4 Short-Term Rental Industry Trends to Watch in 2024
If the last few years have been any indication, change in the Short-Term Rental (STR) industry isn’t going away.
Honestly, it’s probably going to increase.
Despite a shaky 2023, the STR market is still projected to grow at a CAGR (Compound annual growth rate) of 10.80% from 2024 to 2034.
For those of us that aren’t economists, what this actually means is the next year and beyond are a great opportunity for property managers to make more informed decisions, strategize effectively, and seize opportunities for expansion or investment.
4 trends to keep an eye on
- AI is here to stay
- Bring on the tech
- The Great Convergence is coming
- Renters expectations will continue to rise
After all, demographics within the STR space continue to change. They used to be dominated by “traditional” vacationers. These days there’s a far wider audience than ever made up of tech workers, longer-term stays, and even whole families looking for a home away from home.
When you couple these changes with more regulations and shifting consumer expectations?
Staying competitive is even more complex.
While there’s no Magic 8 Ball that can predict what’ll happen next (we wish), we’re going to highlight a few trends you should definitely keep your eye on this year, whether you have five properties or five hundred.
In this article, we explore expert tips to manage your short term rental cleaning operations as you scale.
Find out how you can scale your short-term rental operations.
Where the STR industry is now
Global events continue to have a huge effect
Increasing Regulations and Taxes
At the same time, STR industry growth has come part and parcel with increased scrutiny around regulation. Some cities have imposed strict rules on short-term rentals, often in response to housing affordability concerns. According to Skift, higher taxes and regulations have led to increased operating costs, causing some operators to even exit the market.
Technological Innovation
Online platforms and digital technologies have revolutionized the STR industry. The proof lies in the surge many property owners saw during the so-called “revenge travel period”. Platforms have made it easier than ever for property owners to list their spaces and for travelers to find and book them. However, as reported by Forbes, this rapid growth and change also bring challenges, such as maintaining a competitive edge in a crowded market and adapting to changing consumer expectations.
Market Saturation and Correction
The STR market has experienced a surge in supply in recent years, leading to increased competition among property owners. This saturation has resulted in many operators selling their properties which has led to a market correction.
This trend suggests that the industry is going through a period of consolidation and adjustment, which could reshape its future trajectory which we’ll get into shortly. This isn’t a huge cause for concern because occupancy has returned to levels seen in 2019, despite the influence of economic woes and softening demand.
4 short-term rental industry trends to watch in 2024
1) AI is here to stay
It’s probably a much shorter list to say what Artificial Intelligence (AI) isn’t going to impact in 2024. When it comes to the short-term rental space, AI is already making waves in operations, aiding in marketing and business intelligence—and that’s only the beginning. The potential applications of AI in the short-term rental industry are vast.
From smart home automation for enhanced guest experiences to using AI for risk assessment and security, the possibilities are endless and we’re confident there’s going to be a huge surge in this area next year. In an era where AI is rapidly evolving, being updated and improved at what feels like every few minutes, those who fail to adapt risk being left behind.
What this means for you
Let’s be clear: AI can’t run your business for you. You should, however, consider AI as a potential solution for a problem you’re having. Maybe you need more consistent pre-check-in communication with guests or a first draft of updated listing details. AI can’t solve every single problem but it can definitely be a huge help.
2) Bring on the tech
AI isn’t the only tech in town. There are plenty of excellent solutions on the market that can help you manage everything from property care automation to keyless entry. Not all tech is created equal therefore it’s necessary to have a clear vision of which problems can be solved by technology that are currently either ignored or handled manually.
What this means for you
Take a hard look at the problems you’re having. Where are the inefficiencies? Where is the ball most frequently dropped? What are your customers most unhappy with?
3) Renters expectations will continue to rise
Today’s travelers are not just looking for a place to merely rest their heads; they’re seeking unique experiences that whisk them away from the mundane.
They crave stays that offer a taste of the extraordinary, a dash of the exotic, and a sprinkle of the unexpected. That’s why there are over 2,000 castles and over 5,000 tree houses listed worldwide on AirBNB. Making for fierce competition in 2024.
What this means for you
One word: opportunity.
Property owners have a chance to focus on creating memorable experiences for their guests. This might mean investing in property upgrades, incorporating local culture and authenticity into your offerings, or simply providing exceptional customer service.
By elevating your stay experience to meet these rising expectations, you’re not just satisfying your guests; you’re exceeding their expectations and setting yourself apart in an increasingly competitive market.
4) The ‘great convergence’ is coming
The real estate landscape is not what it once was. As people seek more flexibility in their living and working arrangements, the demand for versatile spaces that cater to these needs is skyrocketing.
This has led us to the cusp of what’s being hailed as the ‘great convergence’ – a point where distinct sectors such as short-term rentals (STR), institutional investing, corporate housing, and hotels aren’t what they once were. The lines are becoming blurred and this is leading to these categories coming closer together than ever before.
What this means for you
Risk diversification.
By spreading your investments across these converging sectors, you’re no longer at the mercy of a single market’s ups and downs. If your STR business caters to multiple segments of the market, you’re more insulated from volatility.
Closing Thoughts
It doesn’t matter how well you understand these trends, it means nothing if you’re not nailing the basics.
Doesn’t matter whether we’re talking 2024, 1994, or 2054; Short-term rental management will always rely on a few key strategies: property upkeep, accurate and engaging listings, a clear price-for-value strategy, and consistently delivering an exceptional customer experience.
A solid handle on these elements means you can manage your business effectively and profitably. That way, as the industry evolves, you’re able to stay nimble and succeed in a competitive environment.
If you’re looking to better understand the strategies and innovations shaping 2024, check out a recent roundtable discussion, Operto: 2023 Unwrapped hosted by Wil Slickers.
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