Short-Term Rental Market: Size and Growth Analysis

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What is the current global market size of the short-term rental industry?

The global short-term rental industry is valued between USD 131 billion and USD 138 billion in 2025, with millions of active listings operating worldwide.

Major data sources report annual revenues ranging from USD 105 billion to USD 138 billion for 2025, depending on the methodology used and the scope of properties included. The variation in estimates reflects different approaches to counting listings—some sources focus solely on major platforms, while others include smaller regional operators and direct bookings.

The number of active listings globally exceeds 7 million properties across major platforms as of 2025. This represents a 9% year-over-year increase in both global listings and guest capacity from December 2023 to December 2024, demonstrating consistent expansion despite regulatory pressures in certain markets.

Regional growth patterns show significant variation, with Asia and Africa posting the strongest supply increases at 22-25% annually, while Europe and Latin America both recorded 9% growth. North America, as the most mature market, shows steadier but still positive expansion rates.

What has been the historical growth rate of the short-term rental market?

The short-term rental market has grown at a compound annual growth rate (CAGR) of 8.5-11% over the past decade from 2015 to 2025.

The growth trajectory accelerated dramatically after 2020 due to pandemic-driven changes in travel behavior, with travelers increasingly preferring private accommodations over traditional hotels. The shift toward remote work, longer stays, and destinations outside major urban centers created new demand patterns that propelled the industry forward.

Pre-pandemic growth from 2015 to 2019 was steady at the lower end of this range, driven primarily by platform expansion and growing consumer awareness. The post-2020 period saw acceleration toward the higher end as remote work normalized and travelers sought more space and privacy.

This historical performance places the short-term rental sector among the fastest-growing segments of the broader travel and tourism industry, consistently outpacing traditional hotel revenue growth during the same period.

What are the most reliable projections for market growth in the next three to five years?

The short-term rental market is projected to grow at a CAGR of 10.7-11.4% from 2025 to 2030, reaching between USD 223 billion and USD 256 billion by 2030.

These projections assume continued adoption of remote work and flexible travel arrangements, which have become permanent features of the post-pandemic landscape. They also factor in ongoing technology improvements that make booking and property management more efficient for both hosts and guests.

The growth estimates account for regulatory headwinds in major urban markets, where supply caps and licensing requirements may slow expansion. However, analysts expect this to be offset by rapid growth in secondary markets, rural areas, and emerging regions where regulations remain more accommodating.

Key assumptions underlying these projections include sustained global tourism recovery, continued preference for private accommodations over hotels, and increasing professionalization of short-term rental operations. Economic stability and disposable income growth in Asia-Pacific markets are also critical factors driving the upper end of these estimates.

Which regions account for the largest market share in the short-term rental industry?

North America holds the largest market share at 37-39% of global short-term rental revenue, primarily driven by the United States market where platforms like Airbnb and Vrbo originated.

Europe represents the largest region by number of listings and shows steady booking growth across both major cities and secondary markets. The European market benefits from strong intra-regional tourism, diverse destinations, and well-established short-term rental infrastructure.

Asia-Pacific is the fastest-growing region with a projected CAGR exceeding 14% through 2030, fueled by rising disposable incomes, expanding middle classes, and significant investments in tourism infrastructure. China, Japan, Thailand, and Australia are key markets driving this regional expansion.

Latin America, the Middle East, and Africa currently hold smaller market shares, but Africa and select Asian markets are experiencing the fastest supply growth rates globally at 22-25% annually. These emerging markets present significant opportunities for early-entry short-term rental operators.

You'll find detailed market insights in our short-term rental business plan, updated every quarter.

How is demand segmented between leisure travelers, business travelers, and long-stay guests?

Leisure travelers remain the core demand segment for short-term rentals, but business travelers and long-stay guests have grown significantly in recent years.

The long-stay segment has seen particularly sharp growth due to the normalization of remote work and the rise of digital nomad lifestyles. Properties that cater to this segment with reliable Wi-Fi, dedicated workspaces, and monthly pricing see higher occupancy rates and more stable revenue streams.

Demand for unique and experiential stays is growing faster than traditional apartments or standard homes, with travelers willing to pay premium rates for distinctive properties that offer memorable experiences beyond just accommodation.

Which platforms hold the highest market share in the short-term rental industry?

Airbnb is the global market leader by number of listings and guest arrivals, followed by Vrbo and Booking.com as the other major platforms.

The short-term rental industry remains fragmented overall, but the top three platforms control the majority of supply and bookings in North America and Europe. Airbnb's dominance is particularly strong in urban markets and international destinations, where its brand recognition and user base give it a significant competitive advantage.

Professional property management companies are growing their share as the industry matures, with many operators managing multiple properties and using dynamic pricing and automation tools to optimize performance. These professional managers often list properties across multiple platforms simultaneously to maximize exposure.

Regional and niche platforms also exist in specific markets, such as HomeAway in North America, Homestay in Asia, and specialized platforms for luxury or unique properties. However, their combined market share remains significantly smaller than the top three global platforms.

The market is showing signs of consolidation, with mergers and acquisitions of property management companies and technology providers reshaping the competitive landscape. Despite this trend, ownership of individual properties remains highly fragmented, with institutional investors holding less than 1% of the total market as of 2025.

What role do urban versus rural markets play in overall growth?

Urban markets in tier-one global cities remain key revenue generators for short-term rentals, but post-pandemic growth is strongest in rural and secondary markets.

The shift toward rural and secondary destinations reflects traveler preferences for more space, outdoor access, and authentic local experiences that emerged during the pandemic and have persisted. Destinations that were previously considered "off the beaten path" now attract significant short-term rental investment and guest demand.

Africa, Asia, and select Middle Eastern and Latin American markets are experiencing the fastest overall expansion in short-term rental supply. These regions benefit from lower regulatory barriers, emerging tourism infrastructure, and growing domestic travel markets in addition to international visitors.

Urban markets face more regulatory pressure, with many major cities implementing caps on short-term rental licenses, minimum stay requirements, and stricter enforcement of existing rules. This has slowed supply growth in cities like New York, Paris, Barcelona, and Amsterdam, while creating opportunities in less-regulated suburban and rural areas nearby.

The expansion into secondary and rural markets has also been facilitated by improved internet connectivity, which enables remote work from previously less-accessible locations. Properties in these areas often command lower nightly rates but can achieve competitive revenue through longer average stays and lower operating costs.

What are the key drivers of demand in the short-term rental market?

Demand for short-term rentals is driven by multiple factors including traveler preferences for flexibility, remote work adoption, personalized experiences, cost advantages, and platform technology improvements.

• Remote work and flexibility: The normalization of remote work has created a new class of travelers who can work from anywhere, leading to longer stays and midweek bookings that were previously rare. This trend has fundamentally changed booking patterns and opened new market segments.
• Cost competitiveness: Short-term rentals often offer better value than hotels for families, groups, and extended stays, with full kitchens and living spaces that allow guests to save on dining costs and enjoy more comfortable accommodations for the same or lower price.
• Desire for unique experiences: Travelers increasingly seek authentic, local experiences and unique properties that hotels cannot provide, from treehouses and houseboats to historic homes and architectural landmarks. This experiential demand drives premium pricing for distinctive properties.
• Technology and platform improvements: Enhanced search functions, verified reviews, instant booking, smart locks, and integrated payment systems have made short-term rentals easier to book and manage, reducing friction for both guests and hosts.
• Privacy and space preferences: Post-pandemic health concerns and ongoing preferences for private, self-contained accommodations continue to favor short-term rentals over hotels, especially for families and groups seeking more space and control over their environment.
• Regulatory acceptance in emerging markets: Many secondary and emerging markets have adopted short-term rental-friendly regulations, enabling faster supply growth and making these destinations more attractive to both operators and travelers.

These demand drivers work together to create sustained growth momentum, though regulatory headwinds and affordability concerns in some markets moderate the pace of expansion. Understanding these factors is essential for operators positioning their properties to capture demand effectively.

This is one of the strategies explained in our short-term rental business plan.

How do occupancy rates, average daily rates, and revenue per available rental compare across major markets?

Occupancy rates, average daily rates (ADR), and revenue per available rental (RevPAR) vary significantly across regions, with North American and European urban centers typically reporting the highest figures.

Revenue per available rental (RevPAR) is calculated by multiplying occupancy rate by ADR, making it the most comprehensive performance metric. Markets with high occupancy but lower ADR can achieve similar RevPAR to markets with lower occupancy but premium pricing.

Supply dynamics are shifting as new inventory enters the market, particularly in previously underserved secondary and rural locations. This has created downward pressure on pricing in some oversaturated urban markets, while emerging destinations see pricing power strengthen as demand catches up with supply.

Operators who use dynamic pricing tools and adjust rates based on local events, seasonality, and competitive positioning typically achieve 15-30% higher revenue than those using static pricing. The best-performing properties also invest in professional photography, detailed descriptions, and responsive guest communication to maximize both occupancy and rates.

What impact are regulations having on supply growth?

Local and national regulations are significantly impacting short-term rental supply growth, with some urban markets experiencing supply reductions of up to 50% due to caps, bans, and strict licensing requirements.

Major cities including New York, Paris, Barcelona, Amsterdam, and San Francisco have implemented some of the most restrictive short-term rental regulations globally. These typically include limits on the number of days a property can be rented annually, requirements that hosts live in the property full-time, mandatory registration systems, and substantial penalties for violations.

The regulatory impact varies dramatically by location—some cities have embraced short-term rentals with light-touch regulations, while others have effectively banned them for non-owner-occupied properties. This creates a patchwork of rules that operators must navigate carefully, especially those managing properties across multiple jurisdictions.

Operators are adapting through several strategies: investing in compliance technology and legal expertise, shifting focus to less-regulated suburban and rural markets, converting some properties to longer minimum stays (30+ days) that often fall outside short-term rental regulations, and working with industry associations to advocate for balanced regulations.

The regulatory environment has also accelerated professionalization of the industry, as operators who invest in compliance, proper insurance, and tax collection systems are better positioned to survive and thrive in regulated markets. Many predict that regulations will continue to tighten in popular tourist destinations, making early compliance and adaptation critical for long-term success.

We cover this exact topic in the short-term rental business plan.

What competitive pressures from hotels are influencing the short-term rental market?

Hotels remain strong competitors in the accommodation market, but consumer preference for short-term rentals continues to sustain growth, particularly for longer stays and larger groups.

Traditional hotels are responding to short-term rental competition by adopting "apartment-style" models, extended-stay concepts, and hybrid brands that blend hotel services with the space and amenities of vacation rentals. Major hotel chains have launched their own apartment brands or partnered with short-term rental platforms to capture this demand.

Price competition has intensified as short-term rental supply has increased in many markets, creating downward pressure on rates in oversupplied urban areas. Hotels benefit from economies of scale, established corporate travel contracts, and loyalty programs that short-term rental operators find difficult to match.

However, short-term rentals maintain advantages in several areas: more space for the same or lower cost, full kitchens that enable meal preparation, multiple bedrooms for families or groups, unique properties and locations not available in hotels, and the ability to experience neighborhoods like a local rather than in tourist districts.

The competitive dynamic varies by guest segment—business travelers on short trips often prefer hotel services and consistency, while families, groups, and longer-stay guests overwhelmingly favor short-term rentals. Smart operators position their properties to emphasize these unique advantages and target the segments where short-term rentals have the strongest competitive position.

What investment and consolidation trends are shaping the short-term rental market?

Institutional investment from REITs and private equity is growing in the short-term rental sector, though individual ownership still dominates with institutional investors holding less than 1% of properties as of 2025.

Mergers and acquisitions of property management companies and technology providers are accelerating, driving increased consolidation and higher professional standards across the industry. Large property management firms are acquiring smaller operators to gain scale, while technology companies are being purchased for their software platforms and operational capabilities.

Institutional investors are attracted to short-term rentals because of higher yields compared to traditional long-term leases, diversification benefits, and the ability to convert properties back to long-term rentals if market conditions change. However, the operational complexity and regulatory uncertainty have kept most institutional capital on the sidelines compared to traditional multifamily investments.

The expectation is that institutional ownership will rise significantly by 2030 as more investment vehicles focused on short-term rentals are created, regulations stabilize in key markets, and professional management platforms make operations more scalable. This trend toward professionalization may create challenges for small individual operators but also presents acquisition opportunities for those who build successful portfolios.

Venture capital and private equity are also funding technology startups that provide revenue management, guest communication, cleaning coordination, and other operational tools for short-term rental operators. These investments are improving industry infrastructure and making it easier for new operators to enter the market with professional-grade systems.

Conclusion

This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult with a qualified professional before making any investment decisions. We accept no liability for any actions taken based on the information provided.

Sources

1. Precedence Research
2. World Tourism Forum
3. Grand View Research
4. Mordor Intelligence
5. StayFi
6. Statista
7. Lighthouse
8. Short Term Rentals Asia
9. AirDNA
10. AirDNA Trends