We dig into the recent supply, demand, and occupancy data to help you determine if now is the right time to invest in your targeted short-term market.

Is 2022 a Good or Bad Time To Invest in Short-Term Rentals?

Depending on who you ask, you’ll hear very different answers to the following question: Is right now a smart time to invest in short-term rentals (STRs)?

We want to address this question and all of the recent recession speculation in the only way we know how to—with data.

Know there’s valid glass-half-full and glass-half-empty perspectives on the state of the American economy and STR industry at large. Here’s a snapshot of the evidence:

528,000 new U.S. jobs were added in July 2022.

Consumer spending remains robust, especially on services.

Declining gas prices should ease inflation.

The stock market has seen gains in recent months.

Weak gross domestic product (GDP), as a result of excess inventories, is slowing business investment.

Consumer confidence measurements are at record lows.

What does this mean for STR investments? Well, U.S. demand for vacation rentals is as strong as ever. Specifically, this June, demand was 16.3% greater than it was in June 2021 and 23.8% greater than June 2019. But the catch is that supply is also through the roof—1.37 million active listings in June 2022 (+25.4% year over year and +9.8% versus 2019).

The important takeaway is that, as a result of this supply boom, occupancy has dropped 9.2% YOY to 63.6% (+8.6% versus 2019). And our data indicates that occupancy will continue to decline in 2023 but not as dramatically as it has in 2022 versus 2021.

We anticipate occupancy rates for 2022 will ultimately settle at 57%, but that’s still nearly four points higher than before the COVID-19 pandemic.

Occupancy is a nuanced metric, sure, but it does remain one of the most effective measurements of STR success over a given calendar year. Any host or investor knows that fully booked properties generate more revenue, while empty properties generate less and can diminish annual profit margins.

Today, the supply forecast remains the most important consideration when it comes to assessing occupancy rates. And we expect that annual supply should grow approximately 8.5% YOY, despite the fact that June’s supply growth rate exceeded 25%.

Even though excessive supply growth can negatively impact occupancy, there is a silver lining: Revenue per available listing (RevPAR) remains positive. And this means the STR industry,, as a whole, is not in a recession. (In June, RevPAR grew 1.7% in markets with low supply growth, while it fell 8.7% in markets with high supply growth.)

However, sub-sectors of the STR industry could experience mini recessions in coming months. (Think fast-growing mountain markets, for example.) But we don’t expect to see any markets suffer as dramatically as they did in 2020 at the height of the pandemic.

Overall, the U.S. STR industry should generate $63 billion in 2022 and $67 billion in 2023. This is nearly double what the industry was earning in 2019. This combination of supply growth, demand growth, and 30% higher average daily rates (ADRs) since 2019 means the industry should continue to generate record revenue for the foreseeable future. However, the economics in specific markets will vary over the coming year.

Check out AirDNA’s new STR Outlook report for a deeper understanding of what to expect throughout 2022 and into 2023. And our latest Best Places to Invest report will help you find opportunities that fit your investment wants and needs.

Finally, be sure to explore our new and improved Rates tool to ensure you’re maximizing the potential of your STR properties.

Achieve financial freedom with accurate tools that are designed to help you invest with confidence.

Take the guesswork out of Airbnb investments

We dig into the recent supply, demand, and occupancy data to help you determine if 2022 is the right time to invest in your short-term rentals. Read now.

Is 2022 a Good or Bad Time To Invest in Short-Term Rentals?

Take the guesswork out of Airbnb investments

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