With a predicted valuation of USD 74.64 billion in 2021, the worldwide vacation rental industry is expected to increase at a compound annual growth rate (CAGR) of 5.3% between 2022 and 2030. The industry is driven by consumers’ rising travel and lodging expenses, especially from millennials. Approximately USD 180 billion is spent on travel each year by millennials, who make up 200,000 million of the world’s travelers, according to Copyrise.
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The COVID-19 epidemic, however, has hindered the market’s expansion. According to AirDNA statistics, weekly reservations declined significantly between January and March 2020. In Beijing, Shanghai, Seoul, and Rome, reservations decreased by 96%, 71%, 46%, and 41%, respectively.
Because they are more private, comfortable, economical, and suitable for families with pets than hotels, vacation rentals are becoming more and more popular among travelers. One of the main reasons why customers choose them over hotels with comparable amenities is the cheaper price. In 2019, TurnKey Vacation Rentals conducted a poll which revealed that 64% of tourists favored vacation rentals over hotels.
When selecting a vacation rental for a family trip, customers take comfort and facilities into account. For instance, the 2021 property management research found that 71% of families with kids prefer to cook their own meals, which has an impact on their choice to book a vacation rental.
Because they are less expensive than hotels, vacation rentals are becoming more and more in demand, but their supply is keeping pace. For example, as of 2021, there are 2.9 million hosts using Airbnb globally, and more than 14,000 new hosts are added every month. Approximately 220 countries are served by Airbnb, and as of 2021, there were about 100,000 active listings.
Consumer knowledge of vacation rental services and products is largely increased by social media and the internet. Important market participants are vying for market share by providing a range of facilities, unique locations, and services. In fact, several businesses cater only to female tourists. For example, Golightly is a female-run vacation rental website that was introduced in January 2020 and caters to all genders of visitors. Across the globe, the corporation has about 350 properties.
What Are the Main Drivers of the Vacation Rental Industry?
Although the primary drivers of the vacation rental market might differ, the following common elements support the industry’s expansion and development:
Growing inclination for distinctive and tailored travel experiences: A lot of people nowadays want for genuine and tailored experiences when they go on vacation. Travelers may customize their stay by choosing from a variety of alternatives such as distinctive residences, nearby areas, and individualized amenities, all of which are available via vacation rentals.
Cost-effectiveness and value for money: Compared to standard hotel accommodations, vacation rentals frequently provide greater room and facilities, which makes them more appealing to families, groups, and extended stays. When used by several visitors, they might provide a more affordable option than hotels.
Technological and online platform advancements: The development of listing websites and online booking platforms has contributed to the expansion of the vacation rental business. These platforms facilitate the marketing of rental properties by property owners and facilitate the quick search and booking of lodging by tourists.
The emergence of the sharing economy has caused significant disruptions to the travel and hospitality sectors. Examples of these services are Airbnb and HomeAway. It has given tourists more alternatives for lodging outside of traditional hotels and allowed property owners to profit from their vacant rooms or buildings.
Flexibility and a feeling of home: Vacation rentals provide guests greater freedom to arrange their schedules since they have more latitude regarding check-in and check-out timings. With features like kitchens, living areas, and laundry rooms, vacation rentals may also offer a “home away from home” experience that can improve convenience and comfort while visiting.
Growing knowledge and acceptability: As time goes by, tourists’ understanding and acceptance of holiday rentals has expanded. The industry has grown as a result of user-shared positive experiences, increasing media coverage, and marketing initiatives by rental platforms.
Diversity and range of destinations: There are many different places to find vacation rentals, including well-known tourist spots, isolated locales, and off-the-beaten-path sites. Due to this diversity, visitors may choose acceptable lodging in a variety of locations that fit their interests and travel preferences.
These and other reasons have helped the vacation rental industry expand and gain traction, which has increased the market’s estimated worth for the upcoming year.