May STR Trends: ADR Climbs, Bookings Shrink, Reviews Climb

Meet the Experts

In the ever-evolving landscape of short-term rentals, data-driven insights have become the compass guiding hosts and investors through market uncertainties. Jamie Lane, Chief Economist at AirDNA, and Scott, the podcast host and industry analyst, continue their monthly collaboration to decode the latest short-term rental market trends 2025. Their partnership brings together deep analytical expertise with practical industry knowledge, offering hosts and property managers the intelligence they need to navigate an increasingly complex market.

Oil Prices, Geopolitical Conflict, and Booking Trends in 2025

Impact of Middle East Conflicts on Global Travel and Bookings

The ripple effects of geopolitical tensions are creating waves throughout the short-term rental industry in 2025. "Oil prices can directly impact bookings for short-term rentals," Jamie explains, highlighting a connection that many hosts might overlook.

When oil prices rise due to conflicts or supply constraints, airfares and road trip costs increase accordingly, affecting travelers' budgets and destination choices. This price sensitivity can lead to booking cancellations, shorter stays, or shifts toward more affordable destinations.

The relationship between global conflicts and local booking patterns has become increasingly apparent as tensions in the Middle East continue to influence travel decisions worldwide.

The data tells a stark story about the immediate impact on affected regions. Israel has experienced the second-largest spike in short-term rental cancellations in the Middle East in three years, with the surge occurring just within a single week in June. This dramatic shift extends beyond Israel's borders, with Jordan and Lebanon also seeing major increases in cancellations as travelers reassess their plans in light of regional instability.

What's particularly interesting is how these conflicts are reshaping American travel patterns. The Middle East had been experiencing a boom in American visitors, with destinations like Dubai, the UAE, and even Saudi Arabia ranking among the fastest-growing travel markets. However, Jamie notes that "with conflict in the region, we're seeing people pull back. They may choose to stay domestic or travel to Europe instead."

Drive-to Leisure Markets and Domestic Travel Shifts

Against this backdrop of international uncertainty, drive-to leisure markets are emerging as unexpected winners. May 2025 data revealed these markets outperforming industry averages, signaling robust demand for destinations within driving distance. This trend reflects a broader shift in traveler psychology. When global uncertainties rise, the appeal of familiar, accessible destinations grows stronger.

The resilience of holiday weekend demand provides another bright spot in an otherwise uncertain landscape. These peak periods continue to draw strong bookings, suggesting that while travelers might be reconsidering international adventures, they're not abandoning vacation plans entirely.

When it comes to understanding traveler displacement patterns, Jamie offers crucial insight: "If someone is planning an overseas trip, they'll still take an overseas trip. We don't typically see that demand shift to domestic travel." This observation, backed by data from similar situations like the Ukraine conflict, suggests that international travelers tend to redirect rather than cancel their plans entirely. The result? Displaced travel that benefits alternative international destinations rather than creating a windfall for domestic markets.

Summer 2025 Booking Patterns and Market Segment Performance

Coastal, Mountain, and Lake Destinations

As we dive into the summer rental outlook for 2025, the data reveals a fascinating tale of market segmentation. Coastal markets are showing remarkable resilience, with July and August occupancy down only 0.5% year-over-year. "For coastal markets, pacing looks the healthiest," Jamie observes, adding that strong last-minute booking patterns could push these destinations into positive territory by summer's end.

Mountain and lake destinations tell a similar story of stability. Popular spots like the Adirondacks and Lake Tahoe are experiencing a modest 2% decline in pacing for July and August 2025. However, Jamie's optimistic that these markets will "probably get flat and on par with prior years" as last-minute bookings materialize. This pattern underscores the enduring appeal of peak season destinations that offer outdoor recreation and scenic beauty.

Urban, Suburban, and Small/Midsize Cities

The urban rental occupancy picture in 2025 presents more challenges. Large cities are experiencing the steepest declines, with suburban markets down 6% and urban areas down 8% in summer pacing as of early June 2025. This concerning trend is compounded by the unique booking behavior of urban travelers, who typically book with shorter lead times. Lead times are averaging just 38 days.

"My biggest concern is with large cities—urban and suburban markets," Jamie emphasizes, pointing to the combination of weak pacing and shortened booking windows as a potential perfect storm. The silver lining? These shorter lead times mean there's still significant booking potential in the final weeks before stay dates, though hosts shouldn't count on last-minute saves as a strategy.

Small and midsize cities face their own challenges, with pacing down 4-5% year-over-year. The culprit here is clear: supply growth continues to outpace demand in these markets. With occupancy already down 1.5% in May 2025, these areas are likely to see continued pressure throughout the summer months.

International Travel Trends Affecting U.S. Rentals

The international travel landscape presents a complex picture for U.S. vacation rental market operators. Canadian travelers, traditionally the largest source of international guests, are dramatically pulling back.

The numbers are sobering: May 2025 saw Canadian air travel to the US down 24% and land crossings down 35% compared to May 2024. "This is absolutely impacting hosts who rely on Canadian travelers," Jamie warns, noting that the decline accelerated from -15% to -28% between March and May.The retreat extends beyond Canada. Germany, New Zealand, the Netherlands, and France are all showing declining visitor numbers to the U.S.

However, it's not all doom and gloom. Several markets are bucking the trend, with Argentina, Israel, Italy, Australia, South Korea, Brazil, Japan, India, and the UK all showing increased travel to the US compared to last year. The challenge? These growing markets aren't large enough to offset the massive decline in Canadian visitors.

Airbnb Review Scores and Operator Performance in 2025

Review Score Trends by Host Size (June 2025 Data)

The relationship between scale and guest satisfaction reveals itself starkly in the latest Airbnb review scores data. Single-unit operators maintain near-perfect scores, averaging 4.97-4.98, while large operator review scores Airbnb show a notable gap, with 500+ unit operators averaging 4.76-4.77. "Maybe not surprisingly, as you scale up—the more units you have under management—the lower your review score is," Scott observes.

This pattern holds true across all review categories: accuracy, cleanliness, check-in, communication, and value. Maintaining quality at scale remains one of the industry's greatest challenges. However, the year-over-year trends offer hope for larger operators.

Factors Driving Review Score Changes

The most encouraging news for scaled operators comes from the year-over-year improvements. Large operators showed the greatest gains in review scores across all categories, suggesting that the industry is successfully addressing the quality-at-scale challenge.

What's driving these improvements? The answer involves multiple factors working in concert. First, there's the platform effect. "Airbnb has made a big push to remove the lowest-performing properties...400,000 underperforming properties from the platform," Jamie reveals. This massive culling of poor performers between May 2024 and May 2025 has naturally elevated average scores across the board.

Technology adoption plays a crucial role as well. AI-powered messaging systems, sophisticated property management platforms, and automated guest communication tools are helping larger operators deliver more consistent experiences. As Jamie notes in his optimistic take, "The technology to manage listings is getting more advanced. AI messaging is improving, and operators' ability to scale and handle these tasks is getting better."

Industry consolidation adds another layer to this improvement story. High-quality operators are expanding their portfolios, bringing professional standards to more properties. This trend, while smaller in impact than platform changes or technology adoption, contributes to the overall elevation of service standards in the luxury short-term rentals segment and beyond.

Using Data Tools for Competitive Benchmarking

In this data-rich environment, successful operators aren't flying blind. Modern tools enable hosts to benchmark their performance against local competition with unprecedented precision. "You can connect your listing in read-only mode and see your review score compared to your market, other operators, your submarket, or a custom comp set," Scott explains, highlighting how accessible these insights have become.

This democratization of data means that operators of all sizes can now access the same market intelligence that was once reserved for large property management companies. Understanding your competitive position has never been more critical—or more achievable.

Market Outlook and Strategic Recommendations for Peak Season 2025

Monitoring Booking Windows and Market Weakness

As the short-term rental market navigates the second half of 2025, vigilance becomes paramount. "We have to be vigilant in looking for signs of weakness in booking windows and pacing, and what that means for the market," Jamie emphasizes. The economic backdrop adds urgency to this monitoring, with clear signs of slowing job growth and elevated recession risks creating additional headwinds.

The importance of real-time market monitoring can't be overstated during peak season. Successful operators are tracking not just their own performance but also their competition's booking patterns, rate strategies, and property types that are winning (or losing) in the current environment. This granular attention to market dynamics separates thriving operations from those merely hoping for the best.

Segment-Specific Trends: Budget vs. Luxury

The market continues to reveal a tale of two segments. Budget properties face ongoing challenges, while luxury rentals demonstrate remarkable resilience. "We're still seeing further weakness on the budget side compared to the luxury end," Jamie notes, a trend that has persisted throughout 2025 and shows no signs of reversing.

This divergence reflects broader economic patterns—travelers with means continue to book premium experiences, while budget-conscious guests pull back or seek alternatives. For operators, this trend underscores the importance of understanding your property's market position and adjusting strategies accordingly.

Actionable Strategies for Hosts and Operators

Success in the current market requires active management and strategic thinking. "Monitor your competition to see how their bookings are coming in, what rates they're able to get, and what types of properties are being booked versus those that aren't," Jamie advises. Don't just play copy-cat. Try and understand market dynamics in real-time and adapt quickly.

The temptation to rely on last-minute bookings as a salvation strategy must be resisted. As Jamie bluntly states, "Putting your head in the sand and hoping bookings will come in just because we're seeing a lot of last-minute ones isn't a strategy." Scott reinforces this message: "That is not the strategy I would recommend anyone deploy."

Instead, successful operators in 2025 are those who combine data-driven decision-making with proactive market engagement. They're adjusting rates based on real-time demand signals, optimizing their listings for changing guest preferences, and most importantly, staying connected to their local market dynamics. Because while broad trends provide context, Jamie reminds us that "none of these broad trends are going to hold at your local market level."

The path forward requires embracing both the opportunities and challenges that 2025 presents. Whether you're managing coastal properties benefiting from domestic travel shifts or urban rentals navigating international traveler declines, success lies in staying informed, remaining flexible, and never assuming that yesterday's strategies will work tomorrow. In this dynamic market, the only constant is change and those who adapt fastest will thrive.