DENVER, Dec. 13, 2022/PRNewswire/ -- AirDNA's 2023 outlook report confirms that the U.S. short-term rental (STR) industry is poised for further growth, remaining strong in the midst of a possible recession. According to the report, conducted by vacation rental analytics provider AirDNA, STR demand will increase by 5.5% in 2023, a quarter of its 2022 growth level, while average rates will maintain current levels (+1.7%), stunted by economic pressures on consumers.
AirDNA U.S. monthly short-term rental demand forecast until 2024 showing market recovery is complete, and the industry now enters a mature growth phase.
AirDNA forecasts that the supply of available rentals will grow 9% in 2023, tempering the impressive supply growth observed during the first half of 2022. By Q3 2022, STR supply was up nearly a quarter higher than its 2021 levels. This growth has slowed in recent months as STR premiums narrow, but investors may be encouraged by the Federal Reserve's more measured rate increase schedule and falling home prices.
"The STR landscape has been through a major transformation, shifting from concentrated demand in dense, popular cities to less-populous areas underserved by traditional lodging," said Jamie Lane, VP of Research at AirDNA. "While demand for this winter in large urban markets is still lagging 26.7% behind pre-pandemic levels, small towns and rural markets have doubled their 2019 future booking levels."
In 2021, STR supply wasn't able to keep up with the strong growth in demand, driving occupancy rates to all-time highs. A drop in occupancy was inevitable as the STR market caught up and new homeowners listed their properties to get a piece of the action. Occupancy is forecast to decline to 56.4% in 2023, still well above the 53.3% seen in 2019, with a more significant drop in areas where pandemic-era occupancy skyrocketed, such as coastal and mountain resorts. As revenue per available room (RevPAR) is forecast to decrease 1.6%, hosts and property managers in these locations will have to pay close attention to the data to make sure their listings remain attractive to guests.
"While economic hardship is in the cards, the pandemic taught us that consumers will still prioritize travel, which we see in the continued strength of future bookings," said Demi Horvat, AirDNA's CEO. "The STR market has matured and become a preferred option for many more travelers, pointing towards a bright future for 2023 and beyond."
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