Think back to summer 2021, as COVID-19 restrictions began to loosen and travel started to bounce back. Remember how difficult it was to book a vacation rental on platforms such as Airbnb or Vrbo?
Now, those problems are long gone, according to a report from AirDNA, an analytics company that tracks Airbnb and other short-term rental sites. The data shows just how significantly the number of listings has ballooned. The increase in supply likely means a reprieve in vacation rental prices for travelers.
An exploding short-term rental market
In September 2023, the U.S. reached a high of 1.65 million short-term rental listings, according to AirDNA. That’s an increase of more than 80% from a low in February 2021 — when vacation rental platforms were losing listings, not gaining them.
But as travel picked back up in the summer of 2021, and people felt comfortable renting a cabin away from the city, there weren’t enough properties to go around.
Jamie Lane, AirDNA’s chief economist and senior vice president of analytics, says available listings were scarce, leading people to book months before their vacation to ensure they had accommodations.
By 2022, vacation rental hosts were listing properties at a furious pace to meet the rising demand, and it hasn’t let up.
Worldwide, Airbnb’s active listings in the third quarter of 2023 grew by 19% compared with the same quarter in the previous year, the company revealed during its third-quarter earnings report. Almost 1 million of Airbnb’s 7 million global listings have come online in 2023, the company said.
» Learn more: Airbnb vs. Vrbo: Which is better for travelers?
Increased competition and restrictions for owners
This spike in listings means more choices for travelers, but also more competition among owners to fill their units.
U.S. occupancy rates in November 2023 hovered around 47.7%, almost 6% lower than in November 2022, according to AirDNA. This data indicates the market has essentially stabilized to occupancy levels before the pandemic.
Some owners are also dealing with increased competition for guests because of new municipal regulations that require longer stays. The growth of short-term vacation rentals in recent years sparked scrutiny about the impact of rental properties on a housing market already thin on inventory. New York City, for example, cracked down on stays under 30 days in length — a regulation Airbnb has criticized as a “de facto ban” in the city.
Years of rising prices
With the supply of U.S. short-term rental listings still growing, the sharp upward price increases of accommodations are finally starting to subside.
Back in 2021, when the supply was squeezed, customers paid the price. Average daily rates surged, climbing to nearly 20% over the previous year, according to AirDNA data.
Airbnb CEO Brian Chesky acknowledged guests’ frustration over rising prices and cleaning fees during his remarks at a travel industry conference in late September 2023.
“What the market has been telling us for the last couple years is that the price of Airbnb has gone up significantly over the last five years,” Chesky said. “We’ve heard tens of thousands of people go on social media and complain.”
Chesky suggested Airbnb hosts might be able to fill more rooms on more nights by dropping rates.
In 2023, rates started to trend slightly downward compared with 2022. In September 2023, the average daily rate decreased in 22 of the nation’s top 50 markets for short-term rentals.
“There is some discounting happening, especially as you get closer to the date of the stay where if someone isn’t booked, they’re going to discount,” Lane says.
Will short-term rental prices drop in 2024?
These more consumer-friendly pricing trends are likely to continue this year. And there’s still plenty of room for prices to fall, according to Cheri Young, a professor of hospitality at the Daniels College of Business at the University of Denver.
“It appears that supply has caught up if not surpassed demand, but prices on Airbnb are still relatively high,” Young said via email. “I do believe the next few years will be good for travelers who like to stay in Airbnb units as prices will start to be more competitive as the natural forces of economics take hold.”
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