Vacation Rental Industry Trends:
Summer 2023
With a shrinking gap between supply and demand growth, owners can get ahead with strategic revenue-driving moves.
There’s a lot of talk these days about vacation rental industry trends, with many wondering whether the continuous outpacing of supply growth to demand growth means the Airbnb market is going bust.
The great news: it’s not. But the market is normalizing, and it’s unlikely owners are seeing the same performance from the highs of 2021 and 2022. This is largely because the space is still rising in popularity for both guests and investment-minded property owners, making it more competitive than ever.
That means it’s time to level up in order to win bookings. And it doesn’t happen only by offering competitive rates. Owners who are performing best are the ones effectively implementing a range of optimization strategies using advanced technology and data — right alongside offering unique hospitality touches and amenities. These owners know guests won’t accept anything less than a stand-out experience, and they’re stepping up to ultimately help themselves earn more revenue.
But what did summer’s vacation rental industry trends show us specifically? And how can owners take that data to prepare for fall? Let’s dive in.
Your Seasonal Snapshot
Here’s a performance overview for the summer 2023 season:
Current Market Supply
(available listings)
Summer Market Demand
(total nights booked)
Evolve's Total Summer Revenue
per Property
*Get more details on how and why we evaluate market data here.
As has been the case for the last year, market supply and demand are both still growing — and this summer shows continued imbalance between the two, with supply expanding at a faster clip than demand. This gap is the main culprit for why total revenue per property is down year over year (YOY).
Economic strain is also lightening. Inflation dropped as low as 3% this summer — down from 6% in January and a whopping 9% in summer 2022 — and travel, in many regards, costs less. Domestic airfares dropped 13% from August 2022, and car rental rates went down 7% from peak inflation times last year.
Together, this means owners simply can’t charge the same rates they may have previously. They have to think outside the box, leveraging a variety of tactics to win bookings over local competitors. This is especially true moving into fall, since seasonality can heavily influence performance.
While that does put more pressure on owners, great reward can come from the effort. When comparing to 2019 data — an important evaluation given how much COVID-19 changed travel trends — it’s clear revenue growth is still improving at the per-property level.
This helps validate why owners can and should pursue the many benefits that come with vacation rental investment.
Supply & Demand
As reported in spring’s vacation rental industry trends, since August 2022 there has been YoY supply growth that continues to hover in the low 20% range each month. In May 2023, this peaked at 24% — the highest it’d been since the climb began last summer.
But in June, supply growth started to slow. July and August brought the lowest growth rates in about a year, with July seeing a 160 basis point increase compared to July 2022’s YoY growth rate, and August seeing a 270 basis point decrease in comparison to the same measure. This makes one thing more clear: the staggering supply growth of the last year is beginning to lose its momentum.
Demand growth, on the other hand, continues to progress. July brought in nearly 9 million check-in nights, a monthly all-time high for the vacation rental industry and an 88% increase from July 2019.
This change in pace means that, as noted in spring, the supply and demand growth gap is shrinking. When supply started to really outgrow demand in summer 2022, the difference between the two was quite high — creating a 17% gap by August. As things began to level out in summer 2023, that gap shrank to the lowest it’s been since May 2022, narrowing to just 6% in July 2023.
This could be an indicator that the industry as a whole is achieving more balance. On the supply side, the growing market continues to prove to investors there’s great promise in this space. But with a more competitive landscape and so many new players, some may pause at the thought of getting started. This could be helping to slow the rapid growth rates seen over the last year.
On the demand side, well, it’s no secret that many travelers are a fan of staying in vacation rentals — especially unique ones — and many have made it their go-to accommodation option when booking getaways. The rise of flexible work also gives people more room to travel in a way they may not have been able to before, helping to drive record levels of demand month after month.
That said, the supply and demand growth gap still exists. So we’re currently in a traveler’s market, making it harder to win a booking than it may have been in years prior.
How Owners Can Pivot in Today’s Market
With shoulder season on the horizon for many, it’s that much more important to maximize earnings as demand takes a seasonal dip. Let’s take a look at the action items our experts recommend to boost bookings and revenue.
1. Drive more bookings by following the changing booking window trends.
Spring’s industry trends showed us that, thanks to spring break travel and the softening of domestic airfare costs, many guests were booking within 14 days of arrival. This became a much bigger trend in summer, with those booking within two weeks of travel seeing a 5% increase since Spring — and a 22% jump YoY.
Summer also saw a change around the volume of travelers planning ahead. In spring, even with the increased interest in last-minute trips, the majority were still booking 60+ days out. But for summer, that dropped about -8% YoY.
Why so much interest in last-minute trips? It ties back to that supply and demand growth gap. When there’s an abundance of supply in a traveler’s market, theoretically consumers may be more interested in waiting until the last-minute to book. They could be banking on the idea that inventory is still available, and ultimately decide to initiate a staring contest to see if prices will drop as travel dates get closer.
But just because guests invite owners to play doesn’t mean they have to blink first. When Evolve anticipates there’s going to be an influx of last-minute bookings, that gets balanced against how much supply there actually is in the area. It’s then about strategically using regional insights in order to not sell out too quickly, and instead know exactly when to lower rates just enough to stay competitive and entice guests into a booking.
That happened this summer, when Evolve positioned rates to take advantage of the different time stamps surrounding peak summer demand. The result: bookings were locked in at daily rates that were, on average, nearly 10% higher than the market.
This allowed us to maximize owners’ earnings throughout summer, resulting in nearly 5% more base revenue per property than the market.
2. Increase immediate and long-term profit potential by investing in high-value amenities.
With vacation rental competition growing more and more, owners need to elevate their offerings to convince guests to book their property and provide a memorable experience that encourages five-star reviews. This ultimately puts the owner in a profit-driving flywheel, and opens up the flexibility to potentially charge higher rates as they uplevel to a different set of competitors.
When determining which amenities are worth the effort (and cash investment), our research shows those with properties anywhere in the U.S. can’t go wrong with a decked-out backyard, and would do well to have a hot tub, fire pit, or even an indoor fireplace. It also helps to cater to a variety of travelers. So making your home pet-friendly, suited for remote work, or ready to host families can all help drive up rental value.
From there, owners should keep in mind what guests look for when booking a stay in their property’s region (like outdoor gear in the South). It can also be useful to consider property type — those with a beach house, for example, can increase their revenue potential if they provide convenient beach access (even if that’s bike cruisers guests can use to zip to the sand), or use of a private or community pool.
To take it one step further, owners can also conduct property comparisons. Our experts recommend evaluating homes in the area with great review scores, or those showing up at the top of search results on the best booking sites to gain a better understanding of what competitors are offering — informing your action plan of amenities to implement that will help make sure your home stands above theirs.
Evolve does all of this for owners who work with us, and can connect interested investors to our short-term rental design & furnishing partners who help owners increase nightly revenue by 22% on average.
3. Earn more bookings by beating your competitors’ offered rates.
When it’s your region’s peak season, it’s easier to charge higher daily rates if the demand is there and guests are looking to book what you offer. But as demand fluctuates, pricing too high — especially in a traveler’s market like this one — could be detrimental to your bottom line.
And while some may think lowering daily rates hurts a property’s performance, with the right pricing strategy, it can actually do the exact opposite. Competitive daily rates can help open up the visibility of your home to browsing guests. Coupled with the right amenities and policies, it could be the recipe for your rental to make money on dates that may otherwise see little-to-no return on investment (ROI).
Take these two properties in Broken Bow, OK. In the shoulder season (right around March), you start to see dynamic pricing at play as demand starts to pick up and the number of nights stayed slowly rises. Both listings see roughly the same amount of activity early on. But as the season progresses, the property with more competitive pricing (Listing #1) starts to see more nights stayed. That incites more dynamic pricing, as the property is seeing stronger performance — whereas the one stagnating (Listing #2) more or less flatlines due to low performance activity. This results in significantly more action for Listing #1 through the shoulder season, and by the time we reach peak season (June-August), there’s no contest between the two: Listing #1 not only has more nights stayed, but it’s supported by more dynamic pricing strategies because it’s not priced out of the market.
In the end, Listing #1 not only saw 50% more nights stayed — it also earned 31% more base revenue, demonstrating how effective it can be to lower your rates just enough to beat other offers in the area and nab the revenue for yourself.
4. Drum up guest interest with flexible policies.
While daily rates are an important lever to pull when optimizing your property’s performance, it’s not the only one that should be utilized. Another heavy hitter: flexible policies. Given the increased interest in last-minute travel lately, it can actually play an even bigger role in how much revenue you earn, as limiting the number of policies and restrictions on your listing can open up the days available to be booked. Consider the following:
Cancellation policy: Our data has shown being flexible here can lead to a 53% income jump because it gives guests enough confidence to book. (75% of Vrbo travelers, for example, say they’re more likely to book a rental with a flexible cancellation policy.) It also opens up the visibility of your home, as many guests search for properties utilizing “free cancellations” filters. So if you don’t offer that policy, your home won’t appear for those potential guests.
Length of stay policy: Adjusting your minimum booking window in order to accommodate next-day check-ins — guests who want to book a home today, then show up tomorrow — can help fill calendar gaps and keep the revenue rolling. Case in point: data shows owners who did not allow it (requiring longer notice periods instead) saw a –31% drop in nights booked.
Pet policy: Research shows over 50% of guests want to bring their furry friends on vacation, but not all rentals are open to four-legged companions. So if your home is pet-friendly — and offers unique amenities for tail-wagging travelers — then you have a chance to capture bookings from a less-saturated market. Our experts recommend doing a quick search to see how many pet-approved properties are in your area to get an idea of the earnings opportunity available in your local market. Then, consider adjusting your pet policy to attract an animal-loving crowd.
Turn-day restrictions: Lowering restrictions here encourages cleaners to get into your property as quickly as possible once a guest checks out, so they can go through their checklists and prepare for the next guest. The most optimal selection an owner can make here is same-day turns, which allows for one guest to check out in the morning, the property gets serviced, then another guest checks in later that day. And our data shows not doing this can really hinder revenue opportunity: when owners required at least one turn-day without check-ins, it reduced revenue by -22% and nights booked by -36% (with those numbers dropping the more this policy lengthens). Of course, your policy setting needs to remain balanced with your service partner’s ability to effectively turn over the property, so you don’t put yourself at risk of a bad review.
U.S. Regional Trends
While vacation rental industry trends can be evaluated at a national level, it’s also important to be tuned into what’s happening across regions. This summer, some saw strong revenue growth from May through July, but experienced shortfalls compared to 2019 as travelers began thinking about the next season of travel. Others saw strong performance throughout the season — particularly in areas where the gap in supply and demand growth is even smaller. This opened up opportunity to boost revenue in those markets, paving the way for what could be a promising winter season.
Now, let’s take a closer look at the industry trends influencing each region’s performance.
Northeast Trends
Your home’s in the Northeast (or may perform like a Northeast home) if: Seasonal demand is focused heavily on water activities where guests are likely catching trout from the surrounding wooded lakes and streams, or hooking a shark in the rougher waters of the open ocean.
Overall, properties in the Northeast had a successful peak season, with July being the highest occupancy month. Coastal beach and waterfront markets (think Brigantine, NJ or Cape Cod, MA) drove the majority of performance, as many guests came from neighboring states to enjoy sunny days in the sand or waves.
Those with beach houses or lake rentals could make the most of that summer demand. But competitive pricing and flexible policies — particularly length of stay — helped boost all owners’ chances of success, as less restrictive minimum booking windows open up calendar options for those interested in last-minute travel or shorter stays.
As the days get shorter and weekend trips replace week-long summer vacations, owners should focus on making check-in as easy as possible, especially for after-dark arrivals. A keyless entry system and outdoor lighting can be most impactful, so now’s the time to make sure all is set up and working properly. Hot tubs also draw in guests who still want to relax outdoors as the temps fall. With fewer guests visiting after leaf peeping season, now could be an ideal time to make that investment before a busy winter season hits.
Locations seeing strong success:
Locations trailing behind:
- Northwest Michigan, MI
- Catskills, NY
- Finger Lakes, NY
Southeast Trends
Your home’s in the Southeast (or may perform like a Southeast home) if: Guests book most often to enjoy seasonal outdoor comforts connected with sweeping mountain views, crashing coastline waves, or serene placid lakes.
Similar to the Northeast, this region saw high demand in coastal beach markets, and for the most part, kept pace with last year’s performance through its peak season (resulting in solid growth compared to 2019). More mountainous markets in the region struggled — like those in the Blue Ridge Mountains of North Carolina — as these areas are starting to see less demand in summer and more peak performance in autumn, thanks to gorgeous fall foliage and an abundance of outdoor winter activities.
To boost performance across markets in this region, more competitive pricing — predominantly on weekdays — helps encourage travelers to stay outside of the busy weekends. Reducing length of stay restrictions also allows for shorter stays (think two nights instead of three or four) for those who don’t have the flexibility to work remotely or who simply want a quick getaway.
Looking ahead, guests visiting the Southeast really love properties that make it easy for them to spend time in nature, whether that’s having great views of the mountains and changing leaves, proximity to water or hiking trails, or recommendations for al fresco dining in a welcome book. They also appreciate rentals with plenty of comfy seating for a crowd — so don’t neglect any furniture upgrades or additions that can accommodate a bigger crew — along with a clean hot tub to soak stress away.
Locations seeing strong success:
- Ocean City, MD
- Southern Coast, NC
- Myrtle Beach, SC
Locations trailing behind:
- Wintergreen Resort, VA
- Blue Ridge Mountains, NC
- Asheville, NC
Central Trends
Your home’s in the Central U.S. (or may perform like a home in the Central U.S.) if: Guests crave a long drive with the windows down to get away from the day to day, stopping at a cozy cabin, lakefront home, or beachfront condo for a nature-driven experience.
Of all the regions, those in the Central U.S. saw the lowest amount of growth compared to 2019 performance over summer. This is largely due to less interest in weekday stays than what’s typically expected, so lower rates were needed in order to encourage bookings that extended beyond the weekends.
That said, summer tends to be the strongest season for this region, and properties with easy water access — be it a shoreline or pool — did particularly well since it helped guests cool down in the heat.
Weekend travel also tends to carry over into fall here, so implementing dynamic pricing strategies and flexible policies throughout these months is critical to make the most of the revenue opportunity available at this time. Owners should also keep fees top of mind — with many guests booking shorter stays, sky-high cleaning fees or lengthy cleaning requests for guests can incite negative reviews. Instead, our experts recommend evaluating other properties in the area to gut-check what a reasonable fee in that timeframe might look like, and working with your cleaning team to make sure the property is frequently serviced and well-stocked.
Locations seeing strong success:
Locations trailing behind:
Northwest Trends
Your home’s in the Northwest (or may perform like a Northwest home) if: Year-round adventure is available for guests to tap into extreme activities like skiing and ice climbing in winter, plus hiking and biking in summer.
Markets in the Northwest performed exceptionally well this summer in comparison to 2019, though bookings were locked in at lower rates compared to this time last year. Weekends had the most demand in the peak months of June, July, and August — especially in areas like the Puget Sound in Washington and Yellowstone in Wyoming — allowing for higher rates before lowering weekday prices in an effort to boost occupancy Monday through Thursday.
Unfortunately, major heat waves this summer had an especially large impact on performance in Southern Utah. These areas typically draw big national park crowds near Bryce Canyon, Moab, and St. George, but due to the extreme weather, demand dipped lower than expected. In these scenarios, lower length of stay restrictions and discounted pricing can help bring active adventurers back to a booking.
Going forward, fall means cabin weather for guests, so those property types are likely to see the most demand. But if owners in the area don’t have a cabin, they can lean into the cozy, hygge vibes that cabins often present. Offering amenities that bring the outdoors in can help — think fireplaces and big windows for natural light — as can smaller touches like an array of tea and coffee flavors, warm blankets, and snug seating.
Locations seeing strong success:
- Puget Sound, WA
- Yellowstone, WY
- Teton Valley Area, WY
Locations trailing behind:
Southwest Trends
Your home’s in the Southwest (or may perform like a Southwest home) if: Year-round warmth gives guests the chance to unwind with a cup of coffee or glass of wine. And the views — there’s always great beach, vineyard, mountain, or desert views to soak in.
Many areas of the Southwest saw strong growth compared to 2019 in May and June, but as summer progressed — and the temperatures climbed — areas like Phoenix and Palm Springs started to suffer. This is typical in many instances due to traditionally weaker summer demand, but that drop was felt even more this year when coupled with the extreme weather.
The good news: while the weather hurt some areas, in others it helped because they offered guests who live in those hot locations a respite from the scorching temps. Many of these places are also within driving distance — think Ruidoso for many Texans — so last-minute bookings are pretty par for the course, and revenue optimization strategies can be adjusted to accommodate that trend (aka making sure not to sell out too early out of fear that the demand won’t come).
As temps become more tolerable in this region, guests are most interested in outdoor amenities. Pools, hot tubs, and plenty of lounge space in the backyard all help encourage bookings — so owners should perform maintenance checks and make sure these amenities get regular cleaning to help fuel a positive guest experience.
Locations seeing strong success:
- Ruidoso, NM
- Yosemite, CA
- San Diego, CA
Locations trailing behind:
- Phoenix, AZ
- Lake Arrowhead, CA
- San Francisco, CA
South Trends
Your home’s in the South (or may perform like a home in the South) if: There’s heat and humidity, all day every day. Guests escape here to feel like they’re enjoying the tropics.
Summer serves as a secondary peak season for many of the South’s coastal markets, so it’s no surprise to see strong revenue growth from May through August compared to 2019 performance. Holiday weekends were particularly strong contributors to this success, as owners could take advantage of higher demand around Memorial Day and the Fourth of July.
That said, those record-setting temps did have an influence on overall demand in this region, and many properties in Florida’s East and South coasts — as well as theme park destinations — saw less guest interest this year. Instead, many opted for lake and shore destinations where temps were a bit cooler and water was easily accessible for a cool-down swim. More mountainous destinations saw lower demand, too, so owners in these areas needed to be more competitive with rates and policies if they wanted to capture the demand that was available.
Though guest interest takes a seasonal dip in fall, the South tends to have a big peak during snowbird season. With that in mind, owners should make the most of this downtime to prep their property for the next big surge of travelers. Amenities that accommodate family gatherings — like a clean kitchen space with updated appliances, functioning pools and hot tubs, and plenty of propane for grilling — tend to nab rave reviews from visitors.
Locations seeing strong success:
Locations trailing behind:
| When evaluating vacation rental market data, Evolve looks at a subset of the U.S. market to compare against properties that are most similar to those Evolve manages. This is in an effort to remove any data bias and avoid misrepresentation of trend and performance comparisons that could be created by comparing properties that are not “like-for-like” with Evolve’s. “The Market” includes those in counties Evolve properties are located in. Within each county, the properties must be of similar types and bedroom counts, have similar minimum night stay policies, and have the entire home available to rent privately. Vacation rentals with dissimilar features — like those only offering shared rooms or any with 30-night minimum stay requirements — are not included in this data set. |