The global vacation rental market was valued at USD 74.64 billion in 2021 and is projected to grow at a CAGR of 5.3% from 2022 to 2030. The market is driven by the increasing spending on travel and accommodation, particularly among millennials. Millennials, who account for 200,000 million global tourists, spend approximately USD 180 billion on travel annually, according to Copyrise.
However, the COVID-19 pandemic has had a negative impact on the market's growth. AirDNA data shows a significant decrease in weekly bookings from January to March 2020. Bookings dropped by 96% in Beijing, 71% in Shanghai, 46% in Seoul, and 41% in Rome.
Travelers are increasingly favoring vacation rentals over hotels due to their comfort, affordability, privacy, and family and pet-friendly nature. The lower cost compared to hotels with similar amenities is a driving factor for consumer preference. According to a survey by TurnKey Vacation Rentals in 2019, 64% of travelers prefer staying in vacation rentals instead of hotels.
When traveling with families, consumers consider amenities and comfort when choosing a vacation rental. For example, the property management report in 2021 revealed that 71% of families traveling with children prefer to prepare their own meals, which influences their decision to stay in a vacation rental.
The growing supply of vacation rentals is meeting the increasing demand, thanks to their cost advantage over hotels. Airbnb, for instance, has 2.9 million hosts worldwide, with over 14,000 new hosts added each month in 2021. Airbnb operates in approximately 220 countries, with around 100,000 active listings in 2021.
Social media and the internet play a significant role in raising consumer awareness about vacation rental services and offerings. Key players in the market are competing for market share by offering various services, exotic locations, and amenities. Some companies are even catering specifically to female travelers. For instance, Golightly, launched in January 2020, is a vacation rental platform managed by women and available for both female and male guests. The company owns more than 350 properties worldwide.
What are the Key Factors Driving Vacation Rental Market?
The key factors driving the vacation rental market can vary, but here are some common factors that contribute to its growth and development:
Increasing preference for unique and personalized travel experiences: Many travelers today seek authentic and customized experiences during their vacations. Vacation rentals offer a wide range of options, including unique properties, local neighborhoods, and personalized amenities, allowing travelers to tailor their stay according to their preferences.
Cost-effectiveness and value for money: Vacation rentals often provide more space and amenities compared to traditional hotel accommodations, making them particularly attractive for families, groups, or long-term stays. They can offer a cost-effective alternative to hotels, especially when shared among multiple travelers.
Advancements in online platforms and technology: The growth of the vacation rental market has been facilitated by the proliferation of online booking platforms and listing websites. These platforms make it easy for property owners to market their rentals and for travelers to find and book accommodations conveniently.
Rise of the sharing economy: The sharing economy, which includes services like Airbnb and HomeAway, has disrupted the travel and hospitality industry. It has enabled property owners to monetize their spare rooms or properties and has provided travelers with more diverse accommodation options beyond traditional hotels.
Flexibility and home-like experience: Vacation rentals offer more flexibility in terms of check-in and check-out times, allowing travelers to plan their itineraries more freely. Additionally, staying in a vacation rental can provide a "home away from home" experience, with amenities such as kitchens, living spaces, and laundry facilities, which can enhance comfort and convenience during the stay.
Growing awareness and acceptance: Over time, vacation rentals have gained wider acceptance and awareness among travelers. The positive experiences shared by users, along with increased media coverage and marketing efforts by rental platforms, have contributed to the growth of the market.
Destination diversity and variety: Vacation rentals are available in various locations, including popular tourist destinations, remote areas, and off-the-beaten-path locations. This diversity allows travelers to find suitable accommodations in a wide range of places, catering to different travel preferences and interests.
These factors, among others, have contributed to the growth and popularity of the vacation rental market, leading to its projected valuation increase in the coming year.
Insights According to the Analysis
Accommodation Type Insights
Home accommodation type segment dominated the vacation rental market with a revenue share of over 45.0% in 2021.
Popularity of homes among travelers is attributed to their spaciousness, safety features, and access to amenities.
Affordability of accommodations in rural and travel destinations is a significant driver for the home accommodation segment.
- Resort/condominium segment is projected to have the highest CAGR of 6.1% from 2022 to 2030.
Millennials play a key role in driving the growth of the resort/condominium segment.
Millennials are inclined towards experiences with amenities like barbeque pits, games, swimming pools, clubhouses, and tennis facilities.
In 2021, 12% of millennials expressed their preference to stay in a villa/estate, compared to 6% of Boomers and 9% of Gen Xers, according to iPropertManagement.
Booking Mode Insights
Offline booking mode dominated the vacation rental market in terms of revenue, capturing a share of over 70.0% in 2021.
The preference for offline booking is primarily driven by Baby boomers and Gen X, who form a significant consumer base.
The increasing availability and usage of the internet and smartphones among consumers are expected to shift their inclination towards online booking mode.
Online booking mode is projected to experience the fastest compound annual growth rate (CAGR) of 6.0% throughout the forecast period.
This growth is attributed to consumers' desire for detailed access to accommodation offerings, amenities, and other benefits.
Factors such as value for money, convenience, and the search for authentic travel experiences are major contributors to the growth of online booking.
The market is witnessing the emergence of a growing number of startups and third-party travel booking companies that exclusively offer services through applications and websites.
Regional Insights
Europe dominated the vacation rental market with a share of over 30.0% in 2021.
This dominance is attributed to the adoption of glamping and increased spending on booking accommodations in resorts and condominiums by big tour operators and online tour operators.
Germany and the U.K. are expected to lead the market in the forecast period, with the U.K. projected to have the highest growth rate in the region.
Asia Pacific is anticipated to register the highest compound annual growth rate (CAGR) of 6.5% from 2022 to 2030.
The growth in Asia Pacific is primarily driven by the increasing expenditure of consumers on travel and accommodation.
China held the largest revenue share in the region in 2021 and is expected to maintain its leading position in the future.
The rising expenditure of travelers from developing countries such as India, the Philippines, Vietnam, and Australia is also expected to contribute to market growth in the Asia Pacific region.
Key Companies & Market Share Insights
- The vacation rental market consists of a mix of established players and new entrants. Several major players are increasingly focusing on this growing trend and are diversifying their service offerings to maintain their market share.
- As an example, in December 2021, Booking Holdings Inc. acquired Getaroom from Court Square Capital Partners for USD 1.2 billion. This acquisition is aimed at enhancing the value of Booking Holdings' pipeline. Furthermore, in October 2020, Tripadvisor introduced two new technology solutions, Spotlight and Reputation Pro, specifically for hotels. These solutions aim to enhance the hospitality business, build traveler confidence, attract new customers, and make data-driven decisions to improve profitability.
- Some notable players in the global vacation rental market include 9flats .com Pte Ltd., Airbnb Inc., Booking Holdings Inc., Expedia Group Inc., Hotelplan Holding AG, MakeMyTrip Pvt. Ltd., NOVASOL AS, Oravel Stays Pvt. Ltd., and TripAdvisor Inc.
