The short-term vacation rental sector has seen remarkable expansion in the last ten years, propelled by advancements in technology, evolving consumer tastes, and the increasing demand for alternative lodging options. Currently, holiday rentals contribute around 10% of the total revenue in the global travel and tourism industry, with projections indicating that the market as a whole will achieve a significant milestone this year. Recent data suggests that holiday rentals are on track to become a $100 billion industry by the end of 2024.
The market is experiencing a high level of innovation, primarily due to technological advancements and changing consumer preferences. The emergence of platforms such as Booking.com, Airbnb, and Vrbo has transformed the vacation rental industry, offering property owners a convenient way to list their rentals and connect with travelers more efficiently. The mobile applications of these platforms, along with their user-friendly interfaces, have further accelerated market expansion, leading to record-breaking revenue.
Moreover, smart home technologies are being increasingly incorporated into vacation rentals, providing guests with added convenience through keyless entry, smart thermostats, and voice-activated assistants. Data analytics and machine learning innovations further empower property owners to optimize pricing, customize marketing strategies, and improve guest experiences. These advancements, combined with innovative property management and guest services, continuously redefine and enhance the vacation rental industry.
Based on the latest data, the revenue from vacation rentals increased by 30% since 2017, reaching $94.5 billion last year, despite a significant 50% decrease in the first year of the COVID-19 pandemic. Even though the annual growth rate saw a significant drop compared to 2022 and 2023, the vacation rentals industry is poised to potentially set a new record this year.
Global vacation rental revenue is projected to grow by 6% year-over-year, reaching $100.2 billion in 2024, surpassing the combined revenue from camping and cruises. Europe is anticipated to contribute the largest share of this revenue, accounting for nearly one-third of the total at $34 billion. Following Europe, Asia and North America, specifically the United States, are expected to generate $28.5 billion and $24 billion, respectively.
The tourism market in Europe currently leads in revenue generation, while Asia is projected to experience the most rapid growth due to the surge in tourism and internet usage. According to the most recent data, revenue from vacation rentals in Asia is anticipated to increase by 25%, reaching $25.9 billion by 2029. The United States market is expected to grow by 21%, reaching a value of $29 billion, while Europe is forecasted to see a 17% growth, generating approximately $40 billion in revenue during the same period. In total, global vacation rental revenue is predicted to rise by 25%, reaching $125.6 billion in the next five years.
The demand for affordable, distinctive, and customized experiences among travelers is on the rise, leading to a significant increase in the number of individuals opting for vacation rentals over traditional hotels. Industry projections indicate that by 2024, the vacation rentals segment will see a surge in users, with an estimated 857 million people choosing this accommodation option. This figure represents an increase of 47 million from the previous year and 100 million from 2017. The growth trajectory is expected to remain strong over the next five years, welcoming approximately 150 million new users into the market. By 2029, it is anticipated that over one billion individuals will be utilizing vacation rentals for their travel accommodations.
