Short-term Rental Market Size and Forecasts
The global short-term rental market size surpassed USD 112.31 billion in 2023 and is estimated to hit around USD 315.18 billion by 2033 with a CAGR of 10.87% from 2024 to 2033. The short-term rental market has seen significant growth due to various factors. Short-term rentals refer to accommodations that are rented out for a brief period, typically ranging from a few days to a few weeks. With the rise of online platforms and booking websites such as Airbnb, Vrbo, and Booking.com, short-term rentals have become increasingly popular among travelers seeking unique and flexible lodging options. These rentals offer benefits such as affordability, flexibility, and a more personalized experience compared to traditional hotels. Moreover, the sharing economy has played a significant role in the growth of the short-term rental market, allowing property owners to monetize their space and travelers to access a wider range of accommodation options.
Furthermore, regulatory changes and government restrictions have also impacted the short-term rental market, with some cities imposing regulations on short-term rentals to address concerns such as housing affordability and neighborhood disruptions. As travelers continue to seek flexibility and unique experiences in their accommodations, the short-term rental market is expected to remain a key segment of the hospitality industry, offering opportunities for growth and innovation.
Short-term Rental Market Regional Analysis
The U.S. short-term rental market experienced robust growth, with its size reaching USD 29.09 billion in 2023, poised to soar to approximately USD 81.63 billion by 2033, reflecting a compound annual growth rate (CAGR) of 11% from 2024 to 2033. North America, particularly the United States, held the lion's share of the market at 37% in 2023, driven by the pioneering efforts of companies like Airbnb and HomeAway. Originating in North America, these platforms gained early traction, with Airbnb's establishment in San Francisco in 2008 playing a pivotal role in popularizing the concept of short-term rentals. The region's embrace of the sharing economy and the cultural shift towards accepting short-term property rentals have further propelled market expansion. Moreover, North America's technological prowess has facilitated the development of innovative digital platforms and mobile applications, streamlining the booking process for guests and property listing for hosts. However, recent regulatory proposals, such as those by Michael Gove in the United Kingdom, may pose challenges to platforms like Airbnb, requiring planning approval for short-term rentals.
Meanwhile, in Asia-Pacific, the market is witnessing the fastest growth during the forecast period, fueled by increasing demand in countries like China, India, and Southeast Asia. Rapid urbanization, rising disposable incomes, and a preference for unique experiences have driven the surge in demand for short-term lodging options, further facilitated by the proliferation of digital platforms and online booking services, thereby bolstering the market's supply side.
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Short-term Rental Market Trends
Short-term Rental Market Opportunities
One of the most exciting opportunities in the short-term rental market is catering to the growing population of digital nomads. With the rise of remote work, more individuals are embracing a location-independent lifestyle. This demographic seeks flexible, long-term stays in diverse locations, often preferring short-term rentals over traditional leases.
To capitalize on this opportunity, property owners and managers can:
Short-term Rental Market Challenge
One of the most significant challenges facing the short-term rental market is navigating regulatory hurdles. Cities around the world are implementing stricter regulations to address concerns related to housing affordability, neighborhood disruptions, and safety standards.
Short-term Rental Market Leading Company Profiles
Airbnb, Inc.
Company Overview:
Airbnb, Inc. is a global online marketplace that connects people looking for accommodations with those wanting to rent out their properties. Founded in 2008, it is headquartered in San Francisco, California.
Product Offerings:
Airbnb offers a wide range of accommodations, from single rooms to entire homes, as well as experiences and adventures hosted by locals.
Financial Performance (2023):
Recent Initiatives:
Booking Holdings Inc.
Company Overview:
Booking Holdings Inc. is a global leader in online travel and related services, headquartered in Norwalk, Connecticut. It operates multiple brands, including Booking.com, Priceline, Agoda, and Kayak.
Product Offerings:
Booking Holdings provides a range of travel services, including hotel and home rentals, airline tickets, car rentals, and vacation packages.
Financial Performance (2023):
Recent Initiatives:
Expedia Group, Inc.
Company Overview:
Expedia Group, Inc. is a leading global travel company headquartered in Seattle, Washington, offering a wide range of travel products and services through its extensive portfolio of brands, including Expedia, Vrbo, and Hotels.com.
Product Offerings:
Expedia Group provides comprehensive travel services, including accommodations, airline tickets, car rentals, cruises, and vacation packages.
Financial Performance (2023):
Recent Initiatives:
Recommended by LinkedIn
MakeMyTrip Pvt. Ltd.
Company Overview:
MakeMyTrip Pvt. Ltd. is an Indian online travel company headquartered in Gurugram, Haryana, offering a wide range of travel services, including flight tickets, hotel bookings, and vacation packages.
Product Offerings:
MakeMyTrip provides short-term rentals, hotel accommodations, flight bookings, holiday packages, and car rentals.
Financial Performance (2023):
Recent Initiatives:
Oravel Stays Private Limited (OYO Rooms)
Company Overview:
Oravel Stays Private Limited, operating as OYO Rooms, is an Indian hospitality company offering budget hotels and vacation homes. Founded in 2013, it is headquartered in Gurugram, Haryana.
Product Offerings:
OYO provides short-term rentals, budget hotel accommodations, and vacation homes in multiple countries.
Financial Performance (2023):
Recent Initiatives:
Tripadvisor, Inc.
Company Overview:
Tripadvisor, Inc. is an American online travel company headquartered in Needham, Massachusetts, offering travel guidance and booking services.
Product Offerings:
Tripadvisor provides a wide range of travel services, including hotel and vacation rental bookings, travel guides, and user-generated reviews.
Financial Performance (2023):
Recent Initiatives:
Wyndham Destinations, Inc.
Company Overview:
Wyndham Destinations, Inc. is a leading vacation ownership and exchange company headquartered in Orlando, Florida, offering a wide range of vacation rental properties.
Product Offerings:
Wyndham Destinations provides vacation ownership options, timeshares, and short-term rentals through its brands like RCI and Club Wyndham.
Financial Performance (2023):
Recent Initiatives:
Short-term Rental Leading Market Recent Developments
Short-term Rental Market Consumer Behavior Analysis
The short-term rental market is experiencing a significant shift in consumer behavior, with key demographics such as Millennials (25-40 years) and Gen Z (18-24 years) leading the demand, accounting for over 60% of bookings. Middle and upper-middle-class households dominate this market, with a preference for affordable yet comfortable accommodations. Urban areas witness the highest demand, capturing 70% of the market, while rural and suburban regions are seeing a 15% year-on-year growth. Consumer trends highlight a rising inclination towards experiential travel, with 65% of travelers seeking unique and local experiences, and 40% prioritizing eco-friendly and sustainable properties. Remote work has driven a 30% increase in extended stays, with properties offering high-speed internet and work-friendly amenities being highly favored. Price remains a critical factor, with 80% of consumers considering it the primary determinant, followed by location (75%), and amenities (65%). Reviews and ratings influence 90% of booking decisions. Digital platform adoption is nearly universal, with 85% of bookings made online, and mobile applications account for 55% of these transactions. To stay competitive, companies must enhance user experiences, invest in sustainability, adapt to remote work trends, leverage technology, offer personalized marketing, maintain rigorous safety protocols, and explore emerging markets.
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