Why AI and Local Hosts Are Redefining the STR Industry

Jamie Lane and Scott Sage tune in from VRMA 2025, where Jamie presented groundbreaking research on property manager performance metrics. "My first takeaway was that AI is here, and it's making a significant impact," Lane notes about the conference, highlighting how technology is reshaping the hosting ecosystem.

According to Sage, "Operators are more focused on building sales teams, finding leads, acquiring new inventory, retention, metrics, and analyzing their businesses," reflecting the increasing sophistication he observed at VRMA 2025.

Airbnb Host Fee Change: What Property Managers Need to Know in 2025

The most pressing update for property managers using PMS (Property Management System) platforms is Airbnb's mandatory fee structure change taking effect October 27, 2025. This shift represents a fundamental change in how fees are distributed between hosts and guests. Under the current split fee model, hosts typically pay around 12% while guests pay approximately 3%. The new host-only fee structure consolidates these charges into a single 15% fee paid entirely by the host.

This change applies exclusively to software-connected users, including those on platforms like Uplisting and other integrated property management systems. Individual hosts who manage their listings directly through Airbnb are not required to make this change in 2025, though future requirements for 2026 remain uncertain. The timeline is non-negotiable—all affected hosts must transition by the October 27th deadline or face automatic conversion to the new fee structure.

To maintain current earnings levels, property managers need to take immediate action. The math is straightforward but critical: hosts must increase their nightly rates by approximately 18% to offset the consolidated fee structure. This adjustment ensures that both host payouts and total guest costs remain roughly equivalent to pre-change levels.

Impact on property managers and hosts

The financial implications of failing to adjust rates are severe. "If you don't adjust, your earnings will be greatly reduced," Jamie Lane emphasizes during the podcast. Without proper rate adjustments, hosts could see their net earnings drop by the full difference between the old and new fee structures—a potentially devastating blow to profitability.

Communication becomes paramount as this deadline approaches. Property managers must inform their property owners about the change and its implications for pricing strategy. This includes updating all PMS settings, revising pricing algorithms, and ensuring that any automated pricing tools account for the new fee structure. The change also requires updating owner agreements and financial projections to reflect the new payment structure.

Strategic considerations extend beyond simple rate adjustments. Property managers should evaluate how this change affects their competitive positioning, especially in markets where direct hosts (not subject to the fee change) may have pricing advantages. Some managers are using this transition as an opportunity to reassess their entire pricing strategy and optimize their Airbnb listings for better search visibility.

Review Scores, Churn, and Retention Trends in 2025

The data from 2024-2025 reveals a stark reality for property managers: review scores have become a make-or-break metric for business sustainability. Property managers maintaining review scores above 4.7 experience annual churn rates of just 9%, while those at or below 4.7 face a staggering 24% churn rate. This dramatic difference underscores how guest satisfaction directly impacts business retention.

OTAs (Online Travel Agencies) like Airbnb and Vrbo have doubled down on rewarding high-performing properties. Airbnb's new badge system includes Guest Favorites, Top 10%, Top 5%, and Top 1% designations, while Vrbo is transitioning their Premier Host program to operate at the listing level with similar performance tiers. These badges significantly influence search rankings and visibility, creating a virtuous cycle where better-performing properties gain more bookings and maintain their competitive edge.

The financial impact is substantial. Research shows that five-star properties earn nearly 15% more in RevPAR (Revenue per Available Rental) compared to average properties. This performance gap has widened considerably since 2019, when the difference was less pronounced. For property managers, this means that maintaining exceptional review scores isn't just about reputation—it's about survival in an increasingly competitive marketplace.

Churn rate evolution: 2019 vs. 2025

The evolution of churn rates tells a compelling story about market transformation. In 2019, both high and low review score managers experienced similar churn rates around 11%, aligning with the industry rule of thumb that 10% annual churn is normal. This equilibrium suggested that factors beyond review scores—such as market conditions, owner relationships, and local competition—played equally important roles in retention.

Fast forward to 2025, and the landscape has fundamentally changed. While top-performing managers have actually improved their retention (9% churn), underperforming managers face more than double the churn rate at 24%. Jamie Lane explains that "clearly there's something happened in the marketplace that has led to this reduced level of churn for underperforming property managers," pointing to COVID-era changes that accelerated the separation between industry leaders and laggards.

Several market forces drive this divergence. Increased competition means property owners have more management options than ever before. The professionalization of the industry has raised owner expectations for performance and communication. OTA algorithm changes that favor high-performing properties create a feedback loop where poor performers lose visibility, bookings decline, and owners seek alternatives. Additionally, as overall market growth slows, the fight for market share intensifies, making it harder for underperforming managers to maintain their portfolio.

Market Trends and Performance: September 2025 Data

September 2025 marked a significant milestone as the first month to show year-over-year demand decline since April 2024, dropping 0.1%. While this percentage seems minimal, it signals a broader trend of softening demand that has concerned industry watchers throughout the summer season. The decline becomes more meaningful when considered alongside occupancy trends, which fell almost 4% compared to September 2024.

Calendar quirks played a significant role in these numbers. Labor Day weekend's timing meant that one day shifted from September to August compared to the previous year. This shift inflated August's performance (demand up 3.8%, occupancy down only 0.9%) while dampening September's results. When combining August and September for a more accurate picture, demand increased about 2% while occupancy decreased about 2%—not the robust growth the industry hoped for at the year's start.

The summer of 2025 failed to meet expectations across nearly every location type. From May through July, demand grew approximately 3% while occupancy declined about 1%. The August-September period showed further weakening, with demand growth slowing and occupancy declines accelerating. These trends reflect ongoing economic uncertainties, including the impact of tariffs, inflation concerns, and sluggish job growth that have dampened consumer confidence and travel spending.

Supply and listing growth

The supply side of the equation offers a silver lining for existing operators. Total listings declined year-over-year by more than 4% in 2025, marking a significant shift from the rapid supply growth that characterized previous years. This decline stems from a combination of factors: underperforming properties exiting the market, increased regulations in certain jurisdictions, and some hosts converting to long-term rentals amid economic uncertainty.

New listing growth has slowed dramatically, with overall supply growing only 3% despite the decline in total listings. This suggests that while some new inventory enters the market, it's barely offsetting the properties leaving. For large property managers, growth has been particularly anemic at just 3%—a figure that Scott Sage aptly describes as disappointing for what's supposed to be a growth industry.

The most dynamic segment of the market is small and mid-sized operators, particularly hyper-local managers handling 6-20 properties. These operators are growing rapidly, filling the gap left by both exiting individual hosts and struggling large management companies. Their success stems from deep local knowledge, personalized service, and the ability to maintain high review scores through hands-on management. This trend reinforces the conference's prevailing theme that "national is dead and local is king."

Professionalization, AI, and Loyalty Programs in 2025

The 2025 VRMA conference showcased an AI revolution in the short-term rental industry. The exhibit hall featured numerous AI companies demonstrating solutions for everything from guest communication to pricing optimization and property maintenance scheduling. This technological surge represents a fundamental shift in how properties are managed and how guests experience short-term rentals.

Large property managers have already begun reaping the benefits of AI adoption, with communication scores showing meaningful improvement over the past 12 months. While it's difficult to definitively attribute this improvement to AI versus other factors, the timing suggests that automated communication tools are helping managers respond more quickly and consistently to guest inquiries. "It's up to the ecosystem to build the next generation of hosting technology," Jamie Lane observes, noting that waiting for major platforms to lead innovation may leave hosts behind.

The professionalization trend extends beyond technology adoption. Operators are increasingly focused on building structured sales teams, implementing sophisticated lead generation systems, and developing retention strategies based on data analytics. This shift from mom-and-pop operations to professionally run businesses reflects the industry's maturation and the increasing complexity of succeeding in the short-term rental market.

Loyalty programs: Local vs. OTA initiatives

Local loyalty programs are emerging as a powerful tool for property managers to build direct booking relationships and increase revenue. The podcast highlights Red Cottage in New York's Hudson Valley as a prime example. Their program charges $500 annually and provides members with 10% discounts, waived pet fees, early check-in/late checkout privileges, and the ability to book three months earlier than non-members.

The genius of such programs lies in monetizing benefits that managers often provide anyway. Loyal customers frequently receive discounts, fee waivers, and scheduling flexibility as courtesy gestures. By formalizing these benefits into a paid program, managers generate incremental revenue while creating a sense of exclusivity and value for their best customers. "A local loyalty program has a better adoption rate and maybe even a higher willingness to pay," Scott Sage notes, especially for repeat vacationers who return to the same destinations.

This local approach contrasts sharply with OTA loyalty programs like Vrbo's One Key or Booking's Genius program. While these platforms offer broad reach, they lack the personal connection and specific benefits that local programs can provide. Property managers don't need to wait for Airbnb to announce their loyalty program—they can create their own tailored solutions that better serve their specific market and guest demographics.

Holiday and Seasonal Booking Trends: Fall and Winter 2025

The placement of holidays on the calendar dramatically impacts booking patterns and revenue potential, and 2025 offers particularly favorable conditions for property managers. New Year's Day falling on a Thursday creates an extended weekend opportunity that didn't exist in 2024 when it fell on a Wednesday. This shift has driven a remarkable 40% increase in demand for New Year's Eve compared to the previous year.

The entire holiday period from Christmas through New Year's shows strong pacing, as travelers can maximize their time off with strategic use of vacation days. Property managers who may have reduced rates during the 2024 holiday season due to weak midweek demand should reconsider their pricing strategy for 2025. "Understanding consumer behavior and seeing that demand is up 40% gives you much more pricing power," Jamie Lane emphasizes, encouraging hosts to price confidently for the holiday period.

Thanksgiving 2025 presents interesting regional variations in demand. Markets hosting major college football games—including Gainesville, Florida; Columbia, South Carolina; and Ann Arbor, Michigan—are experiencing particularly strong booking pace. This sports-driven demand extends to NFL cities hosting Thanksgiving Day games, creating opportunities for hosts in these markets to capitalize on event-driven travel.

Seasonal demand patterns

The annual "leaf peeping" phenomenon continues to drive significant regional demand patterns in fall 2025. AirDNA's data visualization shows how occupancy peaks move progressively down the East Coast as fall foliage reaches its peak in different regions. Early October sees maximum demand in the Northeast—Maine, New Hampshire, and Vermont—before shifting to mid-Atlantic states and eventually reaching southern markets like North Georgia by early November.

This predictable seasonal pattern offers strategic opportunities for property managers to optimize pricing and marketing efforts. Properties in each region can prepare for their peak leaf-peeping period by enhancing their listings with fall-themed photos, highlighting proximity to scenic drives, and adjusting minimum stay requirements to capture weekend travelers. The data shows that markets effectively marketing their fall foliage experiences can extend their shoulder season significantly.

Looking ahead to winter 2025-2026, pacing data for November and December shows acceleration compared to earlier fall months. This improvement suggests that consumers are regaining confidence in planning ahead, moving past the hesitancy that characterized much of 2025. Property managers should prepare for stronger winter bookings while remaining flexible enough to capture last-minute demand from travelers who continue to book on shorter timelines.

Economic and Consumer Sentiment in 2025

The disconnect between financial markets and consumer sentiment creates a complex environment for short-term rental operators in 2025. While stock markets hit record highs and Bitcoin reaches new peaks, the average consumer feels increasingly squeezed by economic pressures. This divergence particularly impacts the short-term rental industry, where discretionary travel spending often gets cut first when households feel financial stress.

The data reveals a stark divide in the American economy. The top 10% of income earners, who benefit from rising asset values and have limited exposure to inflation, drive approximately 50% of consumer spending. These travelers continue booking premium properties and longer stays. Meanwhile, the remaining 90% face eroding disposable income from persistent inflation, stagnant wages, and job market uncertainty. This group increasingly opts for shorter trips, budget properties, or foregoes travel entirely.

For property managers, this economic bifurcation requires strategic positioning. High-end properties catering to affluent travelers may maintain strong performance, while mid-market properties face pressure to provide value. "Sentiment is weak among large swaths of consumers," Jamie Lane notes, explaining how this weakness translates into shorter booking windows and increased price sensitivity among mainstream travelers.

Looking ahead: Q4 2025 and early 2026

The outlook for Q4 2025 shows cautious optimism, with pacing data indicating stronger performance for late fall and winter holidays compared to the challenging summer season. Normalized booking windows for November and December suggest that consumers are gaining confidence that economic headwinds won't escalate into a full crisis. This stabilization, while not indicating robust growth, at least provides a foundation for planning and investment.

Early 2026 projections show demand growth in the modest 1-2% range, reflecting continued economic uncertainty but avoiding the declines that some feared. The major wildcard for 2026 is the FIFA World Cup, scheduled for summer across 12 US markets. December 5, 2025, marks a crucial date when group assignments are announced, determining which international teams will play in each host city.

Property managers in World Cup markets should prepare for unprecedented international demand. Research indicates that fans from certain countries—particularly Germany, Argentina, Brazil, and England—travel in large numbers and book accommodations well in advance. "Those are the fans who will drive high occupancy and ADRs in your market," Jamie Lane explains, advising hosts to understand which teams might play in their city and prepare accordingly. Even markets not directly hosting games may benefit from increased international visitation as travelers explore beyond tournament venues.