Ever since Airbnb disrupted the vacation rental market in 2008, homeowners’ ability to turn their primary residence or vacation home into short-term rentals has skyrocketed. More and more platforms have launched or pivoted, expanding the creative ways owners can use online booking to capitalize on real estate investments.
Here are 12 facts and stats about the short-term rental market that many do not know:
- The global vacation rental market is skyrocketing. New Airbnb hosts made over $1.8 billion in 2021 alone, which is 30 percent more than in 2019. And since March 2020, over 8,000 cities and towns worldwide have recorded their first-ever Airbnb guests.
- The typical Airbnb host in the United States makes over $1,000 per month. According to Airbnb, new U.S. hosts made an average of $13,800 in 2021—about 85 percent more than new hosts in 2019.
- Florida and California are top markets for extended stays. Digital nomads looking for long-term vacation rentals seem to be flocking to a few Californian and Floridian cities. Last year, Airbnb found that hosts in La Quinta, Indio, and Palm Springs, California, and Delray Beach and Marco Island, Florida, made the highest median earnings in the U.S.
- The vacation rental industry is expected to reach $18.63 billion this year in the U.S. alone. According to Statista, market trends indicate a growth rate of about 2.4 percent, which means the U.S. vacation rental industry could top $20 billion by 2026.
- Social media can influence renters—and help you increase your occupancy rate. Aside from searching for reviews on sites like TripAdvisor, more than half of travelers report seeking recommendations on social media when planning a trip, according to vacation rental software company iGMS. It’s no wonder, then, why Airbnb keeps pulling partnership stunts like renting out a mansion where the sensational K-Pop band BTS has stayed.
- This year, the average nightly rate for short-term vacation rentals in the U.S. is expected to be about $250. That’s slightly lower than 2021 when it was closer to $260 per night but much higher than 2019’s average rate of about $213. This is based on market data collected by AirDNA, which analyzes trends based on 10 million units worldwide.
- Millennials are buying vacation homes as their first-ever real estate purchase. Traditionally, previous generations have focused on buying a primary residence for their first house and a vacation property as a second home. But according to Money.com, the vacation home is the “new starter house” for millennials. Market analysis reveals millennials now make up about 40 percent of buyers in the vacation home market, and they’re not buying them as primary residences. Instead, they’re renting their primary residence and vacation house on booking platforms like Airbnb when they’re not using it.
- Localities around the U.S. restrict short-term rentals—but you can still make money from booking platforms. Short-term rentals of a few days or weeks are increasingly regulated as cities and towns crack down on practices that can make it harder to be a full-time resident in mountain towns or resort hot spots. According to the National League of Cities, an organization advising the leaders of cities and towns across the U.S., 82 percent of the surveyed cities require hosts to pay taxes directly when hosting short-term guests. The NLC has issued guidance for government entities researching how to regulate the market. But you may still be able to use booking platforms to find guests even if you can’t offer a typical short-term stay—in New York, for example, which has cracked down on platforms like Airbnb, you can still book guests for stays of 30 days or longer.
- The rental market size of rural America is blowing up. According to Airbnb, the demand for vacation rentals in rural parts of the United States grew by 110% from 2019 to 2021. And that’s some profound change—rural hosts in the U.S. raked in over $3.5 billion in 2021.
- You can rent your home tax-free for 14 days or less per year. It’s called the 14-day rule. If you live in a place with a short but lucrative peak season for rentals—such as if there’s a low inventory of rentals in your area and there’s a massive annual event for a week or two each year, like a festival, a race, or a sports tournament—you can capitalize on this rule to make significant extra cash without the tax implications.
- There’s a niche for everyone. You probably know about Airbnb, Vrbo (which now owns HomeAway), and Booking.com, which all offer single-family vacation rental properties. But there’s genuinely a rental platform for everyone. Just a few of the niche platforms you might not have heard of include GoLightly, which is a rental platform for women; Hipcamp, which allows homeowners to rent out RVs, cabins, and tent space; misterb&b, for LGBTQ+ travelers; and BringFido, which lets you list dog-friendly properties.
- As inflation rises, more and more people are getting into the short-term rental market. As housing costs have increased since the pandemic, more people are renting out vacation homes or becoming Airbnb hosts in their primary residences to compensate for rising costs, according to new market research by Airbnb. About 40 percent of hosts surveyed earlier this year said they host to make ends meet.
Easily invest in vacation rentals with Arrived
Managing a vacation rental can be fun, but maximum profitability in the rental business often comes from owning several units. Instead of doing all that work yourself or hiring an expensive vacation rental management company, you can invest in rental homes through Arrived on virtually any budget. Check out available homes to see where you could invest today.