Four Compelling Reasons Why Destination Marketers Should Embrace Short-Term Rentals

Key Takeaways

• Short-term rentals provide flexible and personalized lodging that quickly adapt to traveler preferences.
• Vacation rentals offer guests an authentic local experience, differentiating them from standard hotel stays and aligning with destination marketing goals.
• STRs also ensure a fair distribution of revenue within communities, with most profits going to local hosts. This highlights their role in empowering local economies and fostering community prosperity.

Contrary to prevailing thought, the growth of vacation rentals – 300% since 2019 – has been significant. The tourism and hospitality industries have seen a seismic shift in travel preferences since 2020 with 60% of leisure travelers favoring short-term rentals (STRs). Of those travelers, 35% are visiting non-traditional tourist destinations. Vacationers are also  spending 140% more on their accommodations within the community compared to hotel guests.

All 50 states are now taxing vacation rentals, emphasizing their integral role in the industry. It's time for destination leaders to turn their attention to this influential travel segment. 

Here are four surprising reasons why the short-term rental market is so crucial to the industry’s evolution.

1. Agile Lodging for a Changing World

In a time where flexibility and adaptability are paramount, short-term rentals provide a versatile option for travelers. They cater to the evolving preferences and needs of a diverse audience, offering a unique and personalized experience that traditional hotels may struggle to match. 

In a striking example of this adaptability, Phoenix, Arizona, witnessed a remarkable surge in its short-term rental market. In February 2022, the market boasted 16,103 available listings. Within just a year, this number nearly doubled to 29,923. 

Even now, with 28,123 listings, the effect has proven to be long-lasting. Vacation rentals not only  respond swiftly to changing preferences, but can also respond quickly to market opportunities. STRs are more agile compared to the prolonged construction timelines of traditional hotels.

2. Adding Authenticity to the Overnight Experience

One of the key benefits of STRs is that they make overnight stays feel more authentic. Destination marketers want to show what makes their location special, and vacation rentals are crucial in this effort. Unlike typical hotel rooms, short-term rentals provide a real local experience. They let visitors truly feel the unique charm of the area.

3. Redistribute Revenue More Fairly

Unlike hotels that often channel profits to large corporations, STRs ensure that more revenue stays within the community. Companies like Airbnb and other popular rental agencies only take cents on the dollar, roughly 3-15% of revenue, leaving the majority of profits in the hands of the property owner. 

This direct benefit supports local residents who own properties there, fostering a net positive symbiotic relationship between tourism and community prosperity. 

When looking at the U.S. in 2023, you see a remarkable landscape within the short-term rental market: a staggering 74% of all available listings are hosted by “non-professionals,” or individuals managing 20 or fewer listings. Moreover, 60% of these listings are hosted by individuals managing only 1-5 properties, while 30% are managed by hosts with just a single listing. 

This breakdown underscores the grassroots nature of short-term rentals and emphasizes their role in empowering local communities and redistributing revenue more equitably.

4. Adapt to New Travel Trends

The pandemic’s impact on travel preferences reshaped the landscape of desirable destinations. Previously, travelers often preferred downtown locations for their convenience and proximity to attractions. However, COVID brought about a significant shift, with safety concerns and a heightened desire for social distance driving people towards suburban and rural areas. 

These less densely populated locations also offer the added appeal of outdoor experiences, aligning with the growing interest in nature and spacious environments. In this period of evolving community dynamics, short-term rentals have become the most adaptable solution. 

This change in traveler behavior has altered the way destination marketers approach their strategies. It also highlights the flexibility and responsiveness of short-term rentals in meeting new consumer preferences. Data confirms this trend, with 50% of vacation rental growth  originating from smaller cities and suburban areas. 

In conclusion, short-term rentals are not just accommodations–they are catalysts for change within the tourism and hospitality industries. Destination Marketing Organizations  will increasingly rely on location and short-term rental data to drive their strategies and ensure a more authentic, responsive, and community-centric travel experience for all.

Looking for tourism insights on your destination? 

AirDNA is excited to announce the launch of Tourism Insights — our all-new platform for DMOs & tourism pros in 2024. Use vacation rental data and geolocation insights to uncover the latest trends in your city and share them with key stakeholders.