The short-term rental (STR) market is on a steady recovery path. While shorter booking windows create challenges for forecasting, overall demand and occupancy are climbing, rates are stable, and growth across market types is becoming more balanced.
The STR market kept up its growth momentum in early 2025, though at a slower pace compared to last year’s rebound. Key highlights include:
Occupancy Strength: National occupancy climbed above the pre-pandemic average, showing that demand remains healthy.
Rates on the Rise: Average daily rates (ADR) continued to grow steadily, with less price volatility as the impact of new listings on host pricing power eased.
Booking Shifts: Travelers are booking later than ever, which makes demand forecasting more difficult.
A major shift in traveler behavior is reshaping the market:
In August 2023, only 16% of bookings were made within five days of check-in.
By January 2025, that number had nearly doubled to 31%.
As of May 2025, it still sat high at 24%.
This trend is nationwide, with urban markets seeing the sharpest drop in lead times (-8.4% YOY), while coastal resorts fell more modestly (-3.5% YOY). Shorter lead times make pacing data appear weaker than reality, since many reservations now come in closer to the actual stay.
Looking ahead, steady progress is expected:
Occupancy Growth: Occupancy should continue rising gradually through 2026, supported by strong job growth and balanced supply and demand.
Market Divergence Narrowing: Growth is becoming more balanced across market types. Small and mid-size cities remain leaders, but large urban and suburban markets are making a comeback.
Inflation Risks: New tariffs and geopolitical tensions may cause a temporary inflation spike later in 2025, though its impact on ADR growth will likely be smaller than in past cycles.
Leisure-driven destinations like coastal and mountain/lake markets are expected to remain resilient in 2025. While inflation may cool demand slightly in 2026, these areas should continue to see steady travel activity.
As of April 2025, trailing twelve-month occupancy surpassed the pre-COVID average of 55.4% for the first time since 2023. Although falling interest rates will eventually bring more supply, that process takes time, allowing occupancy to rise slowly but steadily over the next two years.
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