Research Insights Regional shifts in the global short-term rental market

Regional shifts in the global short-term rental market

December 2022
Phocuswright Research

Driven primarily by beach and mountain markets, the U.S. experienced the biggest gain in share of gross bookings during the COVID pandemic, and has overtaken Europe in 2022 for the largest regional share. Europe's loss in share will be exacerbated by economic and war concerns as well as increased regulatory restrictions in important markets.

One example is Paris, where in early 2021 both France's and Europe's highest courts ruled in favor of regulations intended to hinder the negative impact of short-term rentals on the housing market. The decisions made tax registration obligatory and restricted the renting of primary residences to a maximum of 120 days per year.

APAC experienced a sharper decline in share of bookings in 2021 due to strict pandemic lockdown policies. The region is projected to bounce back, however, and surpass 2019's share level by 2026 as the rental markets rebound and mature. RoW will lose share as all major markets are predicted to strengthen.

As demand exploded from mid-2020 through mid-2022, the biggest challenge facing many STR markets was a lack of supply. This environment drove up average daily rates (ADRs) to new heights and pushed the industry to add new inventory as fast as possible. Now, with recession manifesting, uncertainty also returns. And as in the last recession, people are turning to STRs as an additional income source, further adding to supply.

If demand drops off abruptly, the market could be left with a glut of supply and plummeting ADRs. Conversely, should demand remain strong, sustained high ADRs may price many travelers out of the market - especially as elevated STR fees push total cost of stay even higher. This possibility is even more relevant as hotels are making a robust comeback, with many touting their more consistent quality and amenities. Some news outlets are reporting that this dynamic is already pushing would-be renters back to hotels.

Despite the challenges, the STR market is expected to sustain post-pandemic momentum in the coming years. Its trajectory solidifies the segment as one of travel's hottest areas as it matures into a core product in the traveler's arsenal, competing ever more directly with hotels for attention.

Looking for valuable global short-term rental sizing and forecasts through 2026 with channel and regional breakouts? Phocuswright’s Global Short-Term Rentals 2022-2026 has it.

It’s important for travel executives, especially those in lodging to understand how regional share of STR markets are still settling into place, following the disruptions of the past several years. This report covers how regional trends, data and market share is evolving. It’s forward-looking and highlights how challenges regarding rising ADRs, regulations, hotel competition and supply-demand match remain ever pertinent and will likely impact the segment’s future. Furthermore, executives can see how funding continues to pour into the STR space while analyzing how the post-pandemic trajectory projects stability in the near future. Get the full report here.

For more deep insights into the travel trends, markets, segments and innovations covered by Phocuswright, subscribe your entire company to Open Access. This subscription puts the entire Phocuswright research library and powerful data visualization tools at your fingertips. There’s a reason executives around the world trust and reference Phocuswright research and data on a daily basis. Explore for yourself why.

Many of these themes as well as the ongoing professionalization of STRs and the potential impact of a recession on the sector were also discussed during the Executive Panel: Growing Pains - the Maturing of Rentals session at The Phocuswright Conference in November.

See below for the full session with Jamie Cohen, CFO at Vacasa; Brian Egan, co-founder and CEO of Evolve; and Margot Schmorak, CEO and co-founder of Hostfully. The panel discussion was moderated by Phocuswright’s senior research analyst Madeline List.