Skift Travel News Blog

The answer to the question “Which is doing better – hotels or short-term rentals?” is “depends on whom you ask and when.”

But in their latest report data firms AirDNA and the CoStar group claim that rentals are growing in demand as well as supply over hotels. 

For this report, the firms aggregated data from 2018 to 2023 to examine changing trends in supply, demand, and ADR for vacation rentals and hotels in the United States. The analysis found that rental shares of supply and demand have accelerated. Small city/rural and suburban locations drove this growth, as they provided consumers with physical space during the pandemic. Among those, larger homes also contributed to growth, with 3-bedroom rental properties accounting for a larger share of growth than 1-bedrooms. In the year ahead, the report predicts that rental share will continue to grow, and hotels are expected to feel the impact.

Rental Demand Growth

Demand growth in the accommodation market slowed from the first quarter of 2022 to the second quarter of this year. Specifically, the annual demand growth dropped from 30.0% to 11.7% for rentals and from 26.4% to -0.6% for hotels during this period. 

Despite the overall slowdown in the North American market owing to international travel, rentals continued to outpace hotels in terms of demand growth. The trend of “bleisure” travel, combining work and leisure, likely played a role in the increased demand for rentals.

Rental demand growth has seen a notable rise in all location types, particularly in small city/rural areas. By May 2023, demand growth for short-term rentals reached 24%, while hotels remained at 0%, the report found. 

Mid-sized cities, suburbs, mountains/lake resorts, and coastal resorts also experienced greater demand growth in rentals compared to hotels. However, in urban areas, both hotels and rentals had a more even demand growth rate of 12%. 

This is not surprising as urban areas had a relatively high supply of traditional hotel rooms and stringent short-term rental (STR) regulations, with cities like New York, Los Angeles implementing strict rules. 

At Skift Global Forum held in September, Airbnb CEO Brian Chesky made a remark on this addressed to the hotel lobby. 

“I think that the hotel lobby was absolutely at the table (on deciding on NYC’s short-term rental law). What I’ll just say is: I never felt like for Airbnb to win, hotels had to lose,” Chesky said. “The evidence of that is Airbnb — we had approximately 400 million guest arrivals last year, and yet last year, hotels had profits and revenue significantly higher than before we started. And the reason why is maybe three reasons. Number one, around half of our nights booked for stays longer than a week. Hotels don’t really serve that need of longer than a week that well.”

Location plays a vital role in shaping consumer preferences, but the number of bedrooms in a rental property also significantly impacts their choices, the report found. Up to May 2023, rentals with three bedrooms constituted 33% of the overall change in rental demand. 

Meanwhile, 2-bedroom rentals made up 22%, and 1-bedroom rentals comprised 14%. For larger groups, opting for a 3-bedroom vacation rental might present more favorable offers compared to booking multiple hotel rooms. 

Hotel Supply Lags

It’s not just demand, but in the real estate market, rental properties are outpacing hotel construction in terms of supply growth. Factors such as labor, land, and building material costs have caused substantial delays and raised concerns among investors, leaving several hotel projects in the planning stages. The rental sector has also encountered its share of challenges, including limited housing availability and elevated interest rates, both of which have impeded growth. Nevertheless, year-over-year supply growth for rentals consistently exceeded 15%, while hotels remained below 5% for each quarter spanning frothe beginning of 2022 to second quarter this year.

Hotel average daily rate growth (ADR) is outpacing rental average daily rate growth. In May 2023, the annual change in ADR was 7.2% for hotels, while it was 2.8% for rentals. Although the gap between the two narrowed from 2022 to 2023, hotels consistently saw a higher quarterly ADR change compared to rentals from during this period. This advancement is primarily attributed to the strong performance of hotels in the top 25 markets. 

In urban areas, hotels saw a year-over-year ADR change of 9.7%, while rentals had a change of 3.8%. Similarly, in mountains/lake resorts, hotels experienced an ADR change of 8.6%, compared to 1.3% for rentals. 

Future Projections

Even with the slowdown in these important indicators, the report predicts that a portion of demand for rentals is projected to increase, going from 14.6% in 2023 to 15.4% in 2024. Particularly for 1-bedroom and studio rentals, this share is expected to rise from 4.2% to 4.5%. 

The hotel sector will experience the consequences of ongoing growth in rental demand. For 1-bedroom/studio accommodations, it is anticipated that hotel occupancy will decrease by -2.8% in 2023 and further drop to -3.0% in 2024. Furthermore, the impact on hotel Average Daily Rate (ADR) is projected to decrease by $1.31 in both 2023 and 2024.

ToursByLocals has appointed Lisa Chen as its new CEO. The leadership change comes as co-founder and former CEO Paul Melhus steps into the role of Executive Chairman of the Board.

Chen initially joined the company in February 2023 as president and brings extensive experience from her previous executive roles at Expedia and Disney.

With 135 core employees, over and above the guides who list on the platform from across 190 countries, the Canadian-based ToursByLocals hit its 2 million customers milestone in May 2023.

Tritium Partners, investors in the company’s $33 million Series A raise just before the pandemic, said it was confident in Chen’s experience to head up the business as a two-sided marketplace.

Conceived by Mark and Jonnie Houston, in collaboration with Mitchell Hochberg of Lightstone, Level 8 is a multi-layered hospitality concept spread across 30,000 square feet of indoor and outdoor space at the Moxy & AC Hotel Downtown LA.

The new concept encompasses eight distinct maze-like destinations that offer a range of dining, drinking and entertainment experiences.

As you can see from the video above, Level 8 is very design-focused, with a number of themed rooms that have taken inspiration from global experiences, that according to a release, are all ‘held together by their link to Downtown LA’.

The Level 8 experience is told through the eyes of its fictional founder, ‘Mr. Wanderlust’, and boasts a range of experiential elements including a 40-foot harp, a speakeasy which is entered through a waterfall, a rotating carousel bar, and a space that has been modeled on a 19th-century cathedral. 

You can see the full list of spaces on offer below:

• Mr. Wanderlust: A lively piano bar and jazz lounge
• Lucky Mizu by Chef Hisae Stuck: An experience inspired by the Japanese art of cooking with water.
• Maison Kasai by Chef Joshua Gil:  A French-Teppanyaki experience.
• Qué Bárbaro by Chef Ray Garcia: A South American live fire grill.
• Golden Hour: A rooftop pool deck.
• The Brown Sheep: A food truck serving Mexican street food. 
• Mother of Pearl: An al fresco oyster and ceviche bar.
• Sinners y Santos: A bar modeled around a 19th-century cathedral.

More information on Level 8 can be found here.

There have been plenty of headlines in the past few days about a lawsuit against an Airbnb guest in Brentwood, California, who has allegedly overstayed her reservation, which ended on March 19, 2022 —without paying rent for more than a year-and-a half.

A vacation rental that was listed on Vrbo. We show this for illustrative purpose, and not for any connection to the squatter issue. Source: Vrbo

The property owner filed a lawsuit in June, seeking to evict the squatter, who has supposedly performed a somewhat similar caper previously, according to published reports.

Squatter Issue Resonates in NYC

Regardless of the details of this particular case, the issue of squatters and laws in many localities that are designed to protect tenants from abusive landlords, hit home in New York City in light of the new host registration law that became effective September 5.

The New York City host registration law seeks to enforce short-term rental regulations that have existed in the Big Apple for years, but often went unheeded. Among them, owners of one- and two-family homes that are owner-occupied don’t need to register as hosts of their vacation rentals, but the minimum stay would need to be at least 30 days.

That’s exactly when squatter laws come into play. New York State law states that people who live in a property for 30 days become legal tenants, and after that time period it can become a protracted battle to evict guests — even if they are paying nothing for the stay.

This issue is a concern for New York City homeowners, many of whom live in Brooklyn, Queens, Staten Island, and the Bronx, who are seeking to rent out their properties for short- and long-term rentals to help pay mortgages and for extra income.

“Many of our RHOAR (Restore Homeowners Autonomy & Rights) members are concerned about the risk of bringing on a tenant that ultimately doesn’t pay their rent and uses NYC’s laws to delay eviction, which has been a financially ruinous experience for many of RHOAR’s members,” spokesperson Lisa Grossman told Skift a few days before the New York City host registration law became effective.

As of a few days ago, RHOAR has conducted meetings with 15 of 52 New York City council members, looking for an amendment “to allow owner-occupied one- or two-family homes the ability to do short-term rentals,” Grossman said.

In other words, these would be rentals for a night, a weekend, a week — anything fewer than 30 nights.

Dan Driscoll, co-founder and chief operating officer of luxury vacation rental business boutiq, based in Austin, acknowledged that squatters might be a problem in some urban markets, but doesn’t see it as a major problem for the vacation rental sector.

“I am not a lawyer and not qualified to give legal advice, but from my vantage point, I think the horror stories are out there, but I think these are wild outliers and fairly isolated to urban markets with unique tenant laws,” Driscoll said.

The September 8 earthquake did not halt Morocco’s post-pandemic tourism boom. The country welcomed 960,000 international travelers in September, up 8.5% from the same month in 2019, according to the the Morocco Tourism Office’s latest data. Between January and September, international travel to Morocco rose 44% compared to the same period in 2019.

On September 8, a devastating 6.8 magnitude earthquake struck the Atlas Mountains. Multiple tour operators temporarily canceled or suspended operations in the immediate aftermath.

Telluride, Colorado, is lifting its moratorium on new short-term rental licenses and introducing a $857 annual per-bedroom regulatory fee for property owners who rent to vacationers. This move is aimed at boosting revenue for housing initiatives and alleviating housing shortages.

A recent study by Economic and Planning Systems in Telluride offered various per-bedroom regulatory fee options to help address the impacts of short-term rentals and support affordable housing. 

_{A Vrbo listing in Como, Colorado. Source: Vrbo}

One of the options included a 100% mitigation rate, charging $2,608 per short-term rental bedroom to generate $3.9 million for affordable housing, and a 20% mitigation rate, which would levy a $522 fee per bedroom, generating $778,000. The council chose a rate targeting about $1.5 million annually for affordable housing.

The Telluride council introduced three tiers of short-term rental licenses exempting residents who rent for under 29 days a year from the new per-bedroom regulatory fees, while “classic” license holders will pay the full fees.

Telluride now joins three other communities in adopting regulatory fees to fund affordable housing. Breckenridge charges $756 per bedroom. Pagosa Springs charges $500 a bedroom. 

The town is also mulling a ballot measure for 2024, seeking voter approval for an excise tax on vacation rental homes. Additionally, Colorado Governor Jared Polis is exploring legislation to categorize short-term rental properties under commercial lodging properties for tax purposes, arguing that they should be taxed at commercial rates rather than residential property tax rates.

A Swedish advertising firm has created a ‘skin-friendly travel agency’ to combat the rising number of skin cancer cases in Sweden. 

The ‘Shadecation’ campaign, created by Wenderfalck on behalf of Sweden’s largest pharmacy, Apotek Hjärtat, aims to inspire Swedes to adopt healthier sun habits and challenge the way they approach their time in the sun. 

Originally featured on Ads of the World, the campaign video highlights that cases of skin cancer are up 100% over the last 20 years in Sweden – making the country the third most affected globally – which prompted the team to ‘inspire Swedes to spend their summer holiday in the shade and out of the sun.’

The cornerstone of the campaign is the ‘world’s most skin-friendly travel agency’, which showcases Sweden’s shadiest destinations. The campaign also features a number of experiential activations, including transforming Apotek Hjärtat pharmacies into travel agencies and an outdoor media campaign. 

You can take a look at the campaign website here (with a little help from Google Translate) and view the original campaign video on Ads of the World here.

Israel’s tourism ministry is working to assist travelers seeking to depart the country amid its ongoing war with Hamas. The country is in a state of emergency.

Travelers can contact Israel’s Home Front Command on WhatsApp or SMS on +972 52 910 4104, said the Israel Ministry of Tourism. They can also receive informational assistance from the ministry’s “virtual office” via WhatsApp or email. 

Many airlines have suspended flights. Ben Gurion International Airport remains open and many flights are still departing Israel, the ministry said.

International traveler spending on travel to, and tourism-related activities within, the U.S. totaled $19 billion in August 2023, its highest level since the pandemic hit in 2020, according to the National Travel and Tourism Office’s latest data. August international traveler spending, however, was still below its 2019 pre-pandemic total of $19.6 billion.

International traveler spending on strictly goods and services like recreation, lodging and foot totaled $10.6 billion in August, down from $11.5 billion for the same month in 2019.

Between January and August, total international traveler spending amounted to over $137.7 billion on travel and tourism-related goods and services, up more than 33% from the same period in 2022. That translated into nearly $567 million spending per day on average.

In August, Americans traveling abroad spent over $17.2 billion, up from $14.9 billion in August 2019.

Attraction World Group (AWG) has been acquired by Montana World Investments, a newly founded international investment group, in a deal facilitated by alternative asset management firm Highmore Group.

The terms of the deal were not disclosed, and it is said to allow the UK-based tours and activities distribution and booking platform to expand internationally into industries like “loyalty programs, online travel agents (OTAs), airlines, rail, and transportation.”

The capital will be used to “fuel growth in new markets, invest in advanced technologies, and make strategic acquisitions in line with AWG’s vision,” according to Olly Nicholls, AWG’s Group CEO.

The deal also marks the exit of previous AWG shareholders, Ten Oceans.