The Growth of the Vacation Rental Industry

July 26, 2021

We’ve all been following the recovery of the travel industry closely and it’s been encouraging to watch the short-term rental industry weathering the pandemic at a higher rate than expected. Many businesses took a huge knock as travel was halted and cancellation rates soared, but a year of restrictions only increased our hunger for travel and the rebound has been rewarding, with many businesses already recouping their COVID losses.

Tourism is one of the fastest-growing industries in the world, yet it is changing as fast as it grows! As the vacation rental industry bounds forward at unprecedented rates and channels into the mainstream flow of lodging options, property managers, real estate investors, and big businesses are taking advantage of the growth, and the industry is becoming more professionally streamlined on every level.

As the US short-term rental demand recovers above 2019 levels, a recent industry report shows the number of companies managing vacation rentals globally has grown from 115,000 in 2018 to more than 140,000 today. This is comprised of 80,000 in Europe, 24,000 outside Europe and North America, and 33,000 vacation rental companies in the US representing approximately 1.98 million vacation rental properties. Yet, demand still exceeds supply!

The Vacation Rental Forecast

The growth potential for the vacation rental industry is immense and industry forecasts are encouraging.

The global vacation rental market was estimated at $87.09 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 3.4% to reach $113.9 billion by 2027. In the US vacation rental sector alone, statistics show that revenue is projected to reach $15,338 million in 2021 with a projected CAAGR of 7% to $20,105 million by 2025.

Not only has interest in vacation rentals peaked, vacation home sales have surged during the pandemic, rising 57.2% year-over-year. The listings count on Airbnb and Vrbo continues to grow to meet demand, short-term rental revenue will increase by 42% over a four-year period, and AirDNA forecasts two years of elevated occupancy as supply catches up with demand.

Growing your business

It’s a time of growth for the industry and individual businesses. As vacation rental management becomes more professional, the competition is fierce and it’s not the time to be complacent. Research shows that agile companies have a 1.5x higher likelihood of overperforming their competitors! It’s time to replace your filing cabinet with modern technologies, streamline your business, diversify your distribution strategy and revenue streams, collaborate with innovative industry partners, add new homeowners to your inventory to meet the demand, and grow your business!