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SHORT TERM RENTALMARKET OVERVIEW
The global short term rental market size was USD 129.8 billion in 2024 and market is projected to touch USD 272.2 billion by 2032, exhibiting a CAGR of 9.7% during the forecast period.
The growth in the short-term rental market has been phenomenal because it was driven by changing consumer preference toward flexible accommodation options and the search for unique travel experiences. This market includes apartments, vacation homes, and shared spaces that allow the traveler to have alternatives to a hotel. The rise of digital platforms, increased travel frequency, and the popularity of remote work boost demand for short-term rentals worldwide. Additionally, urbanization and the desire for more personalized stays have been factors that further contribute to market expansion, especially among millennial and Gen Z travelers looking for authentic and affordable lodging options.The innovative business models and platforms are helping shape the industry, and technology is now making booking seamless, creating secure payment systems, and enhancing the customer experience. Advanced tools for dynamic pricing and property management are being used more and more often by hosts and property owners to increase occupancy rates and optimize revenue. Yet, regulations and considerations about sustainability pose challenges to these stakeholders as cities and governments target problems like housing shortages and environmental impact. Despite these challenges, the market continues to evolve while using tech-driven solutions and catering towards changing travel needs, thus helping it to be well-positioned for steady growth in the forthcoming years.
COVID-19 IMPACT
"Short Term RentalIndustry Had a Negative Effect Due to decline in bookings and revenue as travel restrictions and lockdowns were imposed globally during COVID-19 Pandemic"
The global COVID-19 pandemic has been unprecedented and staggering, with the market experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. The sudden market growth reflected by the rise in CAGR is attributable to the market’s growth and demand returning to pre-pandemic levels.
The short-term rental market has been drastically affected by the outbreak of the COVID-19 pandemic since the imposition of travel bans and lockdowns across the globe saw a sudden drop in bookings along with revenue. Urban rentals, dependent mainly on business and tourist travel, were seeing plummeting demand. But in the latter phases of the pandemic, consumers started turning to rural and suburban rentals because they needed secluded places for security and longer periods to work from there. Companies and operators adapted by enhancing cleaning standards and introducing flexibility in cancellations, restoring customer confidence and slowly revived the market.
LATEST TREND
"Tech-Driven Personalization and Sustainability to Drive Market Growth"
The short-term rental market trend is going to be a higher degree of technology adoption in order to enhance customer experience and streamline the process. Platforms are resorting to artificial intelligence and data analytics to personalize recommendations, optimize pricing, and predict customer preferences. Furthermore, the "workcation" trend has resulted in properties with high-speed internet and work-friendly amenities. Sustainability is also expanding as the popularity of environmentally friendly rentals increases, and green certifications become increasingly sought after by a conscious and environmentally aware type of traveler. This would mean further comfort, technology, and environmental responsibility for short-term rental offerings.
SHORT TERM RENTALMARKET SEGMENTATION
By Type
Based on Type, the global market can be categorized into private home, apartments, resort/condominium and others
- Private Home: These are usually private houses or villas, ideal for guests seeking privacy and an intimate atmosphere for short stays. They are popular among families and groups.
- Apartments: Short-term apartment rentals suit those interested in an urban lifestyle with amenities. This is often preferred by business travelers or vacationers for short stays, especially in cities.
- Resort/Condominium: Resort and condominium rentals are usually located in places of tourist interest. They are high-end accommodations with recreational facilities, ideal for luxury travelers.
- Others: This segment encompasses distinctive accommodations like hostels, cabins, or boutique rentals, catering to various types of travelers and niche segments.
By Application
Based on application, the global market can be categorized into online and offline
- Online: Online channels, such as Airbnb, Booking.com, and Vrbo, have transformed the short-term rental market through easy booking, secure payment systems, and user reviews, thus making the process more transparent and efficient.
- Offline: Offline rentals take place through direct means, such as contact with property owners or local agents, and are mostly found in regions that are less digitally connected, serving spontaneous or local bookings.
By Sales Channel
Based on sales channel, the global market can be categorized into direct channel and distribution channel
- Direct Channel: This includes direct bookings between guests and property owners, mostly through personal websites or word of mouth, which gives them much control over pricing and policies.
- Distribution Channel: This is third-party booking sites or travel agencies that act as intermediaries, helping owners reach a larger audience and providing marketing and booking support, thus ensuring wider market penetration.
MARKET DYNAMICS
Market dynamics include driving and restraining factors, opportunities and challenges stating the market conditions.
Driving Factors
"Increasing Demand for Personalized Travel Experiences to Boost the Market"
Growing demand for unique, personalized, and flexible accommodation options is the reason for the short-term rental market growth, according to the trend among the travelers. In comparison with other hotels, short-term rental accommodations, such as a house or apartment, create more experience through living like locals while delivering customizable amenities. This mode is favored by millennials and Gen Z in great measures. They prefer comfort and anonymity and the ability to have unique accommodations. Consequently, the short-term rentals' market is expected to boom further with the continuing upsurge in demand for a myriad travel experiences.
"Expansion of Online Booking Platforms to Expand the Market"
The emergence of online booking websites, such as Airbnb, Booking.com, and Vrbo, has remarkably grown the short-term rental business. It offers consumers the opportunity to gain convenience, transparency, and a vast selection of choices of accommodations for a traveler to find and then book their rental properties around the globe. Online platforms have become a preferred way of booking short-term rentals due to growing internet penetration and smartphone usage coupled with increased acceptance of the sharing economy model. It is transforming digital, and thereby, propelling the growth of the market into a globalized market.
Restraining Factor
"Regulatory Challenges and Legal Restrictions"" to Potentially Impede Market Growth"Among the major constraining factors of the short-term rental market are the increased regulation by the government and legal restrictions by regions. Cities and countries across the globe have made different laws to restrict the numbers of days property is allowed for short-term rent, ask for licenses on such properties or impose high taxes on operations of short-term rentals. These regulations are more or less used to secure the local housing market and the integrity of the community as well as to ensure safety standards. Whenever the governments tighten these rules, compliance costs and operational constraints might increase for short-term rental operators which slows the growth of the market.
Opportunity
"Increasing Popularity of Remote Work and Digital Nomadism To Create Opportunity for the Product in the Market"
Acceptance of remote work, now accelerated by the COVID-19 pandemic, will open the door to short-term rentals in the short run. With the increase in embracing flexible work arrangements, short-term rentals that will appeal to digital nomads and remote workers are in growing demand. Properties that possess features such as high-speed internet, dedicated workspaces, and proximity to co-working spaces are more in demand. This change in lifestyle and preferences for work will increase the growth of the short-term rental market as travelers tend to book longer stays, and their selection might be determined by the needs required for specific work.
Challenge
"Intense Competition and Market Saturation Could Be a Potential Challenge for Consumers"
The short-term rental market is affected by intense competition and market saturation in popular tourist destinations and in urban areas. Inevitably, with an influx of property owners entering the market, plus established platforms expanding their markets, it becomes increasingly hard to keep up for new or small-scale players. This may often lead to price wars and reduced profit margins as the occupancy rates become increasingly unmanageable. Over-supply in specific regions may reduce the overall value of short-term rentals, making it difficult for both property owners and platforms to stay profitable.
SHORT TERM RENTALMARKET REGIONAL INSIGHTS
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North America
The short term rental market in North America has seen considerable growth, primarily due to increasing demand for alternative accommodation options, particularly in the United States. The United States short term rental market is one of the key contributors to regional growth, with platforms such as Airbnb and Vrbo gaining widespread popularity across urban and rural areas. The increase in remote working, coupled with consumer preference for more flexible travel and lodging options, continues to fuel market expansion. The growing number of travelers and evolving regulations also influence the market dynamics, affecting both supply and demand.
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Europe
Europe accounts for a significant portion of the global short term rental market, with leading countries being the United Kingdom, France, and Germany. The region benefits from a strong tourism industry and growing consumer preference for homestays and vacation rentals over traditional hotel stays. The growth of the digital platforms, along with a diversification of tourist destinations in the region, continues to fuel short-term rental market share growth. The popularity of European cities continues to shift toward short-term rentals as an alternative for other types of accommodations.
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Asia
The short term rental market in Asia is accelerating rapidly due to an increase in domestic and international tourism. Countries including China, Japan, and India are witnessing a significant increase in demand for short term rental properties. The development of the region is fueled by increased urbanization, growth of the middle class, and increased adaptation of online platforms. The Asian unique cultural landscape and the preferences on travel, together with the added advantage of short-term rentals, contributes to the push in the industry.
KEY INDUSTRY PLAYERS
"Key Industry Players Shaping the Market Through Innovation and Market Expansion"
In terms of aggressive global market expansion and innovation in offering better customer experience, the players in the short-term rental market are involved. Such leading platforms as Airbnb and Vrbo are concentrating more on upgrading their user interfaces, new service propositions, and expanding property portfolios as ways to adapt to changing consumer needs for travel. Furthermore, corporations are working with property owners to enable customized and exclusive experiences, resulting in a much more comprehensive choice for the consumer. The incorporation of technologies that are more advanced, for example, AI-driven suggestions and contactless check-ins, assists corporations in maintaining customer satisfaction while working effectively. These factors help reinforce their presence in the challenging short-term rental market.
List of Top Short Term Rental Companies
- Airbnb (United States)
- Expedia Group (United States)
- Booking Holdings (United States)
- NOVASOL (Denmark)
- Wyndham Destinations (United States)
- Tripadvisor (United States)
- Hotelplan Management (Switzerland)
- 9flats.com (Germany)
- Oravel Stays (India)
- MakeMyTrip (India)
KEY INDUSTRY DEVELOPMENT
October 2024: Airbnb (United States) has unveiled a considerable increase in its rental alternatives with the launch of "Monthly Stays," which, the company said, "caters to remote workers, digital nomads, and guests who need longer-term lodging." This feature will facilitate bookings of up to six months. Users will get rates at discounted prices, along with greater flexibility regarding longer stays in many locations around the world. This is part of a larger trend in flexible working and demand for long-term short-term rentals.
REPORT COVERAGE
This report covers the short-term rental market by driving factors, including the growing demand for flexibility in accommodation and the shift towards remote work. It speaks about the emergence of players like Airbnb, Expedia, and Booking Holdings that have made short-term rentals a mass phenomenon for leisure and business travelers alike. It also refers to regional dynamics in the market, which indicates the dominating presence of North America, Europe, and Asia along with a competitive landscape analysis of the major industry players.
Besides, the report assesses the changing trends in consumer preferences, whose trend has been shifting to longer stays, especially under the influences of changing working habits and lifestyle choices. It delves into the effect of technological advancements, like improved booking systems and integrating mobile applications, which have been making it more convenient and improving the user experience. This report covers regulatory challenges to the market, including law and policy changes in vital regions and how players within the market are working their way through to follow such changes and reap emergent opportunities.
REPORT COVERAGE | DETAILS |
---|---|
Market Size Value In |
US$ 129.8 Billion in 2024 |
Market Size Value By |
US$ 272.2 Billion by 2032 |
Growth Rate |
CAGR of 9.7% from 2024 to 2032 |
Forecast Period |
2024-2032 |
Base Year |
2024 |
Historical Data Available |
Yes |
Regional Scope |
Global |
Segments Covered | |
By Type
|
|
By Application
|
Frequently Asked Questions
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What value is the short term rental market expected to touch by 2032?
The global short term rental market is expected to reach 272.2 billion by 2032.
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What CAGR is the short term rental market expected to exhibit by 2032?
The short term rental market is expected to exhibit a CAGR of 9.7% by 2032.
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What are the driving factors of the short term rental market?
Increasing demand for personalized travel experiences and expansion of online booking platforms to expand the market growth.
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What are the key short term rental market segments?
The key market segmentation, which includes, based on type, the short term rental market is private home, apartments, resort/condominium and others. Based on application, the short term rental market is classified as online and offline. Based on sales channel, the short term rental market is classified as direct channel and distribution channel.