The vacation rental industry encompasses furnished properties rented short-term to travelers as alternatives to hotels. These properties range from luxury condos in popular resorts, lakeside cabins, urban penthouses, to remote countryside cottages. The industry has experienced rapid growth, driven by changing traveler preferences and technological advancements.
Current Market Size and Growth
- The global vacation rental market is projected to reach $130 billion by 2028, growing at a compound annual growth rate (CAGR) of approximately 7% from 2023 to 2028.
- In the U.S., the vacation rental sector generated over $38 billion in revenue in 2023, with continued growth as consumer preferences shift toward personalized, local experiences.
- Platforms like Airbnb and Vrbo collectively host over 6 million active listings worldwide, with billions of dollars in gross bookings annually—Airbnb alone reported gross booking value of $122 billion in 2023.
Here, Grand Welcome makes a vacation rental market analysis based on some information that you, potential vacation home hosts and franchise owners, need to know. But, before we dive into the data, let’s take a look at some interesting and insightful vacation rental trends.
| You are reading an article from the Franchise section of our Ultimate Vacation Rental Business Guide.
See the other articles in this section below: ➜ Vacation Rental Market Trend & Analysis |
Vacation Rental Trends
Following vacation rental trends is a smart way to learn what offerings people want and are willing to pay for. The travel industry, in general, has changed drastically over the last 10 years, and there are more projected changes to come.
Here’s what’s available now and what you can expect in the future for the vacation rental industry.
High Season, Year-Round
The industry has moved beyond the traditional high- and low-season model. Travelers now seek accommodations year-round, facilitated by remote work, flexible schedules, and the desire for authentic local experiences, leading to more consistent bookings and revenue.
Pet-Friendly Locations
Pet ownership remains high—over 67% of U.S. households have a pet. There’s a strong demand for pet-friendly rentals, which command premium pricing and often enjoy higher occupancy.
Site-Specific Accommodations
Travelers increasingly seek culturally authentic experiences—whether a historic home in Charleston, a luxury eco-resort in Costa Rica, or a treehouse in the Pacific Northwest. Personalization elevates bookings and price points.
Wellness Retreats
Wellness tourism is surging, projected to reach $639 billion globally by 2025. Properties offering spa services, yoga, outdoor activities, and health-centered amenities are capturing this lucrative segment.
Urban and City Stays
With the rise of remote work, urban districts in cities like New York, Los Angeles, Austin, and Miami are experiencing increased demand for short-term rentals, especially for extended stays.
Vacation Rental Forecasts
Looking ahead, the vacation rental industry is poised for continued expansion. Key forecasts include:
- Increased integration with travel services: Partnerships between vacation rental platforms, airlines, car rentals, and local attractions will enhance the guest experience and drive bookings.
- Loyalty programs and branded experiences: More travelers will favor long-term relationships with trusted brands and franchises, fostering repeat bookings.
- Growth in domestic and cross-border travel: As global travel restrictions ease, international travelers and developing markets will contribute to higher occupancy rates.
- Personalized and localized offerings: Properties that cater to specific markets—pet-friendly, eco-friendly, wellness-focused—will see rising demand.
- Smart-home and automation features: Investments in smart technology will improve guest satisfaction and operational efficiency.
Forecasted industry growth suggests a CAGR of approximately 6-8% through 2028, with markets like North America, Europe, and Asia leading the expansion.
Vacation Rental Market Analysis
The vacation rental market has grown to great values recently, and it is projected to continue on that upward trend. Get to know this market better (and its potential) by reviewing this vacation rental market analysis, which includes:
- Industry growth and value
- Customer segments and buying patterns
- Barriers to entry and competition
- Windows of opportunity
Vacation Rental Industry Growth and Vacation Rental Value
The industry is experiencing strong growth, fueled by evolving traveler expectations and technological innovations:
- Industry revenue: The U.S. market alone reached $38 billion in 2023, with an estimated global market value exceeding $130 billion.
- Growth rate: Industry analysts project a 7% CAGR through 2028, with many regional markets seeing even higher growth.
- User adoption: Active users and bookings are continuously increasing, with platforms like Airbnb and Vrbo expanding into new regions and segments.
- Investment opportunities: The rapid growth offers attractive margins for franchise owners, investors, and property managers, especially those focusing on niche markets like luxury, eco-retreats, or urban stays.
The outlook remains positive, supported by strong consumer demand for unique, personalized, and flexible vacation experiences worldwide.
Vacation Rental Customer Segments and Buying Patterns
There are roughly 600 million vacation rental users worldwide. Among this vast number are some specific segments that owners should be aware of in order to better understand who their customers are and how they buy.
Age Groups:
- Millennials (25-40) remain the largest demographic, comprising around 45% of vacation rental bookings, driven by their comfort with digital platforms and preference for experiences over material goods.
- Gen Z travelers (under 25) are rapidly increasing their share, now accounting for approximately 15-20% of bookings**, especially for city stays and adventure-oriented trips.
- Gen X (41-56) and Boomers (57-75) are actively booking more extended stays, with roughly 20-25% of industry revenue** coming from these groups, driven by a desire for longer vacations and work-from-anywhere lifestyle.
Traveler Types:
- Remote workers & digital nomads: A fast-growing segment, making up about 22% of bookings**, often seeking month-long stays in urban or scenic settings.
- Family travelers: Remain predominant, with over 60% booking vacation rentals for larger properties that accommodate children and pets.
- Luxury & high-end travelers: The luxury segment is expanding quickly, representing around 15-20% of bookings**, with high-ADR properties in exotic locations.
- Group & social travelers: Millennials and Gen Z (especially friends groups) prefer rentals for reunions, adventure trips, and events, often booking in urban or scenic destinations.
Location Preferences:
- City stays: The fastest-growing segment, with over 50% of travelers booking short-term rentals in urban centers like New York, Los Angeles, Miami, and Austin, especially for business or extended stays.
- Beach & Waterfront: Still the dominant choice, with approximately 70-75% of bookings**, especially in locations like Florida, Hawaii, and Mediterranean coasts.
- Mountain & rural retreats: About 20-25% of travelers** prefer mountain regions or countryside escapes, especially for outdoor activities like hiking, skiing, and wellness retreats.
- Emerging markets:* Urban redevelopment and conversion of commercial properties are fueling growth in secondary cities and regions with new attractions.
Booking Trends:
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- Research & decision-making: Over 65% of travelers now read reviews, view photos, and compare listings online before booking.
- Time spent browsing: Potential guests spend an average of 2 minutes browsing listings, emphasizing the importance of professional photography and compelling descriptions.
- Mobile booking: More than 70% of bookings** are made via smartphones, with a premium placed on user-friendly mobile websites and apps.
- Booking window: Travelers are booking closer to their trip dates, with about 50% of bookings made within 30 days of arrival, which highlights the importance of flexible availability and last-minute booking strategies.
Vacation Rental Barriers to Entry and Competition
The barriers to entry of renting out a vacation property have largely diminished over the last few years. Property listing sites are making it very easy for owners to start their own businesses and franchises. However, large hotel corporations have taken notice and are working to try and keep their market share by adding kitchens to rooms, using loyalty programs, and offering plenty of amenities.
The good news is that hotel corporations have a hard time offering what vacation rentals do so readily—personalized home comforts, privacy, space to unwind, and an authentic local experience.
Vacation Rental Windows of Opportunity
We can gather from the above data that there are many windows of opportunity in the vacation rental industry that are waiting to be utilized more fully. Such opportunities include offering:
- Dog-friendly rentals and amenities
- Site-specific and culturally-unique accommodations
- Spa and wellness retreats
- Locations in cities and developing areas
- High-end rentals for younger travelers
- Business features for work travelers
- Vacation rental franchising
Taking hold of the above opportunities will help vacation rental owners better compete with large hotel brands both now and down the road.
Conclusion
With this trending and encouraging vacation rental market analysis and data, it’s no question that investing in this industry is a smart move. So how do you get in on it and make money? There are two main options:
- List your property with Grand Welcome.
- Open a vacation rental franchise with Grand Welcome.
Why choose Grand Welcome? Because our easy and comprehensive management program covers every aspect of your property, our technology takes care of your back-office work, and our team of experts makes it easy for your business to grow and profit.
Request a FREE Franchise Information Kit and get started today!