The State of the Vacation and Short-term Rental Market In 2025

The short-term rental industry has boomed in recent years, with rapidly expanding inventory a clear indicator of the market’s strong health.

As we analyze the latest data, it becomes clear that the short-term rental (STR) market is continuing its upward trajectory. However, new supply trends highlight emerging hotspots and shifts in market dynamics.

In this blog, we’re turning to our data to shed light on the latest short-term rental supply, pricing and demand trends, the supply evolution in key markets and the top emerging destinations. Strap in as we take a deep-dive into the current state of the vacation home and short-term rental market in 2025.

What does the short-term rental market look like in 2025?

Over the past few years, the short-term rental industry has experienced a significant uptick, with the pandemic being an important catalyst for explosive growth. What current trends are we observing globally, in terms of short-term rental supply, demand and – consequently – pricing?

Let’s take a look at the shifts that happened throughout 2024 and where the market is at now compared to one year ago.

The supply of short-term rental properties continued to expand rapidly across 2024, particularly in Africa, Asia, Latin America and Europe.

From December 2023 to December 2024, the global short-term rental market saw a 9% increase in listings and total guest capacity. Supply increased in all markets YoY, although growth was close to flat in North America and the Middle East.

Asia and Africa experienced the highest supply growth, with guest capacity rising 25% YoY in Africa and 22% in Asia, adding over 350,000 guest spaces in Asia alone. LATAM and Europe both saw guest capacity increase by 9% YoY. Capacity growth was notably weaker in Oceania (5%), North America (3%) and the Middle East (1%).

There are now more than 4.34 million listed properties in Europe. Even as more restrictive legislation is taking effect to protect locals’ quality of living from overtourism, sustained demand growth suggests that the impact on short-term rental expansion may be limited.

During the first half of 2024, Average Daily Rates (ADRs) for short-term rentals increased year over year in all regions. However, the second half of the year saw more divergence between regions and some big shifts, reflecting a more challenging global hospitality market.

While rates were rising YoY in H1 across Asia, the Middle East, and Oceania, the second half of the year saw that growth come to a halt as ADRs declined by -0.5%, -3.9%, and -1.4%, respectively.

The Middle East experienced a dramatic turnaround in terms of pricing in H2, with a swing in ADR growth of approximately 21 percentage points compared to H1 2024.

In contrast, Europe and North America – the two largest regions by inventory supply – saw continued growth similar to the first half of the year, with rates up 18.8% and 13.9%.

Latin America also went from strength to strength, with ADR up 15.9% year-over-year in the second half of 2024. ADR in Africa increased by 10.2%, a much better result than the mere 1% YoY growth in H1.

It’s evident that Europe’s STR market will maintain its dominant position, exhibiting strong ADR growth despite a significant supply surge.

Occupancy rates for short-term rentals in H2 2024 were strongest in Oceania at 59%, followed by Europe and North America at 56% and 51%, respectively.

While below typical hotel occupancy of around 60%, these rates drove ADR increases in Europe and North America throughout the year. This highlights strong consumer demand for short-term rentals in mature markets.

In contrast, demand underperformed in some regions, leading to pricing pressure and weaker ADR, particularly in H2 2024. Asia and Latin America experienced average occupancy levels of 42%. In Africa, average occupancy was at 34%. The lowest occupancy was found in the Middle East, at 28%, which explains the sudden shift in pricing power from H1 to H2 2024.

What’s different from past short-term rental trends?

Short-term rental demand has demonstrated a steady upward trajectory in recent years. In the midst of the COVID-19 pandemic, travelers felt more at ease staying at fully equipped properties than at hotels where social distancing could be challenging.

This trend continued after restrictions were lifted, in part driven by the popularity of user-friendly online platforms like Airbnb and Vrbo that offer a secure rental booking experience.

The global shift toward more personalized and flexible travel experiences has also amplified the appeal of short-term rentals. Moreover, the rise of remote work has further fueled the increasing demand, with properties catering to the needs of digital nomads that want to combine business and leisure in one trip.

These factors all contributed to the rapid expansion of the short-term rental market in the immediate aftermath of the pandemic and beyond.

Compared to 2023, short-term rental inventory growth has settled into a more moderate trajectory. This deceleration can be attributed to a multitude of factors, including saturation and increased regulatory scrutiny. The slowdown suggests that the market may be reaching a point of equilibrium.

When comparing 2024 short-term rental trends to those of 2023 in the largest global markets, we can draw a couple of important conclusions.

• Asia
  In 2024, Asia Pacific’s STR market demonstrated strong growth and early signs of market maturity, attracting more travelers. Looking ahead, the market is expected to expand even more, driven by rising tourism and economic factors, with India seeing significant potential in vacation rentals.

• North America
  For North America, 2024 marked a turning point as demand finally outpaced supply growth after years of decline. Occupancy rates stabilized and pricing performance improved as a result. In 2025, the industry is expected to return to pre-pandemic levels, with major cities experiencing notable gains and demand continuing to rise.

• Latin America
  Latin America’s short-term rental market grew steadily, with increased listings and strong demand. The region saw a major surge in available properties in 2024. While growth is expected to continue, it will likely be more gradual in the coming years, with a steady rise in users and market value.

• Europe
  Last but certainly not least, Europe has become the largest short-term rental market globally, benefiting from a continued supply expansion and steady bookings. Looking ahead, market growth is expected to persist, but investors will need to focus on high-performing locations and consider second-tier cities for better opportunities.

In 2024, a steady balance emerged as supply growth slowed and demand recovered, giving short-term rental operators more control over pricing.

As supply growth steadies and rising spending power in key markets fuels increased tourism demand, 2025 looks promising for STR property owners and investors. Lighthouse’s analysis of future market trends indicates positive growth across all regions in the first half of 2025.

Read on as we explore which global destinations saw the biggest increases in short-term rental inventory from January to December 2024.

Short-term rental market supply

As the leading commercial platform for hospitality, Lighthouse distinguishes itself with access to the industry’s most comprehensive and reliable sets of historical, real-time, and forward-looking data. These valuable insights empower professionals worldwide to make informed decisions, navigate the complexities of the market and stay ahead of the curve.

The top 25 travel destinations

Supply growth in the largest inventory markets remains robust, with 92% of the top destinations experiencing positive growth over the past year Only Kissimmee, Florida (-4%), New York City (-2%) and Mexico City (-1%) saw slight declines.

The overall inventory growth across the top 25 destinations averaged +20% from January to December 2024, a steady continuation of the worldwide expansion trend we experienced the year prior.

The median property count across the largest short-term rental markets at the end of 2024 sits at 16,900, representing strong growth across the sector. In total, these markets amount to 580,000 properties.

Buenos Aires and Riyadh are by far the fastest growing short-term rental destinations, showing remarkable supply surges in 2024.

With an extraordinary 88% increase in inventory, the Argentinian capital Buenos Aires saw the fastest inventory growth. A 69% surge in Riyadh indicates Saudi Arabia’s growing appeal.

Marrakesh saw a lower but nonetheless impressive 27% increase and Dubai experienced an annual growth rate of 26%, both continuing their upward trend at a steady pace.

The European rental scene remains strong too, despite increasing regulatory friction. The most significant surges are seen in Rome (+23%) and Athens (+22%).

Other European cities such as Paris, London, Milano and Madrid are also growing in supply, but significantly slower than in the year before. Budapest (+11%), Napoli (+10%) and Cannes (+5%) are new entrants in the top 25.

In 7th and 8th place, Nairobi and Kuala Lumpur continue to demonstrate strong supply expansion with growth rates of +19% and +18% respectively. It’s worth noting that these rates have decelerated since their remarkable growth of 28% and 54% recorded in 2023, indicating these markets have started to mature.

Following closely in 9th place is Rio de Janeiro which recorded a +17% growth, signaling the city’s emergence as a top destination in 2025.

In 10th place, Cape Town continues to show healthy growth (+13%). Bogota (+11%) and Medellin (+9%) have newly entered the top 25, suggesting Colombia’s growing appeal as a travel destination.

The chart below gives an overview of the short-term rental market supply growth in the 25 highest inventory destinations of 2024.

In terms of entire home property count, London, Paris, Dubai and Rome continue to dominate the STR market throughout 2024.

These four destinations have remained the monoliths for short-term rental inventory, and so it’s worth keeping in mind the relative size and maturity of each of these vacation rental markets when weighing the outcomes.

Paris tops the list with 64,300 properties – a 13% increase from January to December 2024. London follows with 55,300 properties, marking a 10% rise over the same period.

Dubai has also experienced significant growth, now ranking third with 40,800 properties (+25.81%) and solidifying its place as a major global market. Meanwhile, Rome expanded to 37K properties, an impressive 23% jump. Last in the top 5 emerging destinations is Buenos Aires at 28,400 properties.

In December 2024, the median property count across the 25 largest short-term rental markets sat at 18,800 and we measured an average property count of 24,100.

In total, these markets amount to 601,400, reflecting +20% growth over the course of the year. One year prior, in January 2024, the top 25 markets collectively housed 523,000 properties, with an average of 20,900 and a median of 18,100.

These shifts highlight the evolving landscape of the global short-term rental market, with new destinations gaining prominence alongside historically dominant cities.

The best short-term rental investment cities

With short-term rental demand soaring and ADR as well as Revenue per Available Rental (RevPAR) expected to keep climbing, the European and North American markets offer interesting investment opportunities.

Based on Lighthouse market data from 2024 and extensive research of property acquisition costs, we identified the highest-yield destinations in Europe and the USA to help investors’ decision-making in 2025.

Top 3 short-term rental investment cities in Europe

In 2024, Europe became the largest short-term rental market in the world. Vacation rental listings have surged by 2.4 million in only two years time – a 38% increase. Despite rising legislative challenges, Europe’s positive trajectory is expected to continue in 2025, along with sustained demand growth.

While travel powerhouses like London and Paris boast strong RevPAR, high real estate costs and strict regulations make other cities more attractive for maximizing returns. These are the top three cities currently offering the best balance of revenue potential and affordability.

1. Seville, Spain

Seville offers an excellent cost-to-revenue ratio, with affordable property prices and high occupancy rates. Its rich history, cultural events, and steady tourism ensure year-round demand. While Spain has been tightening rental regulations in the past few years, Seville remains a strong performer.

2. Edinburgh, Scotland

Edinburgh ranks among the highest RevPAR cities in Europe, thanks to its year-round appeal and major events like the Festival Fringe. While Scotland requires rental licenses, Edinburgh’s occupancy rates and revenue potential outweigh the regulatory hurdles. Compared to London, it offers more affordable property prices with strong returns.

3. Novalja, Croatia

For investors seeking emerging markets, Novalja in Croatia is a standout. It boasts strong RevPAR, low cost to buy, and increasing tourist demand. Unlike a lot of heavily regulated European markets, Novalja currently enjoys a more lenient rental landscape, making it a high-potential destination for short-term rental investment.

Top 3 short-term rental investment cities in the USA

The North American short-term rental market is showing rapid supply expansion, with listings surging by 53% between 2022 and 2024. Since last year, RevPAR is also on the rise in the USA, presenting lucrative opportunities for investors.

Here are the top three cities offering the best investment potential, based on key considerations such as expected demand, revenue, property prices and regulations.

1. Ocean City, Maryland

Ocean City stands out as one of the most attractive STR markets, offering a strong RevPAR and relatively affordable property prices.

As a premier East Coast beach destination, it draws millions of tourists annually, ensuring high occupancy rates, particularly in peak summer months. Its small permanent population means a large proportion of properties are dedicated to tourism, making it an ideal choice for investors seeking steady returns with lower upfront costs.

2. Park City, Utah

A top ski destination, Park City benefits from strong year-round demand, fueled by winter sports, summer hiking, and the famous Sundance Film Festival.

Despite a higher property price range, its consistently high RevPAR and seasonal spikes in rental rates make it a profitable long-term investment. Compared to larger metropolitan areas, Park City offers a more favorable revenue-to-cost ratio, ensuring faster returns for investors.

3. Las Vegas, Nevada

Las Vegas is a tourism powerhouse with year-round demand from conventions, entertainment events, and casino visitors. Despite its lower average RevPAR compared to ski and coastal resorts, its relatively affordable property prices and high occupancy rates make it a compelling investment. Major events such as CES and global concerts drive consistent rental income, offering strong short-term gains.

OTAs: Booking.com, Airbnb and Vrbo

Travel trends are reshaping how people search for and book accommodations, with important implications for short-term rental owners. Most notably, the distinction between hotels and vacation rentals is becoming increasingly blurred, driving changes in how hosts leverage major OTAs like Airbnb, Booking.com, and Vrbo.

What does this trend mean for some of the most popular OTAs for short-term rentals and which ones will remain crucial for short-term rentals in 2025?

Airbnb remains the dominant platform for short-term rentals, with currently over 8.1 million listings, a 5.1% increase compared to 2023. And demand is by no means falling behind. The popular platform saw its bookings increase by 9.5% from 2023 to 2024, going from 448 million to 491 million.

However, significant shifts are happening in the way properties are listed on Airbnb, Booking.com, and Vrbo – the three leading short-term rental platforms. In 2023, 33% of properties were listed on multiple OTAs, with Airbnb dominating at 57% exclusive listings, while Vrbo and Booking.com had 6% and 3%, respectively.

However, new data from late 2024 reveals a shift, with only 28.8% of vacation rentals appearing on more than one OTA.

One of the most notable changes is the decline in properties listed across all three major platforms, dropping from 10% in 2023 to just 5.82% in 2024. Meanwhile, exclusive Airbnb listings have declined to 45.95%, and Vrbo-exclusive listings have dropped slightly to 3.34%.

The biggest surprise comes from Booking.com, which has seen its share of exclusive short-term rental listings rise dramatically to 13.6%.

A key factor that could be driving this growth is the higher number of short-term rentals appearing in hotel searches on Booking.com, particularly in EMEA and LATAM. This visibility is likely drawing more hosts to the platform, as they gain access to a broader audience of travelers who may not have otherwise considered vacation rentals.

More and more short-term rentals are appearing in Booking.com’s top 20 search results. This trend is especially prevalent in EMEA destinations, where entire-home properties constitute around 1/4th of the search results on the platform.Blake Reiter, Director of Hospitality Research

For property owners and operators, adopting the right distribution technology will be essential. While peak-season bookings may come easily on a single platform, leveraging multiple OTAs can help drive occupancy and revenue during off-peak periods.

Thanks to recent advancements in distribution technology, short-term rental hosts have more opportunities to optimize their strategy and maximize profitability.

Measure and map short-term rental supply in your market

As discussed above, 2024 represented a major turning point for the US short-term rental market. Due to demand rising and outpacing supply growth, operators across US destinations saw rates grow last year.

Inventory growth is expected to continue its slight deceleration in 2025. Take a look at the active listing count evolution in a couple of US cities outside of the top 25 destinations discussed earlier in this blog.

You will notice that across 2024 listing growth was relatively static. A stark contrast to the supply boom experienced from 2021 onwards. The hospitality market can change fast and the delicate equilibrium between vacation rental supply and demand shines a light on the rapidly shifting dynamics at play in this industry.

For STR owners and managers, success relies on quality, reliable market data. Without it, you’re navigating without direction and will be unable to anticipate and adapt to shifting conditions, or make confident, informed decisions.

With data as your guiding light, you can be proactive and outpace your competition, even in an unpredictable market.

Curious about data trends for your destination specifically? With Lighthouse you can draw on insights from the industry’s largest data pool, so you can better understand demand, occupancy and pricing patterns and benchmark your property against its true compset.

By leveraging a real-time overview of the complete market, you can adopt a successful data-driven strategy to maximize profits from your short-term rental(s).

With more than 19 million active short-term rentals tracked every day and forward-looking data, Lighthouse’s Data Solutions help you:

• Inform your strategic decisions

• Maximize your short-term rental revenue

• Invest and outperform competitors

Want to learn more about monitoring market supply and demand, benchmarking against competitors or discovering trends? Book a free demo below and discover how our data can fit your needs.

About Lighthouse

Lighthouse (formerly OTA Insight) is the leading commercial platform for the travel & hospitality industry. We transform complexity into confidence by providing actionable market insights, business intelligence, and pricing tools that maximize revenue growth. We continually innovate to deliver the best platform for hospitality professionals to price more effectively, measure performance more efficiently, and understand the market in new ways.

Trusted by over 65,000 hotels in 185 countries, Lighthouse is the only solution that provides real-time hotel and short-term rental data in a single platform. We strive to deliver the best possible experience with unmatched customer service. We consider our clients as true partners – their success is our success.