How Vacation Rentals Can Reach New Audiences

If you had asked a traveler in 2007 if they’d consider sleeping in a bedroom in a stranger’s home while on vacation, they may have looked at you as though you were crazy. But in the years since then, renting a room or home from a private owner has become an accepted and even embraced approach to travel accommodations. While Airbnb and similar brands in the category have evolved and grown notably in popularity since their initial introduction, hotels are still considered the tried-and-true option for travelers.

In order to continue growing, vacation rental brands must understand what’s driving their existing customers while also broadening their base to reach new travelers.

Vacation rentals are improving on all key brand metrics

Vacation rental companies have made great strides connecting with and engaging travelers since the outbreak of COVID-19. Consumers returning to the road after pandemic restrictions were more likely to book vacation rentals than in pre-pandemic years, often due to the physical distance it allowed, compared to hotels which often found consumers in close proximity to others. And the momentum has grown — the share of travelers planning to use a vacation rental in an upcoming trip grew from 18% in late 2021 to 27% in early 2024.

Notably, increased usage has been accompanied by an improvement in brand metrics across the board. Since early 2020, net favorability is up 5 points, and net trust has improved by 4 points. Another perhaps unexpected improvement is in net community impact — despite concerns about the negative influence of vacation rental brands on affordable housing and neighborhood safety and culture for locals, perceptions in this area have grown more positive over time.

Despite these improving metrics, however, there is one area that has remained stagnant: perceptions of value. While net value is positive overall, meaning more consumers believe vacation rentals are a good value relative to their cost than not, it hasn’t grown like the other metrics. Compared with all consumers, baby boomers and lower-earners have more negative opinions of vacation rental brands’ value, suggesting these are audiences that need more reassurance from brands in the category.

Furthermore, net purchasing consideration, while showing improvement, is still negative for vacation rental brands. That means there are more consumers saying they aren’t considering booking a vacation rental than those who say they will. Certainly some of this is driven by infrequency of travel — if a consumer has no plans to take a trip in the near future, they’ll likely not be considering any accommodation options. That said, net purchase consideration for a group of hotel brands is positive, suggesting that this isn’t the only factor. In reality, the lack of purchasing consideration is likely driven by the fact that travelers associate vacation rentals with very limited travel occasions.

Group trips and extended holidays drive vacation rental bookings

Hotels have been the mainstay in paid accommodation for travelers for decades, which gives them a strong advantage against vacation rentals when it comes to housing consideration. In fact, casual leisure travelers (those who took one or two leisure trips in the past year) prefer hotels over vacation rentals for nearly every travel occasion. One scenario in which casual travelers lean towards vacation rentals is when they’re with a group — they’re more likely to prefer a rental than a hotel when with a large group, equally as likely to consider both when traveling with a small group, and only slightly more likely to prefer a hotel when traveling with children. Among these travelers, vacation rentals are also more competitive for more extended stays — specifically, more than five nights.

On the other hand, those who have stayed at a vacation rental for a domestic leisure trip in the last year lean towards repeat future stays for a wider variety of instances. While this is promising for customer retention, the situations in which this group prefers a hotel reveal some areas where short-term rental brands can look to improve.

The two most notable areas are solo trips and short stays. In these scenarios, even travelers who have booked rentals in the past tend toward hotels, possibly due to logistical, cost or safety considerations. Rental brands also have room to improve with business travelers (though usage for work trips has increased) and in urban locations. These deficits suggest that brands in the space should be focusing on improving the experience from booking through to the stay for these occasions. 

To bring in new travelers, vacation rental brands should focus on price and safety

While encouraging return visits is one area where rental brands can focus their attention, they also need to continue to broaden their audience. In order to do so, they should understand the factors that may encourage a traveler to book a short-term rental.

The top consideration, and one that is slightly more important for leisure travelers in general than for those who have stayed at a vacation rental in the past year, is price. While brands have made strides in this area in recent years (for example, Airbnb allowing travelers to search by total price upfront), it remains the most important factor in decision making for those booking accommodations. Brands should continue to highlight the spend required for a vacation rental versus a hotel where possible — notably, this may go beyond a nightly rate and encompass savings on food and beverages, resort fees and the like.

Another element to leverage when reaching new audiences is safety — something that’s more important to travelers overall than to those who’ve booked vacation rentals. While consumers may find comfort in the consistency and security of a hotel experience, they may be put off in that area booking accommodations at a host’s home. While vacation rental brands have made efforts to improve safety — for example, both Airbnb and Vrbo have introduced policies prohibiting cameras in vacation rentals to protect travelers’ privacy — they should continue to devote resources in this area to further reassure guests.

On the flip side, elements like the house aesthetic, host rules or a designated working space will not be as effective at bringing in new guests, as they fall further down the list. Focusing on the top priorities from a product and messaging perspective will help brands in this space reach new audiences and grow their user base.

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