The 5 Forces Shaping the Short-Term Rental Industry in 2027 and Beyond

Jamie Lane (0:05)

Welcome to The STR Data Lab.

I'm Jamie Lane, Chief Economist at AirDNA, and today we have a special episode of The STR Data Lab. This is our 200th episode, and for 200th episode, we have a live recording of my presentation from Verma International, where I'm going to start with the state of the union, where short-term rentals are today in the US, what's happening on supply and demand, and then we're going to go into the five forces that are going to be impacting the short-term rental industry over the next few years. I really think you guys are going to find this episode really insightful and really interested in your feedback. Shoot me a note if you agree, if you disagree with how these five forces are actually going to impact your business in the future. All right. So my name is Jamie Lane. I'm the chief economist at AirDNA. We're going to talk today for about 45 minutes on the state of the industry and then go through five forces that I think will define our industry over the next couple of years. These are all forces that I think many of you are familiar with. They're not necessarily directly related to the short-term rental industry, but many of them are adjacent. So we're going to go through the economy. We're going to go through the OTAs, which who's here happy about some of the changes the OTAs have done lately?

Who's here not happy about some of the changes the OTAs have done lately? Yeah, and that's not going to change. So we're going to talk why that is and some of the issues they're dealing with. We're going to talk through what I call the sorting, which if you went to my panel today on what would you do for a 4.9 review, we're going to talk through some of the impact that the reviews and how they're sorting out businesses in the industry. We're going to talk about the housing market, which is still in deep recession right now, and that's absolutely impacting industry performance. And then we're going to end with AI, because I think it's going to entirely transform our industry, and maybe not the ways you're thinking about it for your own business. So all that in 45 minutes, and because Steve and Bill are in the front, I'm going to try to speak slowly and simply for them.

All right, let's get into it. So where do we stand? This is my favorite slide to look at for the entire industry. It's the first one I look at on a monthly basis when we get the new numbers, and I got September numbers yesterday, so I updated the slides specifically for today. And it is the year over year change in available listings in the US. And I've had so many people come up to me at our booth, and they're like, it feels like supply is slow. Like, is the industry not growing? The answer is absolutely. And we are at 1.6% supply growth. You go back to 2022, the industry was growing at north of 20%.

So 1.6% feels really slow. And so at AirDNA, we break out the 317 different markets in the US.

And when you look at that breakdown, only 145 are growing more than 2%. So that's less than half. And there's 60%, 60 markets that are falling in supply. Who feels like supply is falling in their market?

If you want to check it, come by the booth, but we can show you a lot of markets. A lot of the biggest markets in the country are actually seeing supply falling. And that totally changes the dynamic. Like we're a growth industry. Like it's like, and things are growing 5-10%. Like I only have to get a little bit of that share, and my business is doing great. We're in this 1.5% growth sort of environment. Like a lot of growth is happening from Bill stealing from Steve to grow their supply. And that is a tough environment, because you've got to be really outperforming your competition. You got to be paying attention to what you're doing. You've got homeowners that are questioning what you're doing. If you're not growing revenue, like this is one of the most challenging growth environments that we've been in a long time, because we don't have supplies that major tailwind for the industry. And this isn't just a US story. Europe is essentially flat. There's no growth in Europe right now. But there is growth. South America, Asia, Africa, there's supply growth of north and 10 percent for the industry. So if you want to go somewhere that's growing, maybe go down and start adding supply down in South America.