This article delves into the fascinating insights from Q1 2023 data for the short-term rental industry, focusing on Airbnb, Booking.com, and Vrbo. Discover intriguing trends in demand evolution, supply expansion, and distribution dynamics that can help vacation rental managers make informed decisions to optimize their strategies and revenue in the ever-evolving market. Learn about the growth in booked nights, shifts in average daily rates, and how platform-specific trends shape the industry.
Transparent is a specialized data intelligence company that has been operating since 2016. Based in Madrid, Transparent was acquired by OTA Insight in February 2022.
Transparent tracks over 35 million listings across Airbnb, Vrbo, Booking.com, and TripAdvisor globally. Their data insights help vacation rental property managers, DMOs, tourism bodies, hotels, and more to optimize their strategies and maximize revenue. The data is sourced from a blend of publicly available information and partner data, ensuring the best coverage and accuracy in the industry.
I. Demand Evolution
A. Market Growth
Despite the overall growth in demand for short-term rentals, many hosts have been expressing concerns about the so-called “Airbnbust,” which refers to a perceived reduction in bookings per listing due to increased competition on platforms like Airbnb. However, it’s important to understand that this feeling of reduced bookings on the host level does not necessarily mean that the overall demand for Airbnb and other platforms is declining.
In fact, the 16% growth in demand for short-term rentals in Q1 2023 compared to Q1 2022 demonstrates that the appetite for vacation rentals remains strong among travelers. This surge in demand has been driven by the pandemic, as people increasingly choose vacation rentals over hotels for more flexible and private accommodation options.
The “Airbnbust” phenomenon is mainly a result of the rapid expansion in supply as more and more property owners and managers enter the short-term rental market. While this increased competition may lead to decreased bookings per listing for some hosts, the overall demand for platforms like Airbnb continues to grow.
B. Guest Origin Patterns
During the pandemic, Airbnb launched its “Go Near” campaign in June 2020, encouraging people to explore local destinations and attractions as international travel restrictions and lockdowns limited the ability to venture far from home.
As the travel industry began to recover from the pandemic, guest origin patterns underwent significant changes. Domestic guests now account for a lower share of demand across top markets, with countries like the United States and Brazil capturing the most domestic travel. On the contrary, destinations such as Thailand, Austria, Indonesia, and Turkey relied on over 80% international guests in Q1 2023.
Seasonal fluctuations in guest origin are also evident, particularly in countries like Croatia, Greece, and Italy, which welcome much higher proportions of international guests during the summer months. Understanding traveler demographic data is crucial for vacation rental management companies looking to optimize their marketing and pricing strategies.
C. Booking Lead Times
Airbnb bookings have the shortest lead time, with an average of 41 days ahead of the stay, while Booking.com and Vrbo draw longer lead times at 66 and 71 days, respectively. This information is valuable for short-term rental management companies when designing promotional campaigns, setting dynamic pricing, and planning for seasonal demand.
II. Supply Evolution
A. Inventory Expansion
The largest markets in terms of supply are:
This ranking is based on listings available on Vrbo, Booking.com, and Airbnb. Notably, China is absent from this list due to the weaker presence of these platforms in the country, despite having a significant short-term rental market.
The expansion of available vacation rentals has been significant in the top 25 countries, with supply growing by 30% since January 2021. Turkey leads the charge with an impressive 97% gain, followed by India, Poland, Canada, and Colombia, all experiencing growth rates exceeding 50%. The only exception is Thailand, where supply has contracted.
This growth in supply is a response to the overall demand for short-term rentals, which continues to rise despite the Airbnbust phenomenon affecting individual hosts
B. Professionalization of Vacation Rentals
The share of professional inventory has increased by 9% since Q1 2021. In this context, “professional” refers to listings that Transparent has identified as being managed by vacation rental managers, short-term rental managers, or other management companies. Denmark, Germany, Austria, and Croatia exhibit the highest degree of professionalization, while Brazil and Argentina have the lowest proportion of professionally managed properties. This trend underscores the growing role of vacation rental management companies in the industry and the rising demand for their professional services.
III. Distribution Evolution
A. Overview of Data Collection
The data analyzed in this article comes from Transparent, which collects and scrapes data from Airbnb, Vrbo, and Booking.com. The 100% of the market considered in this analysis is limited to these three platforms and does not account for offline properties or other channels.
B. Platform-Specific Trends
B1.1 Listings Distribution
Airbnb dominates the market with 52% of global vacation rental inventory listed exclusively on its platform. Cumulatively, Airbnb lists 73% of global short-term rental properties. The platform has a strong presence in the United States, with the majority of its properties located there.
B1.2 Host Retention
Airbnb has made progress in reducing host churn. After one year, 79% of hosts who joined in 2021 were still active in 2022, a 10% improvement compared to hosts who joined in 2018. After two years, 62% of hosts remain active, and after three years, around half of the hosts are still active.
B1.3 Booking Patterns
Airbnb bookings have the shortest lead time, averaging 41 days ahead of the stay. The platform also experiences seasonal fluctuations in check-ins, with peak months being March, July, August, September, and October. Airbnb’s average length of stay is comparable to Vrbo, with guests booking for 4.2 days on average.
B2.1 Listings Distribution
Booking.com holds 18% of global listings exclusively and lists 32% of global short-term rental properties in total. The platform has a strong presence in European countries, with the majority of its inventory located there.
B2.2 Pricing and Stays
The average price for a 2-bedroom vacation rental on Booking.com is $235 per night, making it closer to Airbnb’s pricing than Vrbo’s. Booking.com stays are the shortest among the three platforms, averaging 3.8 days.
B2.3 Booking Patterns
Booking.com has longer lead times for bookings, averaging 66 days ahead of the stay. The platform has a more seasonal pattern for check-ins, with 10% occurring in both July and August, and the lowest number of check-ins in January. Booking.com has the shortest average length of stay for short-term rentals, at 3.8 days per booking.
B3.1 Listings Distribution
Vrbo has 8% of global listings exclusively and lists 23% of global short-term rental properties in total. The platform has a more even distribution of listings across geographies, with stronger footholds in regions outside the United States and Europe.
B3.2 Pricing and Stays
Vrbo offers the most expensive short-term rental nights on average, with one night in a 2-bedroom vacation rental costing $324. The platform’s stays are more comparable to Airbnb, with an average duration of 4.4 days.
B3.3 Booking Patterns
Vrbo bookings have the longest lead times, averaging 71 days ahead of the stay. The platform’s check-in patterns are similar to Airbnb, with peak stays occurring between June and September. .
C. Pricing and Occupancy Trends: Comparing 1-Bedroom Short-Term Rentals and Hotels
In this section, we examine pricing and occupancy trends by comparing hotels with 1-bedroom short-term rentals in markets where competition between the two is the highest, such as major cities. Analyzing hotel data alongside short-term rental data in these competitive markets allows property managers to better understand market dynamics and make informed decisions for their pricing strategies.
Pricing Trends: Closing the Gap
Vacation rentals are generally more affordable than hotels, but the gap is narrowing, particularly in markets like big cities where competition between hotels and 1-bedroom short-term rentals is the most intense. The average advertised nightly rate for a 1-bedroom short-term rental across key cities stands at $207, while hotels average at $225, making them 9% more expensive. In markets like Los Angeles, hotels are 65% more expensive than vacation rentals, whereas Dubai and Sydney are the only markets where short-term rentals cost more than hotels.
Occupancy Trends: Short-Term Rentals on the Rise
For the remainder of 2023, short-term rentals show higher occupancy on the books compared to hotels in these competitive markets, with an average occupancy of 22% for 1-bedroom rentals across key cities. In contrast, hotels have just 8% occupancy on the books for the same period. This discrepancy can be attributed to hotels’ shorter booking windows and more sophisticated pricing strategies.
Comparing hotel prices and occupancy trends with 1-bedroom short-term rentals in highly competitive markets helps property managers understand the market dynamics, enabling them to adjust their pricing strategies accordingly. By considering both hotel and short-term rental data in these specific markets, property managers can better anticipate demand, optimize pricing, and ultimately maximize revenue. However, it’s important to note that this level of competition may not be present in all markets or property formats.
The Q1 2023 data shows significant growth and evolution in the global short-term rental industry, with varying trends in demand, supply, and distribution across platforms and markets. Vacation rental management companies should leverage this data to optimize their strategies, adjust to market fluctuations, and capitalize on emerging opportunities in the industry. By staying informed and adapting to these trends, short-term rental management businesses can continue to thrive in this rapidly evolving market.