ARE SHORT TERM RENTALS STILL A GOOD IDEA IN 2025?

It’s been more than lucky timing for shortterm rental investors. The confluence of housing shortages, relaxed COVID restrictions, and consumers’ desire for a more organic vacation experience has made short-term rentals big business and a popular choice for getaways.

In the U.S., over 200 million overnight stays were booked in 2023. Short-term rentals were a $64 billion market with over 2.4 million properties operated by 785,000 hosts at an average daily rate of just over $300 and an average return of $26,024 annually, according to analytics firm AirDNA. The short-term rental industry is anticipated to exceed $81 billion in the next 10 years.

Precedence Research lists a number of reasons the short-term rental market is growing, including:

• Short-term rental agencies such as Airbnb, Vrbo, and Yacasa streamline bookings for vacationers as well as give a platform to homeowners to advertise their property or properties.

• Corporate travel, adventure travel and staycations are increasing demand for distinctive, cozy lodging.

• Gen Z and millennials want unique experiences they can book online.

• A higher percentage of disposable income is being used toward travel.

• Homeowners can derive income from their investment.

• Automation technologies such as selfcheck-in and keyless entries streamline the process.

• Eco-aware tourists like eco-friendly, energy-efficient lodgings.

• Guests like the options to prepare their own food and do their own laundry in a home environment.

This rapid growth held promise—until a wave of new entrepreneurs flooded the market.

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