companies have set the standard in the industry, providing users with many options and trustworthy services.
Booking Preferences
Travelers’ booking habits and preferences vary:
- 600,000 Americans have used Airbnb and other online platforms to rent out homes to short-term guests.2
- 40% of leisure travelers who book online belong to the millennial age group.2
- Within the next three years, 83% of vacation rental revenue is expected to be generated through online sales.1
- 67% of travelers believe it’s easier and cheaper to book through a brand website rather than a third-party website.2
Profitability and Return on Investment
For property owners considering entering the vacation rental market, understanding the potential profitability and return on investment is crucial. While specific figures can vary widely depending on location, property type, and management style, here are some general insights:
Average Returns
The average return on a vacation rental property can be between 6% and 8% each year. This can be more in popular tourist spots or for properties that are well-managed. The high demand in tourist hotspots often results in increased rental rates and maximized occupancy, boosting annual returns.
Profit Margins
A good profit margin for a vacation rental property is typically considered to be around 30% to 40% of the rental income after expenses. However, this can vary based on factors such as location, seasonality, and operating costs. Strategic marketing and excellent guest experiences can help property owners achieve their desired profit margins.
Factors Affecting Profitability
Several factors can influence the profitability of a vacation rental:
- Location: Properties in high-demand areas tend to command higher rates and occupancy.
- Seasonality: Many vacation destinations have peak seasons where rates and occupancy are significantly higher.
- Property Management: Effective management can increase bookings and reduce costs.
- Amenities: Properties with desirable features often attract more guests and higher rates.
Investing in property upgrades and offering unique amenities can significantly enhance the perceived value of a vacation rental, thereby increasing profitability. Additionally, adapting to local market trends and consumer preferences can offer a competitive edge.
Final Thoughts About Vacation Rental Industry Facts and Statistics
The vacation rental industry continues to evolve and grow, offering exciting opportunities for both property owners and travelers. With the increasing preference for unique, home-like vacations and the convenience of online booking platforms, vacation rentals will see continued expansion in the coming years.
For property owners and investors, understanding the latest trends and statistics helps you make informed decisions and maximize returns. As the industry continues to mature, those who stay informed and adapt to changing traveler needs will be best equipped to thrive in the competitive landscape of vacation rentals.
Sources (all sources accessed 5/6/23):
- Statista, Vacation Rentals – United States. Page last updated 7/14/22.
- iProperty Management, Vacation Rental Industry Statistics. Page last updated 7/14/22.
- https://www.alliedmarketresearch.com/vacation-rentals-market-A16943. Page last updated 8/22.
- Air DNA, 2023 Outlook Highlights. Page last updated 12/12/22.
- Statista, Online travel market size worldwide from 2020 to 2022, with a forecast for 2023 and 2030. Page last updated 3/3/23.
- Stratos Jet Charters Inc., 2022 Airbnb Statistics: Usage, Demographics, and Revenue Growth. Page last updated 1/4/22.
- Airbnb, About Us
- Statista, Market cap of leading online travel companies worldwide as of December 2022. Page last updated 1/26/23.
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