2026 Midyear STR Outlook: What's Driving Demand, Pricing & Growth for the Rest of the Year

Welcome to the STR Data Lab.

Hello and welcome to the STR Data Lab. I'm Jamie Lane, chief economist at AirDNA, and I am joined today again by my good friend and colleague Bram Gallagher. Bram, good to see you.

Good to see you, too, Jamie. Exciting time and always fun to be on the podcast. Thank you.

Yeah, so this episode we're going to dive into our mid-year review. So, really step back, and we're sitting here beginning of July, uh and can review the first half of the year, uh get a sense of how it's played out, how it's played out versus expectations, and then talk about and what we expect for the year ahead, um and even into 2027. Uh but, given that it's mid-July, uh it's and peak and mid-July is like peak short-term rental demand. And we're probably seeing more stays happening uh this week than any other week throughout the year. You going to be taking some and trips this summer, Bram? Uh uh What is your summer look like?

Probably Well, not for the next month, right? Because I got to take a close eye on the research team while you are on a sabbatical going to Iceland. Very jealous. And of course, Maine as well. It's going to be beautiful. And also, great way to beat the heat cuz a lot of us are experiencing that. I just got back from a trip across um the Appalachia. Uh I went to Pigeon Forge and Asheville and then Greenville uh to go to the TT RA and had a really nice time doing that. We We did pack so much stuff in there. I feel like I've had three vacations already. So, my Leslie, my uh my partner, she planned it as a hedge against future gas price increases. She said, "We'll just do all the trips in one." You know, while we're up while we're up there. So, it was really great time and really great panel, too, at TT RA.

Posted a link on my LinkedIn if anyone's following along, but yeah, I got to talk with Daryl Cronk from Tourism Economics, Joey Van Nesson from the Moore School in South Carolina. So, always fun to talk to economists, especially when we're thinking about the future.

Yeah, so I asked about vacation and you talked about a conference, Ram. What's going on?

Well, you know, we had some time around the edges. Um

[laughter]

I I think we used to coming out of the pandemic we were what calling that bleisure.

Yes, that's right. Mola travel.

Business in the front and and leisure in the back.

Yes, exactly. Yeah. We're just kind of in the area, I guess. Um so, but yeah, my son and and and Leslie, they they had a couple days while I was at the conference where they were just exploring Greenville by themselves. So, they they had a really great time. Really fun town. They've done so much work by the river. They're just really nice nice and enough. They've got so much walkable downtown and so many great restaurants there, you know, it's kind of kind of an unexpected gem. Anyone wants a a drive-to regional leisure destination, can highly recommend Greenville.

That's awesome. Yeah, and as you mentioned, I am out the month of July. Um this is sort of last little recording before heading out with the family for 10 days in Iceland and then a few weeks in Maine. Uh we'll come back uh in August uh refreshed. Airbnb they give everyone including the leadership team a month-long sabbatical after you hit 5 years, so coming up on six, so I got to got to take it uh before I lose it. Uh Uh, so, for our loyal listeners, you will hear be hearing a variety of different, um, uh, hosts, uh, and guests, uh, while I'm out with others stepping in to keep, uh, new episode in your feed every week. So, with that, uh, Bram, I do want to dive in to what we saw in the the first half of the year, uh, cuz I know I was going back and reading your 2020 uh, six outlook report that we put out at the beginning uh, of 2026. And you had described 2025 as the year of two halves. Uh, so, we had the beginning of the year, which started out relatively strong, uh, decent booking behavior, and growing occupancies.

Uh, and then, uh, things sort of, um, and the bottom fell out in the back half of the year, and that, and it's really a and a starting point for, and how this year's played out, where, uh, we've had some uh, tough comps, um, in the first half of this year. I mean, last year performed so well. Uh, and now we're coming up in the back half of the year, and we've got some easier comps to sort of go against, and with back half of last year so weak, uh, we have, and it's easier to grow off of that than I mean, the first half, when it was growing so strong. I mean, occupancy, I don't think it's been as strong as we would have hoped, um, in the first, uh, part of the year. Still slightly down, uh, but ADRs have come in and relatively strong. Not as strong as inflation, but um, growing. And then, and our big prediction for the year was that supply was going to re-accelerate, and with interest rates falling and at or below six, um, home values, uh, moderating, and that leading to, sort of, a resurgence in short-term rental investment.

But, and as usually happens, like, there's there's always new things that get, uh, introduced into the equation, um, and so, maybe, and and my first question to you is, and how do you feel like the first half of the year is, and what would you call out as the major, sort of, geopolitical or economic, um, changes that have really impacted, uh, the first half of the year versus what we're expecting going in?

Sure, yeah. And I don't think that this is going to come as a surprise to most of our listeners, but I think, yeah, the biggest, you know, biggest wild card that turned up was the war in Iran and the subsequent effect on gas prices and, um, inflation. So, you know, just to go back to some of the what you were describing,

[clears throat]

you know, what we last year, in 2025, we had the big tariff announcement in April. This caused a lot, uh, I guess, reorganizing in this as far as the supply chain, a lot of uncertainty, maybe even, you know, people holding back, uh, can, you know, consumption spending maybe in the back half of the year as there was a lot of uncertainty. But, things were really like starting to look up. Uh, and, you know, outcome in 2025 might be down a tiny, tiny little bit compared to 2025, but really it's it's following almost exactly the path that we set in 2025, which to me is, um, which is is great, considering that, you know, that was the strong half. And if we look actually at that compared to 2024, we're we're we're doing well.

We're actually above, uh, a lot of 2024. So, you know, that's that to me tells me that we're actually coming into 2026 with some strength, with a little bit of recovery. I think that the the tariff inflation it came and then it went. It wasn't as bad as as we initially thought. A lot of those tariffs were sort of dialed down. So, you know, that that helped. Um we did see of course terrible snow drought which didn't help out in January February because you know, that's that's a slow month except for the ski. But setting that aside, if you were to set aside just sort of the some of the ski performance which was which was dismal. Uh you know, we were doing really really well. February unfortunately we at the end of February we we plumped up inflation again. I guess we have a new inflation scare. And it may be causing some problems as far as you know, the demand and sort of sort of the occupancy.

But the major effect it's really had on our forecast is it's effect on on interest rates. Uh I think because that is the you know, that was sort of our big prediction is that we got lower interest rates, home prices are sort of moderating. Therefore, we must have more supply. Um what we saw is that you know, with inflation we saw another 50 basis points added to mortgage rates very very very quickly. The housing market kind of locked back up uh to some extent. Uh prices have been well, they haven't been going down very quickly. We did see a slight dis- decrease this last month. Oxford Economics is is thinking though that the the prices are going to firm up afterwards. And so as a result, I think we're going to see less new supply. Demand is recovering. I think it's going to strengthen as we get closer to the end of the year.

Because one of the things is that you know, with that inflation also came declining real incomes. And that's that's that purchasing power. That was you know, what uh uh you know, Daryl and I from Tourism Economics were talking about quite a bit is that why is consumer sentiment down? You know, why are uh you know, some of these metrics coming in a little slower than we'd like? He's more focused on hotels, which have been doing okay this year as well. But it's that purchasing power. Now, it has been declining since that event in February, but we're, you know, we have some hope that there is uh uh you know, loosening up in the Strait of Hormuz. You know, day by day, we're going to be paying very close attention to it. Um but we do know that oil prices have have declined dramatically, back down to under $70 a barrel for a moment. But however, around there, so a lot lower than the what we saw, certainly not, you know, really extreme prices.

And I think that is is improving sentiment a little bit. We actually did see consumer sentiment increase just a a bit over the last month or so. Uh although there is a little pessimism for the job market. Um but that the job market's still holding on pretty pretty well uh also. So, in addition to I believe in addition to some of the easier comps that we've got from last year, I think also with the fact that, you know, as inflation begins to ease, as the pain at the pump uh diminishes, that people are going to start being more hopeful, sentiment is going to improve, and consumption should follow.

No, that's and that that flows. Like, there's no way we could have predicted uh uh a a a a new war, uh the and changes in interest rates that would have uh that subsequently changed from there, higher oil prices, the impact on on consumer spending from that, like, all fair and and I think unexpected. Um and now that and it it does feel like we're moving through and past uh the war in Iran, um and getting the sort of normalization in oil prices, and is that where we can feel confident that interest rates will come down? Or because and we are in a period of higher and higher inflation probably for at least a little bit that interest rates will remain high maybe throughout the rest of the year.

Yeah, Oxford does have it still above six all the way through 2027. So, but it it gets closer to to six as we as we progress. So, you know, inflation's probably peaked you know, according to Oxford's forecast, inflation's likely peaked either this month or last month and it's going to decline, but it's still going to hang on for a little while. It's going to be a little little higher than we're comfortable with and that is going to keep rates up just a little bit higher for longer. Of course, there's still a pretty big wild card from Iran. You know, I check the news every day and it sort of shifts from day to day. Things are looking maybe rocky today, but who knows what they'll what what they'll be tomorrow.

You know, two of the things just like in tariffs, you know, when the announcement happened, you know, when the event happened, you know, we had we had you know, a lot of bad bad forecast, you know, a lot of horrible stuff could have happened. Um, especially when you know, sort of use earlier oil shocks as kind of a guideline, but you know, it was it was a little different this this time just like with tariffs. Um, you know, we had initially a lot of fear, but you know, as time went on, it seems like things are a little bit more flexible. So, last year tariffs came down and we also saw supply chains adjust. Here too, what we've seen is you know, even with the Strait of Hormuz being closed, we saw a lot more demand destruction from China than we expected.

So, they were able to reduce their oil consumption considerably. Um, you know, they they got electric cars, they've got lots of renewables, they've got lots of coal power, so they didn't maybe need to depend on oil as much as they did in previous cycles. Uh, in addition, we've also seen big drawdowns to stock piles as well to supplement the the market. Big increase in exports from the US as as as we're sort of gearing up production and and helping to fuel the rest of the world as well. So, you know, all of those things I think are coming coming together sort of mitigating some of that initial shock. So, yeah, I do think inflation is going to be coming down, but as far as interest rates go, it's going to take a a little bit longer.

Um although, the labor market is kind of a big question mark here because we've got a new Fed Reserve chair uh in Warsh. We know that he would like to cut rates if possible. Right now, he's kind of constrained by the high inflation and the low unemployment. However, there is a little bit of pessimism around the job market and if things start changing there, I think we could see the Federal Reserve change tack very, very quickly as they sort of remove their focus from inflation as those fears recede, and then they refocus on employment and keeping that strong. So, you know, I think there's definitely potential for some unexpected, maybe positives as far as as interest rates go. And on the other hand, too, this is for our forecast update, for existing operators, having all this sort of competition coming in as we forecasted, you know, that that might have been a little bit hard on some of the existing um operators.

So, this has actually given them maybe a little bit more breathing room to help increase their sort of occupancy and rate.

Okay. So, as we think about and the rest of the year, and we're we're sitting at and stock market still doing great. Um and it does vary from day to day, but and we're still sitting and essentially at all-time highs. We've got GDP growth uh relatively strong. We've got job growth and and still coming in like last jobs number was what up over 170 uh thousand jobs. We'll get a new job number what this week um for June.

We should also point out, too, we don't need a whole lot of new jobs. Either immigration is is very, very low now. The the policies that have been put into place have really cut that down. So, uh the population is not is not growing. It's graying. And you know, as a result, we don't need as many jobs as as we once did to make sure that we've got lots of employment.

Yeah. And so, and you've got overall unemployment still very low. Uh you've got inflation ticking up. So, as you think about and for average host out there, property manager, like what are you paying attention to and in the back half of the year? Like is it inflation sort of starts moderating quickly and that we can get to a more and lenient stance on policy? Is it that the economic engine of jobs and GDP continues to push forward through productivity gains? Like is it and is it all about incomes and if we're getting real income growth and people should continue to be traveling? Like if there's one or two things that you would say focus on, what what are you looking at?

Well, I would say yeah, incomes is we know that real income is you know, really strongly related with the hospitality tape. So, that is going to be improving. It's here well, the growth is going to be improving, I should say. But that does help optimism. That helps optimism. Something else too is that you mentioned the stock market and you know, something else that that we want to pay attention to as well is that we've got incomes, yes. We also have this sort of wealth effect that is is creating, you know, a lot of a lot of consumption support. Uh so, one of the things that you you know, that I think people are going to be looking at and we've seen a little bit more strength than in rate than we've expected. And what I one of the things I think is maybe positioning.

Right? So, the wealthier consumer right now is feeling, I think, markedly more confident. So, we look at consumer confidence, there's you know, a couple different ways that you can split it but but you know higher income higher wealth uh groups are definitely feeling more optimistic. We know that they've supported a lot of consumption over the past year. I think that that is going to be keeping that that trend is going to continue for the rest of this year and I'm expecting more broad-based gains though in 2027. Not just sort of the wealthy but you know more broad broad-based because we're going to see those sort of income start to to go up as inflation recedes. So right now what we're looking at is is some uh you know we're going we're going to be going along at a pretty good clip. Um I think it is going to be led by some of the you know the wealthier consumers uh during the second half of the year.

I think we're going to see acceleration in demand in 2027. Uh we do want to pay very very close attention to sort of unemployment, hiring. Um we do have low unemployment rates but something else that's going on that's also affecting wages is we have a very stagnant sort of labor supply. Not a whole lot of um quits, not a whole lot of new hires. People are staying at the jobs. That's limiting wage growth to some to to some extent which is helping our inflation but it is again also giving more sort of consumption power to these sort of wealth holders uh rather than you know some of the lower income people that really depends chiefly on on wages for their for their income.

Okay. So and that's great on the economy and the other thing I want to get into is maybe more and what's happening in terms of booking behavior. This is been something we've been monitoring very closely over the past few years as and COVID really impacted booking behavior uh and now we're seeing whether it's the economy or just and general behavior sort of change um and how far in advance people are booking, average length of stays and a lot of And this is like my early indicator on what's happening on the economy. So, if people start shortening their trips, and that is one way of cutting back. If they wait longer and longer, that's another way of sort of cutting back of And you're not certain that you're going to have a job, you're not certain And if you're not If you have uncertainty about the economy, you're going to wait as long as possible to make a decision around what you might do.

So, I I do see these as really important And sort of early indicators on what's happening. So, all that said, like when you were digging into our mid-year outlook report, And how have you seen sort of these these indicators been playing out in the first half of 2026?

Yeah, so the length of stay I I'd like to focus on that one first. For many locations, length of stay actually has been lengthening over the last few years. The exception Uh the two exceptions would be the resort locations. So, coastal resorts and you know, so the mountain lake resorts have been declining slightly in their length of stay. Uh coastal resorts, of course, do have longer length of stays than than most of the locations generally, or at least they did back in say 2023. Um when they kind of maxed out. However, the other four location types, so the all the large cities, the mid-size cities, the small city rural uh areas, suburban and urban, those had all been sort of lengthening out their their length of stay um since say maybe a low in 2022.

Um which was which was great. And this sort of universally shifted uh among all the location types right around the beginning of the year. So, all of them started kind of turning down to shorter trips. So, that does, I think, speak to you know, it's at the beginning of the year. Uh uh not not when we saw the war in Ukraine. So, that that that's kind of an interesting timing there. Now, of course, there were some course these ski trips, I'm sure they got cut short and there's a smaller sample in the beginning of the year cuz we've got fewer demand nights. Um but it is interesting the sort of the timing of that. Now, that's that's continued since then. So, we are seeing shorter length of stay since the beginning of the year.

Lead times have also been declining pretty much across the board for several years. Uh they have mostly stabilized with the exception of the destination resort coastal which has seen slightly longer lead times and urban which has seen slightly shorter lead times uh since the beginning of the year. And Ooh, I'll tell you doing all those press requests for the World Cup uh in those urban areas, it did seem like people were waiting till the last minute. Thank goodness they finally came through and we you know, we've seen great demand there, but it did have a lot of the sort of news outlets wondering and and keeping us guessing and we had to sort of give that last minute bookings line many times, but it's been born out because those those lead times for urban, they are continuing to shrink.

They've been shrinking for a long time. They're they're I think under 20 days now on on a median basis. So, where our differing decision making, that's been part of a longer trend, but this shorter length of stay, that's a little bit more recent and really just started at the beginning of the beginning of the year.

Bram, I'll let you finish, but I was not going to ask you about World Cup this whole podcast and

[laughter]

and you brought it up.

I can't help it. It's in the news. You know, we're thinking about it uh frequently moving on to the next stages. So, everyone's still excited about that. It has been a success from the short-term rental side. So, that at least that forecast at least came true.

Yeah. And that all makes sense. So, I mean, TLDR, like are you are you worried about the trend in length of stay or booking lead time. Is is there Is there a reason to worry or do you think it's sort of broader sort of changes in and guest behavior that aren't related to maybe pull back that are causing this. What How should I feel?

Well, the lead time is very frustrating for operators, but I think that the lead time is more of a long-term structural trend. We haven't seen it sort of reverse or change. In fact, you know, it's it's kind of studied out over the last year or so. You know, the You might You might argue that well, it can't go much lower, especially for urban. So, but I wouldn't you know, I wouldn't necessarily say that is necessarily a signal or indicative of something. However, you know, the the length of stay uh I think perhaps is because the timing there is so universal. All the location types turning down about the same time. And even the coastal markets which had uh been declining for some time accelerated their decline. So, you know, that tells me there might be something there to that. On the other hand, if you look to look at a lot of these places, the the length of stay has declined a bit, but if we look at say urban, it's still higher than it was in 2023, 2024.

It's only gone down uh compared to a recent high. Since as I pointed out, most of these locations are had been increasing their their length of stay. So, you know, is it a sign of maybe changing preferences? Maybe it's a sign of, you know, some economic distress or people worried about uh you know, the the labor market stability. However, um it's not such a big shift that it's going to materially affect the bottom line for for operators at this point.

Okay. Um and one of the other sort of things I I wanted to talk about was just the broad sort of demand shifts that we're seeing in the market. Uh if uh listeners have been keeping along with our our sort of monthly updates. And there have been some sort of broad trends that we've been following. One is on international travel. So, we looked into what's happening and it really stemming from post liberation day where the US imposed a bunch of tariffs on our international trading partners. And then so when we we saw a sizable decrease in inbound demand from those countries. Canada has been and probably the biggest impact because of our reliance on Canadian travelers especially on border markets. So, think Adirondacks, Seattle, even through Michigan, markets that rely on Canadian sort of travel crossing the border and traveling and then even in our South Florida, California, Arizona, Hawaii, so snowbird markets where a lot of Canadians travel south for the winter.

And unfortunately, like we haven't seen that improve much. So, when we look at a year-over-year basis and first half of the year was probably down about 20% but part of that was off of April was down 30% May was down 30% June was down 35% so when we start looking at the two-year difference so percent change from 2025 and we're still looking at almost down 40% in terms of Canadian inbound travel staying in short-term rentals. So, that is persisting and it's persisting at at a pretty I'm sizable decrease. Well, and when we look at all the countries sort of compared to 2014 levels uh in the first half of the year, uh Canada was down 32% New Zealand down 27% uh Columbia down 23, Germany down 23, Spain down 18 uh Belgium down 16. So, a lot of whether it's Canada or our Western Europe European countries that are um seeing a pretty big decrease, but on the flip side, there's markets like Argentina, uh Israel, Brazil, Costa Rica, even Ireland uh that are seeing actual sizable gains in inbound travelers.

So, not all bad uh on balance. I mean, we're still uh shedding um international travelers on a year-over-year basis. Uh so, this is a a drag on growth, and I think will continue to be a drag on growth uh through throughout the rest of of 2026. So, I mean, I've always seen international inbound travel as one of those great tailwinds uh on the industry. More and more people around the world wanting to travel internationally, uh this growing middle class in China and India uh and throughout uh South America, and them wanting to travel to the US and that just continually to grow over and over again. And the fact that we're now in this sort of negative loop is definitely weighing on growth potential, I think, for for US uh short-term rental and the broader travel sector uh in the country.

That's a you know, that's a good point is that it has switched from a tailwind to a headwinds. You know, slight in each case, and that that's kind of the most disappointing thing is that this is used to be sort of a source of new demand. Another thing that I think that was really interesting when we looked at that data was, you know, how much Canada really influences the sort of total international visitation. So, they're the number one origin market where they still are despite the you know, the big reductions. But if you look at the sort of number of individual countries, there are more countries that are increasing their their travel than decreasing their travel to the US. However, that Canada uh part of it is just so large that it's it's it's still dragging the the total down. One of the you know, surprising things and uh you know, is is that we've got two neighbors uh that you can sort of drive to the US from, Mexico and Canada.

Mexico's up 16%. So, it may be you know, I what what I heard is that the stereotype is that Canadians are very polite, I guess. So, when Trump says impolite things, then Canadians are are much more likely to take it to heart, I guess. And it it it appears that, you know, Mexico, they're still fine coming to the US um despite all the sort of rhetoric coming out of Washington. Um it's definitely helped I think it's helping Texas markets uh you know, during the World Cup and and and afterwards as well. Uh Argentina certainly helping uh Miami uh in the last few years. A lot of folks traveling there for soccer unrelated to the World Cup as well. So, so it's kind of interesting. We're going to keep keep looking at that. If we could get you know, rapprochement with Canada, you know, we could reverse the international travel deficit. How do we get there? Uh that's difficult. that's that's more of a political question, I think, than anything.

May have to do with exchange rates, but you know, it's I think that, you know, repairing those uh repairing those relations that relationship that one specific relationship, I think, is very important for international travel.

No, that I totally agree. Um and and it it's not going to make or break most markets, but and having that sort of tailwind absolutely helps in terms of growing the overall pie. So, and there are some other topics you sort of called out Bram around and budget versus economy, large homes versus small homes, and growth in different location types. Do you want to sort of give the rundown on just probably what we've seen and what do we expect across the different sectors in the industry sort of shaping up for 2026?

Yeah, so the K the K-shaped economy, you know, looking at the budget and luxury that was that was an interesting that was an interesting project. You know, so I've talked about wealth and how the stock market has been a tremendous tailwind for wealthy consumers. And so what we wanted to do is look at the different tiers within each one of these markets and say, well, you know, what's on average, you know, what are the prices doing? What are the occupancies doing? Are they coming together? Are they getting farther and farther apart? We actually saw interestingly enough opposite results or inverse results for ADR and for for occupancy for these pending on the year. So in 2025, we definitely saw lots of interest in luxury, huge price increases for for luxury. So these were already the most expensive listings within these markets controlling for bedroom count. And you know, in 2025, we're still seeing double-digit ADR growth for for a lot of these types of listings.

That's been slowing down noticeably as budget has seen their price growth accelerate. So now that we're in 2026, the opposite's going on whereas the prices were spreading farther and farther apart, now they're they're coming together more closely. So what this tells me is that, you know, operators in 2025 could identify maybe two separate groups of consumers or or two sort of separate you know, forces acting on consumers. Maybe it was the wealth effect helping out the higher income folks and and sort of inflation hurting the budget traveler. But then, you know, that that has switched now so that operators are now more identifying that everyone's in a sort of a similar economic basket. Now we're seeing sort of more convergence, I guess. So, the you know, sort of inflation, the the economic difficulties, it's more it's more sort of broadly based than than it had been in 20 25. So, maybe a bit of a convergence there.

We're also seeing convergence in occupancy because occupancy was growing more quickly for budget than it was for luxury back in 2025. And that has switched. So that, you know, now luxury occupancies are increasing more quickly than budget. I should point out luxury occupancies generally run lower. So, what this means is that not only are prices getting closer together, but occupancies are getting closer together now as well. Um so, you know, this sort of points again to this perception, I think, on the part of operators that you know, the the tourism market is becoming maybe more homogeneous. Um now, whether that is very, very wealthy folks maybe trading down, that that's one potential issue. It also may be that we're just focusing on, you know, the the upper end of the consumer now. You know, we're just saying that that's that's the person that we're going after. Um and all of us are going to try to do it or are going to position ourselves to try to do that.

So, that that's kind of the K-shaped economy. What we have seen in 2020 uh six so far is a little bit more pricing power, generally speaking, than we expected at the beginning of the year. Um so, it you know, that that may suggest that yes, we're sort of going after that high-end consumer. And that makes sense, too. That's what we've been telling uh folks for the last year, as well. We have definitely seen more ADR growth, but in but very, very much uh the RRI growth has been has been very, very strong. So, the existing operators, the people that are remaining within the markets, which I think is is very interesting because generally, you know, when we see when we saw that last time where the existing operators are having more pricing power than the market as a whole uh was during the last sort of big inflation boost that we saw back in 2022-23.

Uh we saw sort of that RRI being growth being higher than ADR growth. So, I think then, you know, the effects of both the tariffs and sort of this energy shock are maybe sending us to came maybe a similar place, but the upside is that whereas we saw ADR declines back in 2023, we're still seeing pretty good ADR growth. And we're seeing RRI growth that's definitely above inflation. So, existing operators are actually able to price above inflation uh this year in 2026. So, you know, maybe they are we are hunting down those sort of higher income uh consumers that are feeling fine even as inflation goes up because of their wealth position.

Uh that all makes sense. And like I really think it it's important that we take that next layer down in terms of understanding I mean how things are performing cuz I mean you could be I mean a budget one-bedroom property and feel like I mean things are falling apart uh verse I mean a luxury five-bedroom home and feel like things have never been better and all operating within the same industry uh and even have that switch in different markets at different times, right? So, all this is meant to be like I mean these are ways to segment the data, I mean dig into what's happening in your market, and these are the type of trends that you should be trying to understand around what's happening in your area of what's driving growth, what are guests looking for, and what's happening in terms of I mean the type of demand that people um are the type of stays people are looking to get in in different markets and areas.

Yeah, I didn't on the size of the listings, but it's it's a similar story to what we've seen since the the pandemic. Larger listings performing better. They're seeing bigger occupancy growth. They're seeing better ADR growth. It's a big differentiation between short-term rentals and say hotels. Uh which is sort of another interesting comparison that we did bring out in the the outlook. But, you know, if if you the larger I guess your short-term rental listing is, I guess the more different from a a single bedroom hotel room uh that that it is. And they've definitely been pulling away. The larger listings been pulling away from the rest of the pack for years now, it seems like.

I mean, it has been [clears throat] years. Man, it's crazy. I mean, I I feel like I I was saying it coming out of the pandemic, the larger the listing the better performance. We sort of took a pause in 2021 when we like saw I mean, urban demand come back. But, then it's like 2022 on to today, like it's I mean, it's happened every single year. Larger listing, larger the listing, larger the performance, the better the amenities, and the higher the pricing power. Like, all these differentiation points have really uh driven growth.

And I even Yeah, I even did the I did the uh the cross cross tab and looked at it. It's regardless too. You know, your bigger budget is doing better than your smaller budget. Your bigger luxury is doing better than your your smaller luxury. So, if you if you're going for the budget crowd, then they like the value of having all those bedrooms. If you're going for the luxury crowd, they love the you know, the high amenities, the high level of of finishes and and uh you know, the the luxury of of having the larger sort of property. So, very interesting to to pay attention to over the years.

Right. So, maybe let's I mean, end this on summarizing I mean, what is your expectation for the industry for the back half of 2026 and into 2027? Are you going to renew your prediction on on a re-acceleration of supply growth, or do you think this sort of three percent growth that we're in right now is is going to be there for the time being? Is the strong rate growth that we've seen in the first half of 2026 going to maintain? And will occupancy turn back positive after the weakness we've seen over the past 12 months? What is What is your crystal ball say?

Yes, so occupancy is definitely firming up. I think it's going to be a more positive second half. We've got those easier counts. We've got real income starting to increase during the back half of the year. We've got people being maybe a little bit more optimistic about their financial future, and that helps them, you know, book vacations today. So, I do think that, you know, all said and done, we're going to see a little bit higher occupancy in 2026 as a whole, and that means the back half of 2026 is is going to be certainly better than in the back half of of 2025. We are going to see some acceleration in the supply. It's been delayed quite a bit, but those interest rates are going to come down as the inflation goes down. We're not going to get a below six, but we're going to start approaching six in 2027. And that's, you know, that that six is kind of a magic number. That's when a lot of, I guess, business proposals seem to to paper well.

That was when you get after it sort of that rate. Home prices, uh, you know, they're they're holding pretty firm right now. They're not declining rapidly, but, you know, that that's that's okay because we'll see those payments go down as the mortgage rates decline. And home prices stay pretty even keeled. So, we will see some acceleration in supply growth in 2027. In the meantime, great time to be an existing operator. Our eyes, that growth is is very, very strong. So, all the people out there that are operating right now that have that review history, um, they're doing really, really well. They're going to continue doing well. Occupancies are going to continue increasing because even though supply growth is going to come back in 2027, demand growth is going to be stronger as well as we start seeing again the that inflation get behind us.

Oil prices already are down. Gas is going to be cheaper. Productivity is going to increase as well. We're going to see real wages go from a negative growth to positive growth and that is going to strengthen everyone's consumption outlook in 2027. Now barring any kind of catastrophe, which you know, there are a few, but other than that, I'm thinking that the back half of 2026 is going to be a strong finisher. You know, we are going to still want to continue I guess positioning ourselves for some of those higher ends consumers. We still can get pricing power. We're still going to see higher occupancies as well moving forward. So, you know, not not every not all of this is bad news. It's almost like the boll weevil saving the saving the cotton crop, right? We don't have this ruinous competition and that's going to help existing operators.

Awesome. Well, Bram, this has been a lot of fun. Really excited to check back in with you mid-August, get a sense of what happened over the past few will be about 6 weeks till we talk again. See how the summer panned out. See how the World Cup knockout stages ended up in terms of overall performance and then and hopefully we aren't in any new wars and interest rates are are are are ticking back down as we sort of push back out of the summer.

Right, yeah, knock on wood. You'll have lots of interesting stories about Iceland, I'm sure. Then we'll have midterms to look forward to. What an exciting time to be forecasting in the short-term rental business.

Awesome. All right, Bram. Thank you.

Thank you.

Thank you.

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