Vacation Rental Market Expected to Reach $111.2 Billion by 2030
In 2020, Prudence Research valued the global vacation rental marketplace at $22.7 billion. From 2021 to 2030, the vacation rental industry is expected to grow at a compounded annual growth rate of 17.3%. This translates into an overall valuation of $111.2 billion by the end of the decade.
For Airbnb hosts wondering if their vacation rental property is worth the upkeep—this is your friendly reminder that it most certainly is! Over the next eight years or so, there will be plenty of opportunities for financial gain in the vacation rental market.
Millennials are Driving Growth in the Vacation Rental Industry
Primarily driven by growth in the tourism industry, vacation home rentals are becoming increasingly more popular and affordable. This is especially true among millennials who are projected to be the most significant drivers of the market.
According to Airbnb, millennials and the generations after them will make up two-thirds of the tourist population by 2025. The comfort and convenience offered by vacation home rentals along with the low-cost availability of homes, create an ideal environment in which vacation rentals are openly accepted and even preferred among travelers.
The rise of the internet has also contributed to widespread awareness of vacation rental services. Social media platforms play a pivotal role in informing travelers of their various travel options, such as destinations, restaurants, and attractions.
Social media has also influenced how people view travel. Younger generations are increasingly viewing travel as more of a right than a luxury. This change in social perception has given way for vacation home rentals to become more popular, as well.
The Pandemic & Its Impact on Vacation Rentals
Following the rapid and unprecedented spread of COVID-19, rigid travel restrictions were implemented across the globe. These restrictions forced people who would normally require vacation rental services, to now stay home for indefinite periods of time.
This resulted in a major loss of revenue for the tourism and hospitality industries, which inevitably trickled down into the vacation rental market. The World Tourism Organization reported that touristic activities witnessed a 70% decrease in 2020 alone.
In 2021, vaccines were made available to the population and ignited a travel trend known as revenge tourism. This new travel mindset is characterized by individuals who are looking to make up for lost time through eager and frequent travel. Revenge tourism is another driving force behind the growth of the vacation rental market, particularly in the first few years after the onset of the pandemic.
Market Dynamics Worth Noting
As an established vacation rental management company, MB Experiences pays close attention to all trending developments in the hospitality sector. We like to share our insights on these developments with our clients in order to strengthen their competitive advantage in the vacation rental industry.
Taking into account findings released by Prudence Research, we recommend hosts maximize their presence on instant booking platforms such as Airbnb, Vrbo, and other lesser-known platforms that feature vacation rentals. The convenience of instant booking and zero-cancelation fees are two major factors that are expected to drive success in the online vacation rental market.
That being said, we also recommend investing in security measures to protect consumers when booking online. As with any activity online where personal information must be exchanged in order to complete a transaction, financial losses can be incurred due to fraud. Going through the effort of verifying reviews and securing payment transactions will work in your favor as a host.
Lastly, we’d like to emphasize the growth potential the hospitality industry is displaying, particularly over the next decade. From now until 2030, vacation rental hosts will start to see a largely segmented market come together; with several big players adopting strategies initially implemented by vacation rentals.
Marriott International has already started expanding into the vacation home rental industry by introducing Homes & Villas, allowing guests to choose from 2,000 luxury homes across North America, Europe, and Latin America.
Innovative hospitality startups such as Casai work with traditional vacation home rental hosts and companies to transform the typical vacation home into a smart home, conducive for remote work and convenient living.
In terms of opportunity, there’s no shortage of it for ambitious hosts looking to expand. The hospitality industry is promising and not showing signs of slowing down anytime soon.
References:
Vacation Rental Market Size to Surpass US$ 112.3 Bn by 2030, Precedence Research, Globe Newswire Press Release
