The size of the global vacation rental market was worth USD 84 Billion in 2023. The global market is anticipated to grow at a CAGR of 5% from 2024 to 2032 and be worth USD 130.31 billion by 2032 from USD 88.20 billion in 2024.
The Vacation Rental Market has been seeing a considerable boom due to the growing number of tourists contributions to the tourism industries worldwide in the last few years. The desire for unique experiences and the gradual development of travel patterns propelling the increased demand for villa holidays or holiday homes or let or gites in both developed and emerging economies. Also, a large section of people is fascinated with shopping in European countries, the United States or any other developed nation with a rich history and culture which compels them to book a vacation rental for a few days, especially for this purpose. This significantly elevates the industry’s market size.
Moreover, the growing demand for wellness and fitness tours is also fuelling the market growth rate. The desire to enjoy hospitality and the advantage of such accommodations is pushing the industry forward. Besides these, short-term renting is regarded as the most viable real estate investment. This helps people maintain a higher cash flow. As per statistics, close to 50 per cent of owners revealed that income from temporary renting supported them in meeting their expenses. Another 20 per cent said this rental money stopped eviction or foreclosure.
Today, tourists are looking to take breaks regularly to recharge themselves from the wear and tear of their busy lifestyles. This change in surroundings and conditions increases the need for short rental holidays. These vacation homes provide people with the much-required support, convenience and cheapness while simultaneously fulfilling their expectations.
Increased work pressure and deteriorating health have surged the demand for wellness and fitness trips. This trend became even more important and prevalent in the post-pandemic environment in the travel sector. Recently, the importance of mental health has greatly increased influencing people to prefer wellness tourism. In addition, travellers also look for personalisation and tailor-made treatment plans by retreats and resorts are rapidly gaining traction.
Different countries have different laws, and this makes compliance tougher. It also increases the final price for the customers. Like, rules for the Lodging Shared Economy (LSE) are a key issue for players using online platforms such as VRBO and Airbnb. Moreover, stringent regulations by several cities and municipalities have been implemented for short-term rentals in local communities like noise complaints, displacement of long-term residents and housing storage. For example, in Japan, the most common problem among guests is unintended disturbances to their neighbours. This is due to the thin walls in the apartment along with inappropriate sound levels are hurting the market.
As the inflation rate comes down the European market for villa holidays is believed to drive the industry forward. Countries like the United States Virgin Islands and Texas, France, Germany, Italy, Greece, Spain and Turkey are likely to furnish more prospects in future.
Furthermore, the rising investment options in vacation properties in the US and emerging nations are propelling the Vacation Rental Market forward. Emerging travel patterns, the introduction of new technologies and shifting remote work arrangements are shaping the market in 2024.
The growing concerns related to fraudulent homes, homestays and apartments are a key hindrance to the expansion of the Vacation Rental Market. False information, content and photos are decreasing the consumer’s trust which is ultimately hurting the market. Also, the wrong user reviews and ratings on prominent websites and platforms like HomeAway and Airbnb are another factor challenging for the industry players. Moreover, the lack of awareness about the culture and region has often landed customers in trouble with local people. This has led to an increase in the refusal rate of certain travellers.
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REPORT METRIC |
DETAILS |
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Market Size Available |
2023 to 2032 |
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Base Year |
2023 |
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Forecast Period |
2024 to 2032 |
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CAGR |
5% |
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Segments Covered |
By Management, Booking Mode, Accommodation, and Region. |
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Various Analyses Covered |
Global, Regional & Country Level Analysis, Segment-Level Analysis, DROC, PESTLE Analysis, Porter’s Five Forces Analysis, Competitive Landscape, Analyst Overview of Investment Opportunities |
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Regions Covered |
North America, Europe, APAC, Latin America, Middle East & Africa |
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Market Leaders Profiled |
VRBO, Airbnb, Booking.com, Expedia Group, Onefinestay, Tripadvisor, Wyndham Destinations Inc., 9flats.com Pte Ltd., MakeMyTrip Pvt. Ltd. and Oravel Stays Pvt. Ltd., and Others. |
The Managed by Owners segment holds most of the Vacation Rental Market share. The majority of companies are small private owners of resorts and hotels. The shifting customer preference around the world, especially in emerging economies, for comfort and spacious accommodation is one of the factors driving the segment’s market growth. This is because most of the time people are surrounded by office colleagues or workers and coupled with long working hours have forced them to have quality time and peace either alone or with their partner. On the other hand, the demand for luxury properties at beaches or mountains is on the rise, so the professionally managed segment is also growing.
The Online segment has surpassed the offline segment in terms of growth rate and is expected to flourish in the coming years. A large section of people prefers online channels for booking vacation rentals due to comfort and easiness. Moreover, it is anticipated that close to 80 per cent of the revenue generation will be through online mode. Besides this, the market share is further elevated by the channel management software. These not only
addressed various problems but also automated rates, content and inventory distribution. availability.
The home segment holds a considerable share of the Vacation Rental Market. This can be attributed to the strong popularity among tourists because of availability, security, space and facilities provided by owners. Apart from this, the deepening collaboration between online service providers like Airbnb and homeowners is also driving the segment’s market size. Likewise, millennials top priority is vacation rentals and travellers between the ages 25 to 34 account for 30 per cent of all the guests, 27 per cent by ages between 35 and 44 and 55 to 64 holds only 11.5 per cent. Additionally, the increased awareness of scams, frauds and safety concerns is another factor that pushed customers to choose home accommodations instead of hotels.
Europe is leading with a significant share of the Vacation Rental Market. Wellness tourism is rising quickly in the region. As per a survey, more than 50 per cent of Europeans felt or experienced the brink of burnout. Also, nine out of ten world’s 10 spa break destinations are present in this region. Paris, Barcelona and Brussels are the area's top three places for spas. The market is expected to expand further in Romania and Greece as they registered lengthy stays by guests from other EU nations in 2022. As per the European Union Commission’s study, their average stay was over 9 nights and 7 nights for EU destinations. Also, Cyprus and Greece witnessed the highest average trip expenditure in 2022.
The North America Vacation Rental Market is steadily growing annually. The United States has dominated the regional industry. Over the years it evolved considerably to become the distinguished player in the hospitality industry. Currently, most US states have vacation rentals, especially in key tourist destinations like California, Hawaii and Florida. Also, shore areas with rental beach houses are trendy in the country. Moreover, it is the second-largest industry after Europe and local industry in Orlando (Florida) is booming owing to the high popularity of villa holidays among Europeans. Besides this, Alabama and the Gulf of Shores are some of the favourite vacation rental industries.
Asia Pacific Vacation Rental Market is witnessing an upward trend in booking holiday accommodations. The regional industry grew at a higher CAGR during 2022 and 2023 with an around 84 per cent rise in vacation rental bookings. It followed the same incremental growth pattern as Europe, the United States and Canada. The prominent markets include China, India, Indonesia, Singapore, Japan and Thailand. Moreover, there was a 20 per cent surge in average booking value against pre- and post-COVID-19 years. It rose to a 3-night average stay from the 2.5-night mean. Apart from this, Airbnb has a significant presence in
Japan, the Philippines, Indonesia, Thailand, India, South Korea, etc. However, each industry has a domestic competitor to the Airbnb.
Latin America is quickly moving forward in the Vacation Rental Market. In recent times the increased penetration of digital service providers such as VERBO and Airbnb, rising travel activities and the growing middle class are driving the growth of the LA industry forward. Moreover, the increasing prevalence of short-term rental is a major contributor to the regional industry’s development. In addition, Brazil and Mexico are the dominant players due to the extensive application of digital technologies and a strong focus on providing a unique travel experience. On the other hand, the market growth is challenged by changing customer preferences and regulatory issues.
The Middle East is projected to propel faster during the forecast period for the Vacation Rental Market. The growing popularity of premium vacation rental companies serves the desires of today’s guests. For instance, after the pandemic, Dubai-based travel company Luxury Explorers boosted its efforts to provide premium holiday homes, like Villa Botanica. However, the multiple conflicts and political turmoil affect the region's market share. Whereas in Africa, the short-term rental prices surpassed hotel costs by 22 per cent. Also, Algeria, Tunisia, Morocco (Rabat and Casablanca) and Egypt are the preferred locations for renting homes rather than buying.
The major companies operating in the vacation rental market are VRBO, Airbnb, Booking.com, Expedia Group, Onefinestay, Tripadvisor, Wyndham Destinations Inc., 9flats.com Pte Ltd., MakeMyTrip Pvt. Ltd. and Oravel Stays Pvt. Ltd.
By Management
By Booking Mode
By Accommodation
By Region
Frequently Asked Questions
The vacation rental market is expected to grow with a CAGR of 5% between 2024 and 2032.
The vacation rental market size is expected to reach a revised size of US$ 130.31 billion by 2032.
Booking.com, Expedia Group, Onefinestay, Tripadvisor, and Wyndham Destinations Inc., are top key players in the vacation rental market.
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