VACATION RENTAL MARKET ANALYSIS

Market Size and Trends

The vacation rental market is estimated to be valued at US$ 75.05 Bn in 2024 and is expected to reach US$ 109.43 Bn by 2031, growing at a compound annual growth rate (CAGR) of 5.5% from 2024 to 2031.

To learn more about this report, request a free sample copy

This industry is driven by the increased preference of travelers towards experiential travels and immersive vacation experiences. As people are willing to spend more on customized and personalized vacations, they are opting for full-home or private-room vacation rentals rather than traditional hotels. Properties managed by rental managers and independent hosts have increased exponentially to meet the rising demand. Furthermore, the continued popularity of practices like workcations and remote working is boosting reservations for mid-long term stays. Rapid advancements in technologies used for listing, booking, payments, and managing rentals have also improved service quality and driven efficiency in operations.

Affordable Accommodation

The rise of the sharing economy and peer-to-peer rental platforms has provided travelers with an affordable accommodation alternative to hotels. Vacation rentals, such as entire homes, condominiums, cottages, beach houses, and chalets, listed on services such as Airbnb offer visitors increased living space and amenities at a lower price point compared to hotels. This disruptive distribution model allows homeowners to generate additional income from their unused or second properties by listing them online, while also benefiting guests seeking more value for money during their holidays. The ability to stay in an entire property rather than a single hotel room, often in desirable tourist destinations, makes vacation rentals compelling for budget-conscious travelers and families looking for spacious accommodations. Their growing popularity can be attributed to the cost savings they provide over traditional lodging such as hotels, resorts, motels, and bed & breakfasts in many popular tourist regions. 

Market Concentration and Competitive Landscape

To learn more about this report, request a free sample copy

An emerging travel trend driving growth in the vacation rental sector is the rising demand for more authentic, local experiences among travelers as opposed to generic accommodation. Many visitors today are seeking meaning, cultural immersion, and authenticity during their trips rather than just sightseeing. Staying in a vacation rental located within a residential neighborhood as opposed to an impersonal hotel allows travelers to feel more connected to the local community and culture, interact with residents, and truly live like locals during their visit. They have the flexibility to cook their own meals just like the locals, explore lesser known areas off the beaten path and immerse themselves in the day to day rhythms of a place. Vacation rentals provide a home base for travelers to embark on their own personalized exploration of places rather than just packaged tourist activities. Their growing appeal lies in satisfying the new generation of more experience-seeking travelers who want to escape from generic tours and interact with the destinations on a deeper level through living like residents.

To learn more about this report, request a free sample copy

As more property owners list their homes on platforms like Airbnb, the supply of vacation rentals is rapidly increasing. This excess supply can lead to lower occupancy rates and prices. Regulations are also a challenge as some cities have imposed restrictions on short-term rentals. Many residents object to holiday makers in their neighborhoods. Managing multiple properties is also difficult for owners. They have to be available to welcome guests, handle maintenance issues, and do cleaning between bookings. This on-demand property management model requires significant effort.

Market Opportunities: Demand for accommodation alternatives like vacation rentals

As tourism continues to grow globally, the demand for accommodation alternatives like vacation rentals will rise. Millennials especially favor unique, whole-home rentals over traditional hotels. New property management tools are also making it easier for owners to operate multiple listings remotely.

To learn more about this report, request a free sample copy

In terms of booking mode, offline contributes the highest share of the market owing 64.7% in 2024 to convenience and trust factors. While online booking offers flexibility and access from anywhere, many customers still prefer the personal touch of offline travel agents. These agents can provide customized recommendations based on customers' specific needs and budgets. They also offer hands-on assistance with bookings and any issues that may arise during travel. This personalized guidance helps give customers peace of mind especially for complex or foreign destinations that they are not very familiar with. Furthermore, older demographic groups that are less comfortable with technology continue to rely on trusted travel agents they have formed relationships with over the years. The agents assure quality services and provide a single point of contact to get all booking details and assistance in one place.

Insights, By Accommodation Type- Home appeal drives the highest accommodation share

In terms of accommodation type, home contributes the highest share of the market owing 37.5% in 2024 to its appeal as a home away from home. Staying in a house provides travelers with more space and amenities than other options like hotels or resorts. It allows them to feel settled with full kitchens, living areas and often extra beds. This works well for families or larger groups looking for a comfortable, self-catering stay at a affordable price point. The configuration of houses also makes them very attractive for longer vacations where guests can truly unwind in a familiar, domestic setting. Many property owners have enhanced their rental homes with welcoming furnishings and high quality finishes to further replicate the warm, cozy feel of a personal residence. 

Insights, By Price Point- Value and flexibility attract mid-range customers

In terms of price point, mid-range contributes the highest share of the market owing 45.8% in 2024 to its attractive balance of value and flexibility. The economic segment is very cost-focused but offers limited amenities. Luxury options have high prices and may not be suitable for all budgets or trip purposes. Mid-range venues address these issues by providing decently-appointed accommodations at reasonable rates. Their pricing structure appeals to diverse groups of travelers from couples to families who want to extend their vacation budgets as far as possible. Mid-range properties also tend to offer more payment plan options, lenient cancellation policies and upgrading features to suit different needs. This adaptability keeps customers satisfied without breaking the bank, making the segment a sweet spot for many vacationers.

Regional Insights

To learn more about this report, request a free sample copy

The U.S. has undisputedly emerged as the dominant market for vacation rentals, which is expected to account for over 35.7% share in 2024 of the global market. This can be attributed to high spending power of American travelers along with readily available options for renting temporary accommodations. Companies based out of major U.S. cities like New York and Los Angeles have established a strong presence in the sector catering to both domestic as well as international tourists. Additionally, the ease of access brought about by online platforms has made vacation rentals a preferred choice over hotels for many travelers in the U.S.

Countries like Thailand, Indonesia, and Vietnam in Southeast Asia have witnessed exponential growth in their vacation rental markets over the past few years, fuelled by the booming tourism industry in the region. Fast expanding middle class population, improving infrastructure, and digital connectivity have provided necessary support to the growth. Local property owners have quickly realized the opportunity and are actively listing their spaces on online rental platforms. Additionally, many global vacation rental brands have also started focusing on these emerging Southeast Asian countries recognizing their future potential. This has significantly added to inventory boosting options for travelers. Affordable rental prices along with an authentic local experience makes vacation rentals an attractive choice for many tourists visiting the Asia Pacific region.

Market Report Scope

Key Developments

• In May 2023, in celebration of the global accessibility awareness day, Airbnb, Inc. is a company that operates an online marketplace and hospitality service platform. announced that its staff had inspected and confirmed the accuracy of around 300,000 accessible features in homes worldwide. These features included entrances without steps, installed grab bars, or bath and shower chairs.
• In August 2022, Oravel Stays Private Limited, known as OYO, is a hospitality company that operates an online platform for booking hotels, homes, and other accommodations. purchased Bornholmske Feriehuse, a company that manages vacation rentals, to grow its business in Europe. The goal of the acquisition was to expand Oyo's presence in Croatia. At that time, Oyo had over 7,000 houses listed on its Traum Ferienwohnungen platform and nearly 1,800 vacation homes on its Belvilla platform in Croatia.
• In July 2022, Planet, a company providing payment services and integrated global technology software, bought Avantio. Avantio is a company that offers software and services for managing vacation rentals. This acquisition helped Planet expand its presence in the hospitality industry.
• In 2022, Meredith Lodging is a hospitality company that specializes in vacation rental management. planned to buy Mt Hood Vacation Rentals to expand its operations in the Mount Hood region

*Definition: The vacation rental market provides an alternative accommodation option for travelers looking to rent fully-furnished homes, apartments or condominium units for short-term stays. This growing market offers properties that are often more spacious and equipped with amenities like kitchens, washer/dryers compared to traditional hotels. Vacation rental platforms and sites allow homeowners to list their properties and tourists to search for and book accommodations in different destinations worldwide.

Market Segmentation

• Booking Mode Insights (Revenue, US$ BN, 2019 - 2031)
  • Online
  • Offline
•  Accommodation Type Insights (Revenue, US$ BN, 2019 - 2031)
  • Home
  • Resort/Condominium
  • Apartments
  • Hometown
  • Villas
•  Price Point Insights (Revenue, US$ BN, 2019 - 2031)
  • Economic
  • Mid Range
  • Luxury
•  Location Type Insights (Revenue, US$ BN, 2019 - 2031)
  • Resort Area
  • Rural Area
  • Small Town
• Regional Insights (Revenue, US$ BN, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC Countries
    • South Africa
    • Rest of Middle East & Africa
• Key Players
  • Booking.com
  • Hotelplan Management AG
  • MakeMyTrip Pvt. Ltd.
  • OYO Hotels & Homes
  • Trivago
  • Agoda Company Pte. Ltd.
  • Yatra Online Private Limited
  • Hotwire, Inc.
  • HotelsCombined
  • Hotels.com
  • BookingBuddy.com, Inc.
  • Priceline.com LLC
  • KAYAK
  • Google
  • Airbnb Inc.
  • Booking Holdings Inc.
  • Hotelplan Holding AG
  • MakeMyTrip Pvt. Ltd.
  • Expedia Group Inc.
  • NOVASOL AS
  • Oravel Stays Pvt. Ltd.
  • Wyndham Destinations Inc.
  • TripAdvisor Inc.