July 25, 2024
Vacation Rental Market
Ict

Growing Demand for Experience Travel is Driving the Vacation Rental Market

Vacation rentals provide furnished homes, apartments, or rooms, typically for short term stays and are a popular alternative to hotels worldwide. The global travel industry has seen a change in travelers’preferences from conventional accommodations to experiential travel. Vacation rentals allow travelers to live like locals and immerse themselves in the local culture and community. From compact apartments in city centers to spacious villas near beaches, vacation rentals offer unique accommodations suited for families, friends, and couples traveling together. The advent of online rental marketplaces has made the process of booking vacation homes hassle-free from the comfort of one’s phone or laptop.

The global vacation rental market is estimated to be valued at US$ 72588.74 Mn in 2023 and is expected to exhibit a CAGR of 5.3% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.

Market Key Trends:

The growing popularity of experiential travel is a major trend driving demand for vacation rentals. Travelers increasingly prefer cultural immersion, local experiences and personalization over conventional pre-planned itineraries and cookie-cutter hotels rooms. Vacation rentals located in historic neighborhoods, rural villages and cities allow tourists to live as locals do and immerse themselves more authentically in the destination. Advancements in technology have made vacation rental booking seamless through dedicated applications, websites and social media platforms like Airbnb. Vacation rental homeowners and property managers leverage digital marketing strategies to reach a wider traveler demographic. Personalization through customized amenities and service also enhance the live-like-a-local vacation experience for guests.

Porter’s Analysis:

  • Threat of new entrants: The threat of new entrants is moderate as the vacation rental market is fragmented with the presence of a large number of small and medium players. However, new players find it difficult to achieve scale and brand recognition.
  • Bargaining power of buyers: The bargaining power of buyers is high due to the availability of a large number of properties listed on various platforms. Buyers can easily compare prices and properties.
  • Bargaining power of suppliers: The bargaining power of property suppliers is moderate. While larger property management companies have more negotiation power, individual property owners have less bargaining power.
  • Threat of new substitutes: The threat of substitutes is low as there are limited substitutes for vacation rentals. Hotels are the major substitute but they cannot provide the entire home experience.
  • Competitive rivalry: The competitive rivalry is high due to the presence of several listings platforms and aggregators competing for customers and property partners.

Key Takeaways:

The Global Vacation Rental Market Size is expected to witness high growth over the forecast period driven by increasing demand for alternative accommodations and unique experiences.

Regional analysis: North America accounts for the largest share in the vacation rental market owing to high tourism activities in the US and Canada. However, Europe is expected to witness the fastest growth on account of high adoption in countries like France, Spain and Italy.

Key players: Key players operating in the vacation rental market are 9flats.com Pte Ltd., Expedia Group Inc., NOVASOL A/S, Booking Holdings Inc., MakeMyTrip Pvt. Ltd., Wyndham Destinations Inc., Tripadvisor Inc., Airbnb, Hotelplan Management AG, and Oravel Stays Pvt. Ltd. Companies are focusing on expanding inventory and offerings to gain market share.

*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it