Trends, Tariffs, and Market Projections

The short-term rental (STR) industry stands at a pivotal moment in 2025. With shifting demand patterns, evolving supply dynamics, and a complex economic backdrop, hosts, managers, and investors must stay agile to succeed.

In this comprehensive short-term rental market analysis 2025, we distill the latest data, expert commentary, and actionable trends from the STR Data Lab podcast, featuring AirDNA’s Chief Economist Jamie Lane and Director of Forecasting Bram Gallagher.

Whether you’re seeking insights on STR market trends 2025, vacation rental industry outlook 2025, or the key metrics that will define the year, this analysis delivers the clarity and depth you need to navigate the months ahead.

Meet the Experts: Jamie Lane and Bram Gallagher

At the heart of this STR market analysis 2025 are two leading voices in the industry:

• Jamie Lane serves as Chief Economist at AirDNA, bringing a wealth of experience in analyzing global travel and accommodation trends.
• Bram Gallagher, AirDNA’s Director of Forecasting, is recognized for his deep expertise in economic modeling and his ability to anticipate shifts in the vacation rental landscape.

Together, Lane and Gallagher offer a unique blend of macroeconomic perspective and granular STR performance metrics, making their insights particularly valuable for anyone invested in the vacation rental industry outlook 2025.

Purpose of the Episode

This episode zeroes in on the latest market performance, with a sharp focus on March 2025 results and early April 2025 trends. The conversation also explores the broader economic outlook for STR 2025, including inflation, employment, and regulatory shifts.

"Today, I’m hoping we can dive into what we’re seeing in terms of March performance and the broader economic context," Jamie explains, highlighting the dual focus on recent data and the forces shaping the short-term rental forecast 2025.

Short-Term Rental Demand and Occupancy Trends in 2025

Demand Growth and Occupancy Rates

The first quarter of 2025 has brought both momentum and caution to the STR sector. Demand growth, while positive, has moderated compared to the post-pandemic highs.

"Demand was down a bit from February 2025—the growth slowed to 3.1%. That’s not terrible, especially considering the calendar shift," Bram notes, referencing the impact of spring break and Easter holidays falling in March 2025 rather than April as in the previous year.

However, this modest demand growth has been met with a noticeable uptick in supply, which is affecting occupancy rates. "Occupancy declined as total listing growth picked up from 3.6% in February 2025 to 4.2% in March 2025," Bram explains. The result: widespread occupancy declines across the top 50 markets, underscoring the importance of monitoring both demand and supply in the short-term rental demand 2025 landscape.

Market Segmentation: Urban, Coastal, and Mountain Destinations

Performance in 2025 varies significantly by market type:

• Urban Markets: After a period of stagnation, urban STR supply is rebounding impressively. "Jersey City grew their listings 20.4% year-over-year, well past the regulatory step-up," Bram highlights. He adds, "Boston had 15% more listings in March 2025, Washington DC was up 12.3%, and Chicago was up 10.6%." These double-digit gains reflect a renewed confidence in city markets post-regulation.
• Coastal and Mountain Markets: In contrast, supply growth remains subdued. As Jamie observes, "We’re still seeing low supply growth in coastal and mountain markets, but strong growth in small and mid-size cities." This divergence is shaping STR market trends 2025, with urban areas facing more competitive pressures while traditional vacation destinations enjoy steadier occupancy.

Supply Growth and Regulatory Impacts in 2025

Supply Growth Patterns

The STR industry is experiencing a stable, moderate pace of supply expansion in 2025.

"I think that 4% looks like what 2025 is going to do," Bram projects, indicating that the current supply growth rate is likely to persist throughout the year. He further explains, "Generally, the supply cycle for urban areas bottomed out sooner than other markets or location types," reflecting the earlier impact and subsequent recovery from regulatory interventions in cities such as New York.

Regulatory and Economic Influences

Regulation and macroeconomic factors continue to shape the short-term rental supply growth 2025. High interest rates, implemented to control inflation, remain a significant barrier for new entrants.

"It’s not going to be easier to get into the short-term rental market in 2025 compared to 2024," Bram emphasizes, pointing to ongoing challenges from both tariffs and elevated borrowing costs. While some urban markets are rebounding, overall conditions for new supply remain tight, and further regulatory changes could influence the landscape as the year progresses.

Economic Context: Inflation, Employment, and Consumer Sentiment in 2025

Macroeconomic Indicators

The economic outlook for STR 2025 is shaped by a complex mix of inflation, employment, and sentiment data:

• Inflation: "Inflation came in pretty low in March 2025, which was great, but a lot of that was due to lower gasoline prices," Bram explains. While this is positive on the surface, underlying causes such as reduced global demand and oil overproduction add nuance to the picture.
• Employment: The job market remains resilient. "Employment was pretty good—we had good job gains, and the unemployment rate stayed right around 4.1% or 4.2%," Bram notes, suggesting that labor market strength is a stabilizing force.
• Consumer and Business Confidence: However, sentiment has taken a hit. "Consumer confidence really plummeted in March 2025—the Conference Board even used words like 'plummeted' or 'plunged,'" Bram points out, while business confidence and market volatility have also increased.

Financial Market Volatility and Interest Rates

Interest rate policy and financial market signals are critical for STR financing and investment decisions:

• "When you challenge the independence of the Fed, it makes people question whether the system is dependable," Bram warns, highlighting the risks of political interference in monetary policy.
• "The stock market is very volatile, and lately it’s been more about tracking Trump’s latest mood than anything else," he adds, using equity market swings as a real-time gauge of economic sentiment.

The 10-year Treasury yield, a key benchmark for STR financing, is likely to remain elevated as the Federal Reserve prioritizes inflation control over rate cuts in 2025. This environment may limit new supply and affect property valuations, reinforcing the need for careful financial planning.

International and Domestic Travel Trends for 2025

Inbound International Travel to the US

International travel trends 2025 are being shaped by both economic and sentiment-driven factors:

• Canadian and European Demand: "We came up with 12.1% fewer nights demanded from Canadians in the US as a whole," Bram reports, quantifying a significant drop in cross-border travel. Despite a weaker US dollar theoretically making American vacations more affordable, "Even though US travel is relatively cheap, it’s probably not going to entice Europeans," Bram observes.
• Safety and Sentiment: "There’s fear as well—fear of travel to the US and what might happen," Bram notes, referencing heightened concerns around safety and privacy that are discouraging inbound travel.

These dynamics are contributing to a softer outlook for international demand in the short-term rental forecast 2025, especially in urban markets that typically rely on overseas visitors.

Domestic Travel and Substitution Effects

With international demand lagging, domestic travel is filling some of the gap:

• "We’ll probably see more domestic substitution," Bram predicts, as Americans opt for in-country vacations amid high costs and negative sentiment abroad.
• Resort and drive-to destinations are outperforming: "Occupancy is really strong in resorts, and that’s driven by the 'drive-to' leisure destinations," Bram explains.

This shift is boosting vacation rental occupancy rates 2025 in mountain, lake, and coastal markets, while urban and suburban areas face more headwinds.

Pricing and Revenue Trends in the STR Market for 2025

Average Daily Rate (ADR) and Affordability

STR pricing trends 2025 reveal a nuanced picture:

• "In February 2025, ADR was up about 6%, but in March 2025 it was half of that—3.3%," Bram shares. This zigzag pattern reflects both seasonal factors and changing market sentiment.
• New listings are now skewing more toward affordability rather than luxury. "Affordability takes a lot of the market when there are declining economic conditions or anxiety about the economy," Bram explains. Hosts are responding to economic uncertainty by targeting budget-conscious travelers.

Revenue Management Strategies

Hosts are increasingly attuned to market signals and adjusting their strategies accordingly.

"Even if weakness isn’t showing up in demand, if negative sentiment is causing hosts to react, that may be something to watch," Jamie cautions. If the affordability trend continues, it could weigh on ADR growth and overall market health, making dynamic pricing and careful revenue management essential for success in 2025.

Key Metrics and What to Watch in the STR Market for 2025

Critical Data Points for 2025

For stakeholders tracking the short-term rental forecast 2025, several leading indicators warrant close attention:

• "If layoffs start happening, that could be really concerning, and we’ll see about that in the months to come," Bram warns, highlighting employment trends as a key risk factor.
• "We’ve seen lead times continue declining, especially outside of resort destinations," Bram notes, suggesting that travelers are waiting longer to book, which could signal caution or uncertainty.

Other important metrics include inflation expectations, wage growth, booking lead times, and cancellation rates—all of which can provide early warnings of shifts in STR demand and pricing.

Expert Outlook for the Remainder of 2025

Looking ahead, the expert consensus is one of cautious optimism, tempered by significant uncertainty:

• "The baseline is still no recession, but it’s pretty close to even odds at this point," Bram summarizes, reflecting the delicate balance between positive employment data and weakening sentiment.
• "One data point doesn’t make a trend," Bram reminds listeners, emphasizing the importance of monitoring multiple indicators before drawing conclusions about the direction of the STR market.

Conclusion: Strategic Takeaways for STR Stakeholders in 2025

Actionable Insights for Hosts and Managers

For vacation rental managers and hosts, the 2025 landscape demands both vigilance and adaptability:

• In markets with limited new supply—such as coastal and mountain destinations—occupancy and pricing remain relatively strong. "For vacation rental managers, that’s a positive story. For everyone else, there’s a bit of worry," Jamie points out.
• In urban and high-growth markets, increased competition and softer demand require sharper revenue management and a focus on differentiation.
• Monitoring economic and travel trends—especially around employment, inflation, and international sentiment—will be critical to anticipating shifts in demand and adjusting strategies accordingly.

Looking Ahead: Monitoring the Market in 2025

Staying informed and responsive is more important than ever:

• "I’ll be looking at layoffs—if there are spikes, that’s a warning sign," Bram advises, underscoring the need to track both macro and micro indicators.
• As Jamie concludes, "I might just have to have you back next month to talk about where all these metrics are going," reinforcing the value of ongoing analysis and regular market updates.

Key metrics to watch in 2025:

• Employment and layoff trends
• Booking lead times and cancellation rates
• ADR and affordability shifts
• International and domestic travel patterns
• Regulatory and interest rate developments

By keeping a close eye on these indicators and remaining flexible in their approach, STR stakeholders can navigate the uncertainties of 2025 and position themselves for long-term success.

For more in-depth STR market trends 2025, vacation rental industry outlook 2025, and monthly updates, stay tuned to the STR Data Lab and AirDNA’s ongoing analysis.