Vacation Rental Market: Trends and Growth Statistics

This article was written by our expert who is surveying the industry and constantly updating the business plan for a cottage rental business.

Who wrote this content?

The Dojo Business Team

A team of financial experts, consultants, and writers

We're a team of finance experts, consultants, market analysts, and specialized writers dedicated to helping new entrepreneurs launch their businesses. We help you avoid costly mistakes by providing detailed business plans, accurate market studies, and reliable financial forecasts to maximize your chances of success from day one—especially in the cottage rental market.

What is the current global market size and five-year evolution?

The vacation rental market is about $97.85 billion in 2025 and has expanded steadily since 2020.

For a cottage rental business, this means demand is broad-based and not limited to a few destinations; rural and nature-oriented stays have rebounded strongly post-pandemic. Europe remains the largest region by revenue, while Asia–Pacific supplies much of the growth momentum that will support future bookings.

Over the last five years, growth was uneven during pandemic years but then normalized as cross-border travel recovered, remote work stabilized travel patterns, and platforms improved search and conversion. The sector’s share of global accommodation spend is now roughly 11–14%, giving room for cottages to win share through better amenities and guest experience.

Set your cottage’s baseline targets using market ADR and occupancy in your region, then refine with dynamic pricing and minimum-stay rules as seasons shift.

You’ll find detailed market insights in our cottage business plan, updated every quarter.

Which regions and countries are growing the fastest right now?

Asia–Pacific is currently the fastest-growing region, with Japan, Thailand, and Australia leading.

Latin America and parts of the Middle East & Africa are also expanding as airlift and payment infrastructure improve; this matters for cottages positioned near nature parks or coastlines, where weekend and short-haul demand is strong. Europe remains the largest region by value—France, Spain, Portugal, and Italy concentrate significant cottage-style demand in rural and coastal areas.

Growth is amplified where regulations are clear, digital adoption is high, and road/rail access is convenient. In these markets, professional cottage operators who invest in branding and direct bookings capture more repeat demand.

Assess growth by cross-checking inbound flight seat capacity, regional OTA search volumes, and local regulation updates every quarter.

What is the projected CAGR for the next five years?

Most forecasts cluster in the 3.4% to ~5.8% CAGR range for 2025–2030.

Some methodologies cite higher numbers (up to ~10.6%), often tied to optimistic assumptions on cross-border travel and supply growth. For a cottage rental business, plan with a base-case CAGR near the mid-single digits and a cautious scenario closer to ~3–4%.

Use a conservative demand curve in your underwriting, then beat it with direct-booking initiatives, professional photos, and upsells like firewood bundles or guided activities. Model two scenarios: steady domestic demand and a stronger international mix.

Update your financial plan annually to reflect new ADR and occupancy data.

This is one of the strategies explained in our cottage business plan.

How do occupancy rates and ADR compare across leading markets?

Occupancy is highest in major European and Asia–Pacific cities, while ADRs peak in select U.S. destinations.

Use the table below to benchmark a cottage’s expected performance; local micro-location, quality, and amenities will shift results up or down.

What share of the overall accommodation industry do vacation rentals hold?

Vacation rentals represent roughly 11–14% of global accommodation spend in 2025.

For a cottage rental business, this means alternative lodging is no longer niche; guest expectations are professional photos, hotel-grade cleaning, and self-check-in. Share gains have come from families, groups, and remote workers choosing more space and privacy.

The remaining headroom suggests well-run cottages can capture incremental demand from hotels, especially in scenic drive-to locations with outdoor amenities. Strengthen value with curated local experiences and reliable Wi-Fi.

Track your mix of OTA vs. direct and repeat vs. new guests to see how quickly you’re gaining share locally.

Which booking platforms hold the largest market share, and how is it changing?

Airbnb leads globally; Booking.com and Vrbo follow; direct bookings are rising.

Use the table to plan your channel mix for a cottage rental business; start with 2–3 OTAs, then invest in a direct site and email capture.

How have traveler demographics and preferences shifted, and what does it mean for cottages?

• Millennials and Gen Z now form the majority of platform users; they value unique nature stays, strong Wi-Fi, and flexible policies.
• Shorter booking lead times and mobile-first discovery require instant-book and responsive messaging.
• Wellness features (sauna, cold plunge, yoga mats) and eco-friendly choices influence conversion and reviews.
• Work-from-anywhere created mid-week demand; equip a proper desk, ergonomic chair, and 200+ Mbps internet.
• Families prioritize space, kitchens, and laundry; child-safe fittings and gear boost occupancy.
• Pet-friendly policies widen the addressable market; apply modest pet fees and extra cleaning SOPs.

We cover this exact topic in the cottage business plan.

What are the main seasonal or cyclical patterns that affect performance?

• Summer peaks (and major holidays) drive the highest occupancy and ADR for lakeside and mountain cottages.
• Shoulder seasons require tactical discounts, 2–3 night minimums, and value-adds (firewood, bikes, local passes).
• Last-minute bookings rise in warm weekends; use same-day pricing rules and gap-night discounts.
• Weather shocks and event calendars (festivals, ski openings) move demand week-to-week—monitor continuously.
• Urban recovery supports rural spillover on long weekends; promote road-trip bundles and early check-in.

How do local regulations influence growth and investor opportunities?

Regulation is tightest in some major cities and clearer in many rural destinations.

For a cottage rental business, that often means fewer caps in low-density zones, provided you follow licensing, safety, and tax rules. Where cities impose night caps or primary-residence rules, demand can shift to nearby countryside, benefiting compliant cottages.

Always verify: (1) zoning and occupancy limits, (2) tourist tax registration, (3) fire and safety code, (4) data-sharing or permit requirements. Transparent compliance becomes a competitive moat when others ignore rules and face delisting.

Document your compliance in your listing to reassure guests and neighbors.

Which technology trends most impact competitiveness?

• AI-driven dynamic pricing can lift revenue materially (often double-digit) when paired with calendar discipline.
• Smart locks, noise monitors, and thermostats increase security, reduce energy costs, and enable self-check-in.
• Guest apps and digital guidebooks raise review scores and cut messaging time.
• Automated cleaner scheduling and linen logistics reduce turnaround errors.
• Channel managers and PMS tools prevent double bookings and sync rates.
• Mobile-first funnels and UGC-rich listings improve conversion on OTAs and direct sites.

It’s a key part of what we outline in the cottage business plan.

How is supply changing—property types, amenities, and management?

Supply is growing fastest in APAC and select US metros, with more professional managers entering.

For cottage rentals, 1–2 bedroom units, unique concept stays (A-frames, treehouses), and wellness-oriented amenities are gaining share. Professionally managed listings grow as owners seek consistent standards and higher RevPAR.

Investment in hot tubs, wood-burning stoves, panoramic decks, and EV chargers consistently improves ADR. Eco-credentials (water-saving, solar, responsible toiletries) support both pricing and search visibility.

Benchmark your amenities quarterly against the top 10 local listings.

What are average returns and profitability across top markets?

Returns vary by location quality, seasonality, and management, but strong operators post solid RevPAR even with rising costs.

Use the table as a directional guide for a cottage rental business; layer in your utility, cleaning, and property tax specifics.

What is the market outlook for the next five years (CAGR recap)?

The base-case outlook is mid-single-digit CAGR through 2030, with upside if international travel accelerates.

Cottage operators should plan for steady demand growth, with higher gains where infrastructure and regulation support sustainable expansion. Supply will keep professionalizing, raising the quality bar and rewarding owners who invest in guest experience.

Winning strategies: rigorous revenue management, channel diversification, and a scalable housekeeping playbook. Direct bookings and loyalty programs will be core margin drivers.

Refresh your pricing rules monthly and content quarterly to track demand shifts.

How should a new cottage business set pricing and revenue management?

Anchor pricing to local ADR and seasonal patterns, then use AI tools for day-of-week and event-driven adjustments.

Set minimum stays for peak weekends and relax them in mid-weeks; use gap-night discounts to fill calendars. Monitor competitor sets and conversion metrics (views→inquiries→bookings) to avoid underselling.

Bundle value (firewood, kayaks, baby gear) instead of blanket discounts to protect ADR. Keep cleaning fees realistic and transparent to avoid cart abandonment.

Audit your listing monthly for search ranking factors and photo quality.

Get expert guidance and actionable steps inside our cottage business plan.

Which operating KPIs matter most for cottages?

Track Occupancy, ADR, RevPAR, Net Operating Margin, and 5-star review rate.

Add booking-window days, channel mix, and repeat-guest share to diagnose growth levers. Use cost per clean, linen losses, and energy per occupied night to manage expense creep.

Build a weekly dashboard; correlate rate changes with inquiry volume to calibrate pricing. Tie housekeeping SLAs to check-in quality to protect review scores.

Reinvest part of peak-season cash into off-season upgrades that drive rate.

What amenities most move the needle for cottage bookings?

Hot tubs, saunas, fast Wi-Fi, quality bedding, and outdoor fire pits consistently increase conversion and ADR.

Pet-friendly setups, EV chargers, and family gear (crib, high chair, stair gate) broaden your audience. Clear outdoor photos at golden hour and styled interiors set expectations and reduce cancellations.

Provide a digital guidebook with local trails, cafes, and safety info; align check-in instructions with smart-lock workflows. Seasonal touches (blankets, s’mores kits) help reviews and repeat stays.

Measure amenity ROI by tracking ADR uplift and review mentions.

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 — Vacation Rental Market
2. Statista — Vacation Rentals Worldwide
3. Fortune Business Insights — Vacation Rentals Market
4. Grand View Research — Vacation Rental Market
5. Rental Scale-Up — Platforms in 2025
6. HotelTechReport — Industry Stats
7. ListingOK — Occupancy Benchmarks
8. Allied Market Research — Outlook
9. NextMSC — Travel Accommodation Market
10. Accio — Market Trends 2025