Short-term rentals: an ever-evolving sector. In the past two years alone, we’ve witnessed the industry reach all-time highs in demand, revenue, and supply. On top of that, tech adoption (and innovation) continues to advance. This is why it’s important for property managers and business owners to keep on top of current and upcoming trends.
So, what does 2023 have in store for short-term rentals? Many are concerned about the year ahead with the current economic challenges, but the short-term rental scene remains optimistic. Consumer interest in the affordable option of short-term rentals seems to be driving demand and supply.
However, changes are inevitable. Growth in the sector is still predicted but at a slower rate than in previous years. We expect to see the industry maturing as increased competition pushes property managers to differentiate themselves while the mass of tech solutions on the market consolidate to combat economic headwinds.
Here’s our take on what we can expect in 2023 from short-term rentals…
6 short-term rental trends that will shape 2023
Adoption of tech: Our integration partner Hostfully recently released its ‘2022 Hospitality trends in the vacation rental industry’ report. This research highlights how, over the past 12 months, short-term rental property managers have faced a rapid increase in competitors joining the market. 41% noticed ‘slightly more’ and a further 39% noted ‘a lot more’ competition. This trend was particularly strong near major attractions and in urban, rural, ski, and beach locations.
What does this mean for 2023? We expect to see even more reliance on tech and an increase in adoption as property managers seek solutions to differentiate themselves from their competitors. These smart home property solutions will likely include automation and revenue management software.
Regulatory pressures: The short-term rental industry faces increasing regulatory pressures, including those stemming from occupancy issues and noise disruption. In 2023, more tech solutions will become available to address these challenges. For example, noise monitoring solutions alert property managers of issues before they can escalate into complaints or fines and threaten your ability to rent in the community.
Continued professionalization: Increased competition for property managers and tech suppliers will keep driving the industry’s maturation as businesses professionalize in an effort to stand out from the crowd. Property managers might adopt technology solutions for the first time or decide to refine their existing tech stacks. Streamlining operations, such as access and temperature control, or noise monitoring, is a route to sustainable growth and profitability.
Economic headwinds: The challenges presented to the industry by economic headwinds will be faced head-on. Property managers will increasingly rely on technology solutions to combat increased costs and ultimately improve their bottom line. Solutions such as smart thermostats, HVAC and water sensors, and access control systems provide ways for businesses to automate menial tasks while reducing damage risks to save on operational and unforeseen costs.
Shifting seasons: Seasonality trends have shifted and evolved over recent years – so much so that Forbes declared that peak season is now year-round. While increased demand and extended seasons may give this illusion, there are still periods in which your short-term rental business will be busier, as well as slower.
These slower periods present an opportunity for property managers to adopt technology while lessening the impact on guests. They also give property managers time to integrate and learn their way around new solutions before fully implementing them. Guests will be looking for tech-equipped properties, so making these changes now could set you up for a better peak season.
Consolidation & M&As: As the saturated tech market faces upcoming economic pressures, we’ll likely see increased consolidation and more mergers and acquisitions (M&As) in the industry. For property managers, a sharper focus on which companies they choose to invest in to curate their tech stack is paramount. When exploring tech solution options, consider the company’s financial stability and longevity – we could see some smaller tech businesses falter if conditions become tougher.
2023 may look different for short-term rentals, but the outlook remains positive. While previous years have resulted in major growth in rental suppliers and tech vendors, this year, due to economic challenges and a saturated industry, we expect to see refinement and professionalization in the sector.
Want to dive deeper into these trends? Check out this article on combating economic headwinds written by our General Manager, Nate Wysk.