Ali Nichols: co-founder and co-CEO of Go away brings an innovative approach to short-term rental property investment.
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The short-term rental industry has exploded over the past two years, experiencing a peak in new supply added and rental demand in 2022. As the industry continues to grow and evolve, it is important that property owners and managers keep up to date with the latest trends and developments. Here are six short-term rental trends we should anticipate in 2023.
1. Increased regulation
In recent years, there has been increasing pressure to regulate the short-term rental (STR) industry. For example, Dallas, a traditionally business-friendly city, just implemented new regulations ban all STRs in single-family residential areas. As cities and towns grapple with the impact of short-term rentals on local communities, more rules and regulations to address issues such as housing availability, zoning and safety could arrive in 2023 .
That doesn’t mean investors and owners won’t be lucky. Increasing regulations only add another level of complexity to operations. Operators must therefore be willing to keep abreast of local politics and to work with municipalities.
2. Growth of alternative housing
Traditional hotels and motels are no longer the only option for travelers. In 2022, Airbnb organized a contest, donate 10 million dollars to hosts with the most unique properties, proving that unexpected new experiences are the future of short-term rentals.
I anticipate more alternative short-term rental options, such as tiny homes, yurts and glamping tents, will hit the market in 2023. As travelers seek different or more authentic accommodations, traditional hotels and short-term base listings may encounter more competition.
3. Increased use of technology
Technology plays an important role in the short-term rental industry. From online booking platforms and property management software to smart home technology and virtual reality, technology is making it easier for landlords and property managers to operate and market their rentals. Because technology is constantly evolving and innovating, we should expect to see new tools emerge for the short-term rental space in 2023.
4. Increased focus on sustainability
As travelers become more environmentally conscious, we can expect to see more attention to sustainability in the short-term rental industry. In Booking’s latest sustainability survey, 81% of travelers say they want to stay in sustainable accommodation. Landlords and property managers will therefore need to consider eco-friendly features and practices in their rentals to meet traveler demands. This can include installing energy-efficient fixtures and low-flow showerheads or introducing recycling programs. As travelers are likely to seek short-term rentals that align with their own sustainability values, it will also be important for property owners and managers to communicate their sustainability practices and efforts.
5. Greater competition
The short-term rental industry is becoming increasingly competitive. For example, AirDNA states that 54% of Airbnb’s short-term rental listings have been hitting the market since the beginning of 2020. While things should start to stabilize in 2023, demand will remain strong.
As more listings enter the market, it will be important for existing players to differentiate themselves with unique and compelling rental experiences. This may involve offering special amenities, such as unique interior design, on-site gyms, or access to rental vehicles; highlighting local attractions and activities; or provide exceptional customer service. To stay competitive, property owners and managers will need to continually evaluate and improve their offerings to attract and retain customers.
6. Continuous Growth
Even with a looming recession, Oxford Economics predicts housing will be one of the least affected industries. As travel continues, people will seek flexible, affordable and comfortable accommodation, making short-term rentals a popular option. As the industry grows, it will be important for property owners and managers to keep up with and adapt to changing market conditions. Following industry reports from providers like AirDNA and Rabbu is a great way to keep the pulse on the short-term rental market.
Overall, the short-term rental industry is still in its infancy, but is poised for continued growth and change in 2023 and beyond. By staying informed and adaptable, short-term rental owners and managers can ensure their rentals remain competitive and successful in this dynamic market.
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