Vacation Rental Market Trends

Growth Drivers

• Surge in digital platforms: The expansion of digital booking platforms like Airbnb and Booking.com has facilitated seamless and secure rental processes, enhancing traveler confidence. Digital growth also supports scalability and international reach for property owners. In July 2022, Planet acquired Avantio, a company offering software and services for managing vacation rentals, expanding its presence in the hospitality industry and demonstrating booming interest in the sector.
• Growing preference for immersive local experience: Travelers are more likely to dive into the culture and authenticity of the local experience by opting for rentals that afford a view of the local way of life. This is indicative of a travel style that increasingly favors authenticity over ordinary tourism hotspots. In May 2023, Airbnb verified around 300,000 accessible elements of its rentals to further drive consistency and quality in vacation rental listings. This was a part of the bigger plan to accommodate travelers who seek an authentic local experience without sacrificing comfort or quality.
• Growing popularity of remote work and longer stays: The rise of remote work has brought various changes in travel patterns, with people opting for longer stays combining work and leisure. The space and amenities, like kitchens and workspaces, make vacation rentals well-suited for such workstations. This trend is driving demand for properties that achieve the right balance between comfort and practicality to satiate professionals seeking a temporary change of scenery.

Challenges

• Regulatory compliance and zoning restriction: Most governments across the globe have been initiating increased regulation of short-term rentals, citing negative impacts on housing affordability and neighborhood disturbance. Many cities are turning to stricter zoning laws and rental capping, which would directly affect the available properties for vacation rentals. Changing regulatory compliance has now become one of the biggest challenges faced by property owners and platforms while negotiating a tricky legal landscape with profitability in mind.
• Standardization and quality assurance: With highly diversified rental properties, standardization of services and quality provided still remains a challenge in view of changing customer expectations. Unlike traditional hotels, where set standards may apply, vacation rentals are diverse. Guests increasingly expect rentals to be more akin to hotels in everything from cleanliness to certain amenity availability. Property owners are now tasked with adhering to much more stringent guidelines.