The global vacation rental market size was valued at USD 65,465.4 million in 2021 and is anticipated to witness a compound annual growth rate (CAGR) of 5.3% from 2022 to 2030. The vacation rental market is driven by many factors, mainly the expanding tourism industry and an increase in consumer spending on travel and accommodation. Tourism is a major contributor to a country's GDP, and several governments are implementing strategies to promote global tourism. This increase in global tourists, coupled with the growing population of baby boomers, has led to a rapid increase in both domestic and international travel, which is boosting the market for vacation rental properties.
Global Vacation Rental Market: Regional Insights
The global vacation rental market is regionally divided into North America, Europe, Latin America, Middle East, Asia Pacific and Africa.
Among regions, North America is anticipated to witness significant growth in the global vacation rental market over the forecast period, owing to rise in number of travelers, specifically young population focusing on changing the ways of exploring new places and gaining unique experiences. Moreover, rise in income levels of travelers along with desire for experiencing new vacations is also supporting the market growth in the region.
Moreover, Asia Pacific is also expected to witness substantial growth in the global vacation rental market over the forecast period. This growth can be attributed to increasing expenditure on traveling and accommodation by consumers. Growing traveling expenditure in emerging countries such as Philippines, India, Australia, Vietnam and China is also driving the market growth in the region. China has become a major contributor in the market, as the country holds highest share of travelers across the region.
Figure 1: Global Vacation Rental Market Share (%), By Region, 2021
Global Vacation Rental Market Drivers:
Increase in consumer preference towards vacation rental properties over traditional hotels is expected to propel growth of the global vacation rental market over the forecast period. At first, there was uncertainty among consumers regarding choosing to stay at house of an unknown person and similarly, hosts were also skeptical regarding renting their property to travelers. Now however, peer-to-peer (P2P) vacation rentals is increasingly being adopted as perception of public towards it has transformed. With this shift, many homeowners began transformation of their empty properties to hotels for travelers and started leasing them out to get an income. This in turn is expected to boost the market growth in the near future.
Increasing government support and initiatives towards traveling and vacation for reviving the economy is expected to augment growth of the global vacation rental market over the forecast period. Governments around the world are supporting tourism and traveling by introducing new policies and initiatives. This is likely to drive different industries to begin businesses, which will further have a positive impact of the travel & tourism segment around the world. For instance, in May 2020, European Commission announced a press release in which it presented a guideline and recommendation package for helping Member States to lift travel restrictions gradually and allow tourism businesses to reopen after long lockdown period while maintaining required health precautions.
Global Vacation Rental Market Opportunities:
The sluggish air travel demand around the world is likely to lead to rate cuts in airfares, which is expected to create growth opportunities in the global vacation rental market over the forecast period. With higher possibilities of rate cuts in airfares, travelers are likely to benefit, which in turn will cause an increase in travel plans, specifically in domestic travel. With this scenario, the number of younger consumers specifically millennials will increase all over the world, and this will create growth opportunities for market players. For instance, as per the study conducted by Dollar Fight Club, in April 2020, the cost of airfare is likely to decrease for short time period.
Rise in adoption of work-from-anywhere module is expected to create growth opportunities for market players in the global vacation rental market over the forecast period. After the Covid-19 pandemic several companies have adopted remote work module, which allows employees to work from anywhere. This trend further gives travelers the opportunity to travel to private rental properties, as these are suitable for remote work modules. Thus, this factor is further expected to propel growth of the market in the near future.
|Base Year:||2021||Market Size in 2021:||US$ 65,465.5 Mn|
|Historical Data for:||2017 to 2020||Forecast Period:||2022 to 2030|
|Forecast Period 2022 to 2030 CAGR:||5.3%||2030 Value Projection:||US$ 116,756.8 Mn|
9flats.com Pte Ltd., Expedia Group Inc., NOVASOL A/S, Booking Holdings Inc., MakeMyTrip Pvt. Ltd., Wyndham Destinations Inc., Tripadvisor Inc., Airbnb, Hotelplan Management AG, and Oravel Stays Pvt. Ltd.
|Restraints & Challenges:||
Global Vacation Rental Market Trends:
Increasing number of countries opening their borders for tourists after the Covid-19 pandemic is likely to create a substantial demand for vacation rental properties, which is a growing trend in the global vacation rental market. For instance, in May 2020, Iceland announced that it has opened its borders to all the travelers allowing entries to tourists and residents of Iceland on the condition of medical certification from health authorities or immediate two-week quarantine. This is further expected to increase international tourism and travels, which will expand scope of vacation rental market.
Increasing rate of vacation rental occupancy around the world, after the coronavirus pandemic, is another trend, which is expected to augment growth of the global vacation rental market during the forecast period. For instance, in November 2020, VRMintel published a blog, according to which, in North America, there is rapid increase in rebound in the STR industry, with 322% rebound rates of leisure destinations. There is an increase of 60% in vacation rental occupancy globally after the pandemic, and a 23.2% increase in the average daily rate. This trend is likely to continue in the market over the forecast period.
Global Vacation Rental Market Restraints:
Factors such as decline in disposable income in consumers is expected to hinder growth of the global vacation rental market over the forecast period. Due to decrease in consumer spending in industries, the consumer spending on vacation rental is negatively impacted. As per the Partnership for New York City, there was a year-on-year decline in consumer spending in New York City by 37% in May 2020. The expenditure on lodging was decreased by 95%, which is a biggest drop. Moreover, sales of restaurants decreased by 82% in 2020 compared to the previous year. Thus, this factor is likely to hinder growth of the market during the forecast period.
Moreover, political conflicts and terrorism are also the factors likely to impede growth of the global vacation rental market over the forecast period. These factors have impacted overall rate of foreign trips and choice of destination. The risk of terrorism profoundly intimidates the tourists, which further affects their perception of destinations and travel behavior. The image of a destination can be tarnished due to a mismanaged incident, which adversely impacts the revenue of local tourism industry. For instance, in Sri Lanka, the tourism was disrupted for a long time due to the recent terror attacks over the past few years.
Figure 2: Global Vacation Rental Market Share (%), By Accommodation Type, 2021
Global Vacation Rental Market Segmentation:
The global vacation rental market report is segmented into Accommodation Type, Booking Type and Region.
Based on Accommodation Type, the market is segmented into Home, Apartments, Resort/Condominium, Others. Out of which, Home is expected to dominate the global market over the forecast period and this is attributed to the high preference of travelers for homes due to safety features, availability of space and access to amenities. The segment is expected to account for highest market share in the near future.
Apartments segment is also expected to witness significant growth in the near future and this is owing to the various benefits linked with vacation rental apartments leading rise in demand. These vacation rental apartments can accommodate larger groups, it offers private amenities, full kitchen and cheaper costs compared to vacation rental homes.
Based on Booking Type, the market is segmented into Online and Offline. Out of which, Online is expected to dominate the global market over the forecast period and this is attributed to the increasing penetration of smartphones and online booking for traveling around the world. For instance, as per the IMRG, most of the Britons used online booking for booking summer holidays in 2018, while a bigger number of travelers used mobile phones to book holidays through travel agents.
Offline segment is also expected to witness significant growth in the near future and this is owing to the preference for offline mode of booking among baby boomers and Gen X, which is major consumer base of the industry. As per the Travel Market Report, baby boomers are highly expected to understand the advantages of travel agencies. In 2019, only 18% of baby boomers were likely to online booking and 46% millennials, use online booking in the U.S.
Global Vacation Rental Market: Key Developments
In December 2020, Airbnb entered into partnership with Visit Tampa and introduced a joint campaign aiming at recovering tourism and economy of Tampa Bay. Airbnb also introduced a dedicated page to target social media that features selection of stays as well as various outdoor activities, in order to promote tourism in Tampa Bay.
In December 2020, Airbnb announced a joint campaign with Nasdaq for hosting a stay on New Year’s Eve in New York close to 2020. This campaign arranged one-night stay in a private dome having a view of the Time Square ball drop.
Global Vacation Rental Market: Key Companies Insights
The global vacation rental market is highly competitive. This is attributed to continuous launch of new technologies due to ongoing R &D and efforts by value chain participants. Moreover, key players are adopting various business growth strategies in order to expand their presence on regional as well as global basis.
Some of the key players in the global vacation rental market are 9flats.com Pte Ltd., Expedia Group Inc., NOVASOL A/S, Booking Holdings Inc., MakeMyTrip Pvt. Ltd., Wyndham Destinations Inc., Tripadvisor Inc., Airbnb, Hotelplan Management AG, and Oravel Stays Pvt. Ltd.
Vacation rental homes are a great way to experience a place like a local. They are often located in residential areas, away from the main tourist drag and hotel districts. Sometimes they are even located near a beach. Several companies, like Royal Shell, offer vacation rental houses. These vacation rentals are great for families and groups.
Vacation rental homes are typically privately owned vacation properties, with the exception of farms and co-located properties. Clients rent the property for a specified amount of time, sometimes for a month, however, most vacation rentals are rented for a week or more. Vacation rentals can be either fully-furnished or partially-furnished. Regardless of whether consumers plan to rent the property out for a month or a year, there are many factors to consider when choosing a vacation rental.
A vacation rental property must provide basic living accommodations, such as a bed, kitchen, and bathroom. It must also be used for personal purposes for at least 14 days. This is different than a short-term rental, which is typically less than a month long. It is also important to know that vacation homes can be rented for shorter periods of time.
The growth of global vacation rental market is spurred by various factors, including improved infrastructure. The number of millennials has also contributed to the industry's development. Moreover, social media and internet platforms are helping promote tourist destinations and hotels. Furthermore, the growing economy of sharing economy and the influence of the millennial generation are some other factors fostering the growth of the vacation rental market.
The increase in demand for vacation rentals has created opportunities for entrepreneurs in this field. Moreover, newer trends like short-term rentals and home-sharing platforms are also gaining popularity and benefiting the vacation rental market. However, factors such as political conflicts and terrorism, and declined disposable income among consumers are likely to obstruct growth of the global vacation rental market over the forecast period.
Key features of the study: