NASHVILLE, Tennessee — For years, short-term rentals have continued to pose a threat to hotel market share thanks to the rise in popularity for booking platforms such as Airbnb and VRBO.
But now short-term rentals are mostly growing in areas where hotels tend to fall short when it comes to consumer desires, said Jamie Lane, chief economist and senior vice president of analytics at AirDNA, at a presentation at the 2025 Hotel Data Conference.
And that's in large properties that can host groups or families — properties with pools or beach access.
"The broader trend that we see across short-term rentals is less toward commoditized, one-bedroom condos in urban areas, and more toward large, five-bedroom units and the unique stays that happen around that," Lane said. "In the areas where hotels most compete with short-term rentals, like [when] the product looks very similar, hotels are crushing short-term rentals."
Hotel and short-term rental growth also depends on market — urban vs. rural, as well as traditional vacation destinations, like beaches or mountains. And while short-term rentals are growing at a faster pace than hotels, Lane said it's a more nuanced growth that hotels can find some hope in.
Tracking hotel and short-term rental growth
When it comes to hotel and rental supply and demand in the top 50 U.S. markets, the levels are similar when comparing 2025 to 2019, Lane said. But, when breaking out the data to show performance in urban and suburban activity in those same markets, hotels are performing similarly while short-term rentals are experiencing bifurcation.
"Urban demand [for rentals] is 16% below 2019 levels, and suburban demand is 43% above 2019 levels," Lane said.
Short-term rental offerings range from one private room to full houses with five or more bedrooms. AirDNA's data found that the number of private room listings have fallen by 39%, now only representing 16% of urban listings. One-bedroom rentals have stalled, but on the other side of the equation, larger homes have grown their share of the listings.
"The rentals found their voice — this is the niche. This is where there are needs to be filled," said Claudia Alvarado Cruz, senior analytics manager of financial performance at STR.
In urban areas, the more bedrooms a rental listing has, the stronger the year-over-year demand growth.
"The larger the home, the stronger the overall demand performance," Lane said.
Regulation has affected short-term rental offerings in some urban areas, and Lane gave New York City as an example of a market that's been greatly affected by laws targeting short-term rentals.
Meanwhile, entire-home suburban rental listings in the top 50 U.S. markets have more than doubled since 2019, with homes with three or more bedrooms making up half of the listings in suburban areas.
"Urban one- and two-bedroom [rentals] were essentially on par with 2019 levels, similar to what we saw with hotels," Lane said. "That's not the case in suburban areas. In suburban areas, one- and two-bedroom units have essentially doubled their overall listing counts, while the 3-, 4-, 5-plus bedrooms [have grown] 137% [since] 2019, so a massive increase."
Deciding between rentals and hotels
Price and location are the top two deciding factors for travelers weighing their options between a hotel and short-term rental stay.
"Location may be more obvious. Short-term rentals are able to grow where the demand is. It doesn't take the one or two years to build a hotel; [rentals] can pop up overnight where the demand is," Lane said.
For price, rentals have the edge in urban markets, providing a 25% discount compared to hotels, per AirDNA and CoStar data. However, in suburban markets, rentals are 5% more expensive than hotels.
The data also looked at how guests are reviewing rentals and hotels. The smaller the short-term rental operation — like one to 100 units versus 100 or more — the better the reviews. But comparing the larger rental operators to hotels, hotels were able to compete in some metrics.
"What really sort of called out to me is where hotels do better — cleanliness, communication and maybe a little bit on value," Lane said. "Where short-term rental professional operators do a little bit better — check-in, which surprised me. Most short-term rentals are keyless. [Also with] accuracy — maybe the hotel listings aren't as accurate. ... And then location. Clearly people aren't enjoying the location that they're having to stay at relative to a short-term rental."
All of this is important for hoteliers to take note of, Alvarado Cruz said.
"In terms of guest satisfaction, you cannot change the location of your hotel, but you can change the value and the perceived value from for the guests," she said.