2025 Vacation Rental Market Projections:
Looking ahead to 2025, the domestic vacation rental market is expected to experience a modest rebound compared to 2024 performance. Several key factors will shape the outlook:
Market Stabilization: After a period of rapid growth, the market is expected to stabilize, with growth rates returning to more sustainable levels.
Shorter Stays and Lead Times:
Guests are booking shorter stays and making reservations closer to their travel dates, with both length of stay and lead time shrinking year over year.
Demand for Unique Destinations: There remains strong demand for smaller towns and unique destinations. Properties located in off-the-beaten-path locations are well-positioned to capitalize on this trend.
Meeting Rising Guest Expectations: As competition increases with more properties entering the market, those that maintain high-quality standards will perform best. Properties that command the highest nightly rates and achieve above-average occupancy rates are those that meet rising guest expectations. These properties typically feature modern design aesthetics, quality furnishings, white linens, and a wide range of amenities.
A Trend to Keep an Eye On: American Travelers Showing Caution About Spending on Trips
Financial Sentiment: In January 2025, Future Partners (formerly Destination Analysts) found that while 51.5% of American travelers remain optimistic about their financial outlook, fewer travelers feel better off financially compared to the previous year. Only 29.2% reported an improvement—marking the second time in three months thids figure has fallen below 30%.
Travel Budgets Decline: The expected annual leisure travel budget dropped by over 15%, from $5,898 to $4,973. High travel costs and personal financial concerns are the main factors deterring Americans from booking trips, with excitement for travel reaching a 7-month low (an average of 8.1 on a 0-10 scale). These indicators suggest a growing sense of caution among American travelers, which may impact future travel trends.
Early Signs of Emerging Trends Reflected in VRC 2025 Pacing:
VRC’s 2025 pacing started strong, with a year-over-year increase of over 30%. However, in the past three weeks, we've seen a slowdown in new reservations and a slight uptick in cancellations in January and February due to travelers changing their plans. Factors contributing to this include below-average snowpack, unseasonably warm temperatures in some resort markets, in addition to the declining consumer confidence noted above. These trends align with what larger OTAs (Vrbo & Airbnb) are reporting across their platforms.