Explore data on booming luxury rental demand, its key growth drivers, and strategies for captivating high-end travelers.

The Growing Demand for Luxury Short-Term Rentals: What You Need to Know

The demand for luxury stays is skyrocketing, with a jaw-dropping 73% increase since 2019 for plush pads costing over $1000 a night. This trend signifies a ripe opportunity for investors and hosts aiming to cater to the high-end market.

Key factors propelling this growth include higher disposable incomes, a growing preference for privacy and space, and the appeal of home comforts coupled with customized services. 

To woo the luxury market, your rental needs to be more than just a place to crash. Think spa-level amenities, personalized experiences, and a location that screams exclusivity.

Travelers love to live the high life, even for just a few days. 

From breathtaking vistas to private swimming pools, luxury short-term rentals elevate travel to an art form. This market is rapidly expanding, driven by both guests and investors. According to AirDNA research, demand for stays that cost more than $1000 per night has increased 73% since 2019. Properties charging more than $1,500 per night have climbed a dramatic 91.4%.

It's clear that short-term rental owners are redefining luxury travel. But what do investors and vacation rental owners need to know about the luxury short-term rental market to operate successfully? 

The Data Behind the Growth of Luxury Short-Term Rentals

Although properties with nightly rates of $1,000+ only make up 2.7% of total stays in 2023, they have seen significant growth in recent years. We can track that growth using demand nights and Average Daily Rates (ADR), or how much hosts typically charge guests per day.

Demand For Luxury Properties Has Skyrocketed

In 2023, there were 1.9 million demand nights where guests paid more than $1500 a night and 3.7 million demand nights where guests paid anywhere from $1000-1499 a night. 

Last year alone, demand for stays over $1000 a night increased 7.7% year-over-year (YOY) while demand for stays over $1500 a night increased by 12.5% YOY. These numbers reflect a robust upward trajectory in the luxury vacation rental sector.

Luxury Rentals See the Greatest ADR Growth 

The Average Daily Rate (ADR) for luxury accommodations eclipsed the general market's ADR growth by a notable margin. This indicates a strong willingness among guests to invest in premium experiences.

Let’s compare ADR growth of luxury short-term rentals versus other types of properties: 

Luxury Rental ADR Increase Since 2019: 36%

Budget Property ADR Increase Since 2019: 17%

Meanwhile, more property investors are seeing the value in the luxury short-term rental market. According to Host Financial, loan requests for purchasing short-term rental properties worth more than $750,000 rose more than 6% in the years 2022-2023. Here’s what David Ramirez, one Host Financial expert, had to say: 

“More and more, we are hearing from our investor clients that they are focusing on larger, higher-end properties that can provide the kind of amenities and experiences that short term rental travelers are increasingly demanding. These higher-end properties offer vacation experiences that can’t be matched by alternative travel accommodations such as traditional hotels, motels and resorts. 

Higher-end short-term rentals have the advantage of being able to host multiple families at the same property. They offer increased levels of privacy and amenities that are exclusively used by those staying at the property. These qualities would be extremely difficult for legacy operators/competitors to replicate." 

AirDNA’s powerful yet easy-to-use tools make hosting and investing a breeze. This means having every insight you need, all in one place, always up-to-date.

5 Factors Driving Demand for Luxury Short-Term Rentals

The luxury short-term rental market is booming, and there are many reasons why more people are ditching traditional hotels for upscale alternatives. 

Here are five factors influencing growth in luxury short-term rentals:

1. Economic Variables and Growing Incomes

A significant part of the demand for luxury short-term rentals comes from economic growth. Household incomes and disposable income have both seen increases, making these upscale stays more accessible. 

Since 2019, personal disposable incomes in the US have jumped 8% and are predicted to rise another 5% in the next two years. Additionally, the number of US households earning over $100,000 annually grew by 7% since 2019, reaching 57.6 million. 

Growth is expected to climb another 4% in the next two years. With more spending money, people can afford more expensive stays. This contributes to the demand for luxury short-term rentals.

2. Increased Desire for Privacy and Space

In a post-pandemic world, people are looking for a little more space to stretch their legs. Luxury short-term rentals offer more privacy and luxury, setting them apart from impersonal and small hotels. This makes luxury short-term rentals an ideal choice for family and friends seeking a comfortable and private space to relax and bond. Spacious high-end properties provide groups with private residences ideal for celebrations and creating memories without others intruding on their space.

Finding and booking a high-end rental has never been easier. Property owners can easily list their places on various platforms and apps specializing in luxury short-term rentals (which we’ll go through later in this article). This ease of access is a big driver behind the market's growth.

Luxury short-term rentals offer the comforts of home, like full kitchens and living spaces, but with the added bonus of personalized services. Think private chefs, your own concierge, and even transportation services. These customized services make the stay feel tailored and exclusive.

With more people working remotely, there's a new flexibility in how and where we can work. This has led many to blend work with travel, even bringing their family on work trips (who says you can’t mix business with pleasure?!). 

Your vacation rental may be amazing, but is it better than your competition? Connect your Airbnb listing to AirDNA to see its Booking Performance Score.

How to Appeal to the Luxury Short-Term Rental Market

Hosts must ensure their properties are not just places to stay but destinations in themselves in order to captivate the luxury market. Offer a vacation experience that guests will reminisce about for years to come. 

Here are some ways to make your property stand out and command higher rates: 

Spa and Wellness: Equip your property with spa-like amenities, including saunas and hot tubs with hydrotherapy features, to offer a sanctuary of relaxation.

Fitness Options: For those who don't want to skip their workout routine, offer a selection of high-quality fitness equipment. State-of-the-art treadmills and elliptical machines are a good start.

Smart Living: Integrate smart home devices for convenience, such as voice-activated assistants and automated lighting and climate control systems. Smart features make the stay effortlessly comfortable.

Be sure to read AirDNA’s guide on the best amenities for the highest return on investment. 

Furniture: Select furniture that is not only visually appealing but also offers unparalleled comfort, including designer or custom-made pieces.

Artwork: Adorn your spaces with original art or curated high-quality prints that evoke a sense of luxury and culture.

Luxurious Fabrics: Incorporate rich, plush materials in your bedding and upholstery, using fabrics like silk, velvet, or Egyptian cotton to add a tactile dimension to the luxury experience. The devil is in the details! 

The essence of luxury travel lies not only in the amenities and services provided, but also in the location of the rental. A strategic or picturesque location can make your property much more appealing:

Promote the Location in your Listing: Draw attention to the exclusivity and attractiveness of your property's location in your listing. Whether it's nestled in a serene coastal area, perched in a bustling city center, or located near iconic landmarks, make sure to convey how the location adds value to the guest's stay.

Offer Local Exploration Guides: Compile a guidebook or digital content that showcases local attractions, hidden gems, and must-visit sites around your property. This not only highlights your location’s appeal but also positions your rental as a gateway to unique local experiences.

Deliver Personalized and Memorable Experiences

Concierge Services: Offer a dedicated concierge team to cater to guests' every need, from arranging personalized menus to booking exclusive experiences at local sites.

Unique Welcome Gifts: Impress guests upon arrival with welcome baskets full of handpicked local delicacies or luxury items, adding a personal touch to their stay.

Premium Transportation: Offer various transport options, including luxury car rentals and private chauffeur services, so that guests can travel in style.

Fine-tuning your pricing strategy is important in positioning your luxury short-term rental to effectively attract high-end travelers. Here are some ways you can optimize your pricing: 

Adopt Dynamic Pricing: Dynamic pricing tools automatically adjust your rates according to current trends, demand, and seasonality. AirDNA’s Smart Rates™ help you to balance being competitively priced in relation to similar properties while still being affordable enough to attract guests.

Create Exclusive Packages: Design packages that merge your property's unique features with local experiences, drawing on data about popular attractions and activities in your area. This adds value and justifies premium pricing by offering guests a tailored experience. They’re not just getting a luxury stay, but a potential itinerary too.

Adjust for Seasonality and Events: Capitalize on high-demand periods with higher rates and keep occupancy high with deals during slower times.

Continuously Refine Your Strategy: Keep your offering competitive by regularly reviewing your performance and guest feedback. This ensures your pricing strategy and property offerings meet the evolving expectations of luxury travelers.

By prioritizing these key aspects, you can transform your property into a sought-after destination for luxury travelers by offering an unmatched level of service, exclusivity, and personalized care that exceeds expectations.

Use Smart Rates™ to optimize your pricing strategy.

Platforms that Specialize in Luxury Short-Term Rentals

Finding the right platform to list your property can make all the difference for homeowners, hosts, and investors. Here's a guide to the sites specializing in luxury rentals, each offering unique advantages for your high-end property.

Airbnb Luxe (formerly Luxury Retreats) is Airbnb’s premium segment. This platform caters to a luxury-seeking clientele with over 2,000 handpicked homes globally. Each listing meets over 300 criteria related to design and functionality. Owners get the benefit of dedicated trip designers for guests, promising a personalized and high-end service from booking to check-out. Trip designers do everything from arranging local experiences to coordinating in-house services like private chefs or massage therapists​.

A part of AccorHotels, One Fine Stay offers luxury homes in major cities, providing 24/7 support. It's great for urban property owners aiming to draw in guests that seek a blend of home comfort and upscale amenities.

Dream Exotic Rentals curates unique luxury properties, perfect for showcasing distinctive accommodations. It connects owners with a niche market by appealing to travelers desiring one-of-a-kind experiences.

Boutique Homes focuses on architecturally significant homes with design appeal. List your property here to target guests who value aesthetics and luxury.

Villas of Distinction offer a broad selection of high-end villas across more than 50 destinations around the world, complemented by personalized concierge services. It's perfect for owners of spacious and luxurious properties aiming to attract families, friends, or groups seeking privacy and upscale amenities. 

Luxury Retreats Are a Golden Opportunity 

Luxury short-term rentals offer rewards as lavish as the spaces themselves. 

But success hinges on more than just owning a high-end property. You must craft standout moments that guests reflect on long after they've left. Every touchpoint needs to radiate exclusivity. However, intuition alone won't suffice in an industry as dynamic and guest-centric as this. Be sure to stay ahead of market trends as you look to sculpt an experience that exceeds the ever-evolving expectations of luxury travelers. 

Plan your STR strategy based on real booking activity and trends—plus, see how things change year over year.

The time to invest in luxury short-term rentals is now. Learn why high-end experiences are increasingly in demand and how to get in on this growing market.

Key Takeaways:
The demand for luxury stays is skyrocketing, with a jaw-dropping 73% increase since 2019 for plush pads costing over $1000 a night. This trend signifies a ripe opportunity for investors and hosts aiming to cater to the high-end market.
Key factors propelling this growth include higher disposable incomes, a growing preference for privacy and space, and the appeal of home comforts coupled with customized services. 
To woo the luxury market, your rental needs to be more than just a place to crash. Think spa-level amenities, personalized experiences, and a location that screams exclusivity.

Travelers love to live the high life, even for just a few days. 

From breathtaking vistas to private swimming pools, luxury short-term rentals elevate travel to an art form. This market is rapidly expanding, driven by both guests and investors. According to AirDNA research, demand for stays that cost more than $1000 per night has increased 73% since 2019. Properties charging more than $1,500 per night have climbed a dramatic 91.4%.

It's clear that short-term rental owners are redefining luxury travel. But what do investors and vacation rental owners need to know about the luxury short-term rental market to operate successfully? 

Let's take a look.

Boost your rental revenue

The Data Behind the Growth of Luxury Short-Term Rentals

Although properties with nightly rates of $1,000+ only make up 2.7% of total stays in 2023, they have seen significant growth in recent years. We can track that growth using demand nights and Average Daily Rates (ADR), or how much hosts typically charge guests per day.

Demand For Luxury Properties Has Skyrocketed

In 2023, there were 1.9 million demand nights where guests paid more than $1500 a night and 3.7 million demand nights where guests paid anywhere from $1000-1499 a night. 

Last year alone, demand for stays over $1000 a night increased 7.7% year-over-year (YOY) while demand for stays over $1500 a night increased by 12.5% YOY. These numbers reflect a robust upward trajectory in the luxury vacation rental sector.

Luxury Rentals See the Greatest ADR Growth 

The Average Daily Rate (ADR) for luxury accommodations eclipsed the general market's ADR growth by a notable margin. This indicates a strong willingness among guests to invest in premium experiences.

Let’s compare ADR growth of luxury short-term rentals versus other types of properties: 

Average Daily Rates (ADR) Trends:

Luxury Rental ADR Increase Since 2019: 36%

Nationwide ADR Increase Since 2019: 26%

Budget Property ADR Increase Since 2019: 17%

Meanwhile, more property investors are seeing the value in the luxury short-term rental market. According to Host Financial, loan requests for purchasing short-term rental properties worth more than $750,000 rose more than 6% in the years 2022-2023. Here’s what David Ramirez, one Host Financial expert, had to say: 

“More and more, we are hearing from our investor clients that they are focusing on larger, higher-end properties that can provide the kind of amenities and experiences that short term rental travelers are increasingly demanding. These higher-end properties offer vacation experiences that can’t be matched by alternative travel accommodations such as traditional hotels, motels and resorts. 

Higher-end short-term rentals have the advantage of being able to host multiple families at the same property. They offer increased levels of privacy and amenities that are exclusively used by those staying at the property. These qualities would be extremely difficult for legacy operators/competitors to replicate." 

Smart investments happen here.

AirDNA’s powerful yet easy-to-use tools make hosting and investing a breeze. This means having every insight you need, all in one place, always up-to-date.

Start exploring for free
5 Factors Driving Demand for Luxury Short-Term Rentals

The luxury short-term rental market is booming, and there are many reasons why more people are ditching traditional hotels for upscale alternatives. 

Here are five factors influencing growth in luxury short-term rentals:

1. Economic Variables and Growing Incomes

A significant part of the demand for luxury short-term rentals comes from economic growth. Household incomes and disposable income have both seen increases, making these upscale stays more accessible. 

Since 2019, personal disposable incomes in the US have jumped 8% and are predicted to rise another 5% in the next two years. Additionally, the number of US households earning over $100,000 annually grew by 7% since 2019, reaching 57.6 million. 

Growth is expected to climb another 4% in the next two years. With more spending money, people can afford more expensive stays. This contributes to the demand for luxury short-term rentals.

Learn about short-term rental data
Start AirDNA for free

2. Increased Desire for Privacy and Space

In a post-pandemic world, people are looking for a little more space to stretch their legs. Luxury short-term rentals offer more privacy and luxury, setting them apart from impersonal and small hotels. This makes luxury short-term rentals an ideal choice for family and friends seeking a comfortable and private space to relax and bond. Spacious high-end properties provide groups with private residences ideal for celebrations and creating memories without others intruding on their space.

3. Technological Advancements

Finding and booking a high-end rental has never been easier. Property owners can easily list their places on various platforms and apps specializing in luxury short-term rentals (which we’ll go through later in this article). This ease of access is a big driver behind the market's growth.

4. Home Comforts and Customized Services

Luxury short-term rentals offer the comforts of home, like full kitchens and living spaces, but with the added bonus of personalized services. Think private chefs, your own concierge, and even transportation services. These customized services make the stay feel tailored and exclusive.

5. Flexible Work Arrangements

With more people working remotely, there's a new flexibility in how and where we can work. This has led many to blend work with travel, even bringing their family on work trips (who says you can’t mix business with pleasure?!). 

How is your STR performing?

Your vacation rental may be amazing, but is it better than your competition? Connect your Airbnb listing to AirDNA to see its Booking Performance Score.

See your score
How to Appeal to the Luxury Short-Term Rental Market

Hosts must ensure their properties are not just places to stay but destinations in themselves in order to captivate the luxury market. Offer a vacation experience that guests will reminisce about for years to come. 

Here are some ways to make your property stand out and command higher rates: 

Curate High-End Amenities
Spa and Wellness: Equip your property with spa-like amenities, including saunas and hot tubs with hydrotherapy features, to offer a sanctuary of relaxation.
Fitness Options: For those who don't want to skip their workout routine, offer a selection of high-quality fitness equipment. State-of-the-art treadmills and elliptical machines are a good start.
Smart Living: Integrate smart home devices for convenience, such as voice-activated assistants and automated lighting and climate control systems. Smart features make the stay effortlessly comfortable.

Be sure to read AirDNA’s guide on the best amenities for the highest return on investment. 

 Get custom insights for your Airbnb

Invest in Sophisticated Design and Decor
Furniture: Select furniture that is not only visually appealing but also offers unparalleled comfort, including designer or custom-made pieces.
Artwork: Adorn your spaces with original art or curated high-quality prints that evoke a sense of luxury and culture.
Luxurious Fabrics: Incorporate rich, plush materials in your bedding and upholstery, using fabrics like silk, velvet, or Egyptian cotton to add a tactile dimension to the luxury experience. The devil is in the details! 

Emphasize Your Location 

The essence of luxury travel lies not only in the amenities and services provided, but also in the location of the rental. A strategic or picturesque location can make your property much more appealing:

Promote the Location in your Listing: Draw attention to the exclusivity and attractiveness of your property's location in your listing. Whether it's nestled in a serene coastal area, perched in a bustling city center, or located near iconic landmarks, make sure to convey how the location adds value to the guest's stay.
Offer Local Exploration Guides: Compile a guidebook or digital content that showcases local attractions, hidden gems, and must-visit sites around your property. This not only highlights your location’s appeal but also positions your rental as a gateway to unique local experiences.
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Deliver Personalized and Memorable Experiences
Concierge Services: Offer a dedicated concierge team to cater to guests' every need, from arranging personalized menus to booking exclusive experiences at local sites.
Unique Welcome Gifts: Impress guests upon arrival with welcome baskets full of handpicked local delicacies or luxury items, adding a personal touch to their stay.
Premium Transportation: Offer various transport options, including luxury car rentals and private chauffeur services, so that guests can travel in style.

Refine your Pricing Strategy 

Fine-tuning your pricing strategy is important in positioning your luxury short-term rental to effectively attract high-end travelers. Here are some ways you can optimize your pricing: 

Adopt Dynamic Pricing: Dynamic pricing tools automatically adjust your rates according to current trends, demand, and seasonality. AirDNA’s Smart Rates™ help you to balance being competitively priced in relation to similar properties while still being affordable enough to attract guests.
Create Exclusive Packages: Design packages that merge your property's unique features with local experiences, drawing on data about popular attractions and activities in your area. This adds value and justifies premium pricing by offering guests a tailored experience. They’re not just getting a luxury stay, but a potential itinerary too.
Adjust for Seasonality and Events: Capitalize on high-demand periods with higher rates and keep occupancy high with deals during slower times.
Continuously Refine Your Strategy: Keep your offering competitive by regularly reviewing your performance and guest feedback. This ensures your pricing strategy and property offerings meet the evolving expectations of luxury travelers.

By prioritizing these key aspects, you can transform your property into a sought-after destination for luxury travelers by offering an unmatched level of service, exclusivity, and personalized care that exceeds expectations.

Try Our Vacation Rental Pricing Tool

Use Smart Rates™ to optimize your pricing strategy.

Try here for free
Platforms that Specialize in Luxury Short-Term Rentals

Finding the right platform to list your property can make all the difference for homeowners, hosts, and investors. Here's a guide to the sites specializing in luxury rentals, each offering unique advantages for your high-end property.

Airbnb Luxe

Airbnb Luxe (formerly Luxury Retreats) is Airbnb’s premium segment. This platform caters to a luxury-seeking clientele with over 2,000 handpicked homes globally. Each listing meets over 300 criteria related to design and functionality. Owners get the benefit of dedicated trip designers for guests, promising a personalized and high-end service from booking to check-out. Trip designers do everything from arranging local experiences to coordinating in-house services like private chefs or massage therapists​.

One Fine Stay

A part of AccorHotels, One Fine Stay offers luxury homes in major cities, providing 24/7 support. It's great for urban property owners aiming to draw in guests that seek a blend of home comfort and upscale amenities.

Dream Exotic Rentals

Dream Exotic Rentals curates unique luxury properties, perfect for showcasing distinctive accommodations. It connects owners with a niche market by appealing to travelers desiring one-of-a-kind experiences.

Boutique Homes

Boutique Homes focuses on architecturally significant homes with design appeal. List your property here to target guests who value aesthetics and luxury.

Villas of Distinction

Villas of Distinction offer a broad selection of high-end villas across more than 50 destinations around the world, complemented by personalized concierge services. It's perfect for owners of spacious and luxurious properties aiming to attract families, friends, or groups seeking privacy and upscale amenities. 

Become a better Airbnb host

Luxury Retreats Are a Golden Opportunity 

Luxury short-term rentals offer rewards as lavish as the spaces themselves. 

But success hinges on more than just owning a high-end property. You must craft standout moments that guests reflect on long after they've left. Every touchpoint needs to radiate exclusivity. However, intuition alone won't suffice in an industry as dynamic and guest-centric as this. Be sure to stay ahead of market trends as you look to sculpt an experience that exceeds the ever-evolving expectations of luxury travelers. 

The Growing Demand for Luxury Short-Term Rentals: What You Need to Know

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