Short-Term Rentals Surge in Suburbs, Hotels Hold Urban Ground

The landscape of short-term rentals and hotels is evolving, with each sector finding its niche in the market. As platforms like Airbnb and VRBO gain popularity, short-term rentals are experiencing growth, particularly in areas where hotels have traditionally underperformed. This trend was highlighted by Jamie Lane, Chief Economist and Senior Vice President of Analytics at AirDNA, during the 2025 Hotel Data Conference.

Growth in Short-term Rentals

Short-term rentals are increasingly catering to consumer preferences for larger properties that can accommodate groups or families, often featuring amenities such as pools or beach access. According to Lane, the trend is shifting away from commoditized, one-bedroom condos in urban areas towards larger, five-bedroom units offering unique experiences.

The growth of short-term rentals is more pronounced in suburban and rural areas, as well as in traditional vacation destinations such as beaches and mountains. Despite the faster growth rate of short-term rentals compared to hotels, Lane notes that the growth is nuanced, offering some hope for hotels.

Market Dynamics: Urban vs. Suburban

In the top 50 U.S. markets, hotel and rental supply and demand levels in 2025 are similar to those in 2019. However, a closer look at urban and suburban activities reveals a bifurcation in short-term rental performance. Urban demand for rentals is 16% below 2019 levels, while suburban demand is 43% above 2019 levels.

AirDNA’s data shows a 39% decline in private room listings, now representing only 16% of urban listings. One-bedroom rentals have stagnated, while larger homes have increased their share of listings. In urban areas, larger rental properties have seen stronger year-over-year demand growth.

Regulatory measures have impacted short-term rental offerings in some urban areas, with New York City being a notable market significantly affected by laws targeting short-term rentals. Meanwhile, suburban rental listings have more than doubled since 2019, with homes featuring three or more bedrooms making up half of the listings in these areas.

Deciding Factors: Price and Location

Travelers often consider price and location when choosing between hotels and short-term rentals. Short-term rentals have a pricing advantage in urban markets, offering a 25% discount compared to hotels. However, in suburban markets, rentals are 5% more expensive than hotels.

Guest reviews also play a role in decision-making. Smaller short-term rental operations tend to receive better reviews compared to larger ones. When comparing larger rental operators to hotels, hotels excel in cleanliness, communication, and value. In contrast, short-term rentals tend to perform better in terms of check-in processes, accuracy, and location.

Implications for Hoteliers

The data underscores the importance for hoteliers to focus on areas where they can improve guest satisfaction. While the location of a hotel cannot be changed, enhancing the value and perceived value for guests is crucial. Claudia Alvarado Cruz, Senior Analytics Manager of Financial Performance at STR, emphasizes the need for hoteliers to take note of these trends and adapt accordingly.

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