The year 2025 is expected to be relatively calm for Airbnb and Vrbo hosts.
This was stated to Business Insider by Bram Gallagher, Director of Economics and Forecasting at AirDNA. He specifically said:
“There will be a bit more stability in the coming year. The market is in a more mature phase compared to where it was five, or even ten years ago.”
The global short-term rental boom is traced back to 2020, during the pandemic when more travelers sought accommodations away from crowded areas. This led to increased revenue for hosts and opened the door for an influx of new properties in subsequent years.
Since then, growth rates have been high. Many hosts, witnessing the surge in supply, reduced their prices to remain competitive.
In 2024, the demand for short-term rentals, measured by the number of nights booked, increased by 7% compared to 2023. However, from February 2022 to April 2024, occupancy rates have shown stability.
According to AirDNA, revenue per available rental (RevPAR) for short-term rentals has seen a decline over the past two years. However, RevPAR forecasts for 2025 have turned positive.
“We’ll see some gradual improvement from now on,” said Bram Gallagher.
AirDNA’s predictions for hosts in 2025
Occupancy rates will remain roughly the same
Occupancy rates experienced a historic boom over the past four years, peaking at 61.9% in February 2022.
Subsequently, a wave of new properties, spurred by an investment boom in the industry, increased competition for bookings, pushing occupancy rates to 54% by April 2024.
AirDNA expects occupancy rates to hover around this threshold in 2025.
A slowdown in new Airbnb and Vrbo listings means less competition
The post-pandemic surge in new Airbnb and Vrbo listings is likely to come to an end.
“Supply will continue to slow down, so you’ll have fewer new competitors to worry about next year,” Gallagher said to hosts.
The growing regulations on Airbnbs and Vrbos in cities across the U.S. and abroad over the past few years have also significantly restricted new listings.
This is good news for hosts already managing properties.
“It’s great for operators already in the market, as there are now barriers to entry for anyone looking to compete,” Gallagher noted.
Large homes with relatively affordable nightly rates are likely to continue growing in popularity
A surprising trend identified in 2024 is expected to continue into the new year: the exceptional performance of a specific category of listings—large homes with multiple bedrooms, catering to big families and groups, offering affordable prices along with the space needed by larger parties.
AirDNA found that the greatest increase in both demand and available listings this year was for properties with six or more bedrooms in the budget-friendly category.
Gallagher noted that the rising interest may be a response to comparisons many travelers make between hotels and short-term rentals.
“Travelers are evaluating the value proposition of renting six rooms in a budget hotel versus renting a short-term rental with six bedrooms,” Gallagher said. “It’s a shift in the composition of the short-term rental supply,” he emphasized.
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