5 Airbnb Trends DMOs Need to Watch in 2023 | AirDNA

For destination marketers and tourism pros, vacation rentals have been on a tear since the height of the COVID-19 pandemic.

• Since a brief blip in 2020, the supply of vacation rentals has skyrocketed by over 50%.
• Revenue earned by vacation rentals has grown by 25% yearly since 2020. 
• The share of total vacation rentals bookings compared to hotels has nearly doubled since 2018. 

While this seems like impressive growth, most DMOs need more intel.  

It doesn’t cut it to simply report to your board that “there are a lot of vacation rentals” or “travelers are booking STRs more than they used to.”

Here are five trends defining the short-term rental (STR) industry right now. Use these as talking points in your next conversation with stakeholders, and you’ll set yourself up for success.

Trend #1: Flexible Travel Continues to Impact Demand

A new wave of flexible, long-term travel is one of the major trends driving today’s STR demand.

Hybrid travel. Extended work trips. Globetrotting nurses and construction workers. In other words, “bleisure” or “mullet travel” (our personal favorite) is leading to more longer-term stays. 

Whereas stays of 28-plus days accounted for 14% of all stays back in 2019, today they are over 20%. And destinations that are not prioritizing this mid-term stay demographic will be missing major opportunities in years to come. 

What’s more is that occupancy rates—a property’s total number of reserved days divided by its total number of available days—are stronger now than before the pandemic. This is, in part, because demand for rentals has skyrocketed versus 2019.

But demand often brings about even more supply. Which is exactly what happened in late 2020 and 2021. In the U.S., historically low interest rates fueled a real estate gold rush. Plus, rentals proved more resilient than traditional lodging during the height of the pandemic too.

In short: It was tempting to join the Airbnb game, and thousands of aspiring rentalpreneurs did just that. That’s why occupancy rates have slightly declined. Travelers have more options, and hosts have more competition.

It’s super important for any DMO to keep track of local occupancy trends. It can help you manage the problem of overtourism because you’ll know which areas are most vulnerable. You’ll also be able to forecast with confidence. And just like a host or investor, why wouldn’t you want to know how much money you stand to make over the next 12 months?

Trend #2: Flexible Search Has Opened More Destinations

In case you’ve missed it, Airbnb has effectively changed the way people search for travel. 

Whereas before, travelers had a destination in mind and then began their accommodation search, today, it’s reversed. The accommodation—and all the glitz, glamor, and uniqueness that comes with it—often overshadows the location itself. 

As a result, we’re seeing major upticks in demand for locations that were previously overlooked. Areas that were nowhere near the top of travelers’ minds are now popping up as compelling suggestions. 

Case in point: Small rural towns are now seeing 159% more demand than they did in 2019.

What does this mean for DMOs? Before, we knew roughly where travelers were staying. Today, it’s becoming much harder to track. Neighborhoods that used to get zero foot traffic are now in need of public services and facing sustainability concerns.

As we said before—when there’s demand, supply normally follows. Those same rural/urban markets above have seen a 56% increase in the active supply of STRs since 2020. 

Trend #3: Supply Growth and Demand Lagging In Major Gateway Markets 

All that being said, the story looks very different for large urban markets. Places like Boston, New York, and San Francisco have seen over 30% drop-off in the number of active STRs since 2019. 

Owners and property managers have pivoted away from rentals in these locations and moved them back onto the standard long-term rental market. Even though international travel has recovered somewhat from the pandemic, we’re not seeing supply bounce back as expected.

What happens when there aren’t enough Airbnb or Vrbo listings in a given location? Demand can’t keep up. Travelers end up booking hotels and traditional accommodations. 

Here, DMOs have an easy chart to show how urban recovery has lagged so significantly behind suburban and rural markets.

Trend #4: #Airbnbust is Not A Demand Problem

In case you hadn’t heard the term “Airbnbust” yet, here’s the scoop: After record-breaking years in 2021 and 2022, many hosts and property managers have begun to panic as bookings in recent months simply haven’t kept up. 

The narrative has blamed everyone from careless hosts to exorbitant cleaning fees, chores for guests, increased nightly rates, and the OTAs themselves. Many in the industry noted that, because of this, travelers have grown tired of vacation rentals. 

The truth is that vacation rental bookings are stronger than ever. For however real the #Airbnbust theory is, it certainly can’t be blamed on a lack of demand. 

In terms of both nights booked (based on the date when travelers are actually making a reservation) and nights stayed (when travelers actually check in), we’re seeing really robust growth in demand.

Nights booked are up 15% year over year (YOY), and nights stayed are up 18% YOY.

Trend #5: Competition Between Hotels & Short-Term Rentals

You might think STR and hotel trends are mostly identical, but the differences are significant—and have become extra apparent in recent years. And it’s crucial for every DMO to capture accurate data from both sectors.

While rentals are often thought of as being more affordable, times are changing. Large city hotels reported 42.9% higher average daily rates (ADRs) in 2019. As of 2022, the gap was only 26.6%. And hotels are now offering lower rates in virtually all markets except for urban and coastal resorts.

Travelers continue to prioritize location over every other variable, but value-for-money is high on their list too. Which presents opportunities for hosts, especially in sparse hotel markets (coastal and mountain towns).

As you can see, vacation rental trends are varying heavily by region, property type, asset class, and more. All this makes destination management all the more nuanced. 

If you’re looking for insights on your specific market, AirDNA is here to help. Our Destination Package is trusted by over 500 DMOs around the world and arms tourism pros just like you with every data point you need to make confident decisions. This one easy-to-use toolkit allows you to monitor supply, booking trends, tax revenue, traveler origin, future outlook, and much more.