Stabilization Achieved: After two years of declining unit-level performance, 2024 marked a turning point for the U.S. STR market. Occupancy levels stopped declining, and revenue per available rental (RevPAR) returned to positive growth.

Demand Outpaces Supply: Slowing supply growth, coupled with rebounding demand (+7.0% year-over-year), balanced the market. This brings year-to-date occupancy nearly even with 2023 levels by October.

Resilient Pricing Power: Operators regained pricing power as average daily rates (ADR) growth consistently outperformed the AirDNA Repeat Rent Index (RRI), reversing the downward trends of 2023.

Gradual Recovery Continues: Occupancy is expected to make steady gains toward pre-pandemic levels of around 56% by the end of 2025, supported by modest supply growth and sustained demand.

Demand Stabilization: While the rapid demand growth seen in 2024 will taper off, steady income gains and economic stability will support continued improvement.

Interest Rates and Inflation: High interest rates will continue to constrain housing transactions and supply growth through mid-2025, while inflation is expected to remain slightly above the Fed’s 2% target.

Improved Consumer Confidence: Rising real incomes, driven by a strong economy and fiscal stimulus, are boosting traveler confidence and willingness to spend on STRs.

Slowing Supply Growth: Supply growth is projected to decelerate further in 2025 before stabilizing in 2026, reflecting the ongoing effects of high interest rates and elevated housing prices.

Mix Shift Impacts Pricing: Urban and Mid-Size Cities are seeing an increase in larger, higher-priced listings entering the market, a trend known as mix shift. This is driving growth in ADR but causing the AirDNA Repeat Rent Index (RRI), which tracks rate changes for existing listings, to underperform. The mix shift reflects the addition of premium listings, which elevate ADR without indicating real pricing gains for existing properties.

Localized Challenges: Natural disasters and regulatory changes in key urban and resort markets will influence localized performance trends.