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Image Credit Key Data
The short-term rental (STR) sector in the United States is navigating a complex landscape marked by staffing and revenue challenges. Despite these hurdles, a significant portion of property managers remain optimistic about revenue growth in the coming years. This outlook is detailed in Key Data’s Vacation Rental Industry Outlook 2026, which surveyed approximately 250 property management professionals overseeing 43,000 properties nationwide.
Survey Findings
The survey revealed that around 60% of property managers expect modest revenue growth, 28% flat growth, and 9% significant growth. In contrast, only 18% anticipate a modest decline, with no respondents predicting a significant downturn. This optimism is tempered by the acknowledgment that financial performance is a crucial factor for property owners deciding whether to continue with management programs.
Challenges to Growth
The primary barriers to achieving revenue targets by 2026 include operational and staffing challenges, which were cited by 73% of respondents. Revenue and market pressures are also significant concerns. Additionally, 43% of respondents highlighted external factors such as regulatory and legal issues as potential impediments. Specific regulatory concerns include strict permitting or licensing requirements (47%), high or increasing occupancy taxes and tourism fees (38%), and local resident or association pushback (30%).
Regulatory Pressures
Regulation remains a significant concern within the STR sector. According to Phocuswright research, 47% of STR operators have already had to alter their business models due to regulations, and 56% fear that future regulations could impact their ability to operate successfully. This regulatory landscape is prompting property managers to prioritize operational efficiency and data-driven decision-making over expansion.
Strategic Priorities
To meet their 2026 goals, property managers are focusing on operational improvements, marketing strategies, guest experience, portfolio management, and technology. Despite technology being the last on the list, it remains a vital component, with 95% of property owners utilizing property management systems. This reliance on technology underscores its role as the backbone of operations.
Market Adaptation
The report indicates a shift in market priorities, with property managers emphasizing operations and efficiency over rapid expansion. This strategic realignment reflects a market preparing for tougher conditions while still seeking sustainable growth. Survey findings show that nearly half of property managers (43%) expect Average Daily Rates (ADRs) to remain flat, while 38% anticipate modest growth and 18% predict a modest decline.
The Role of Online Travel Agencies (OTAs)
Online travel agencies (OTAs) continue to play a crucial role in the STR sector. According to Key Data, 67% of property managers plan to maintain their current level of reliance on OTAs, 19% expect to reduce reliance, and 11% anticipate increasing it. Vrbo and Airbnb are the most frequently used platforms, with 97% and 90% of property managers utilizing them, respectively. Booking.com is also gaining traction, especially in international and urban markets, with 73% of respondents reporting its use.
In conclusion, while the STR sector faces significant challenges, particularly in staffing and regulatory areas, property managers are cautiously optimistic about future revenue growth. By focusing on operational efficiency and leveraging technology, the sector aims to navigate these challenges and achieve sustainable growth. The continued reliance on OTAs, coupled with a strategic shift towards direct bookings, highlights the evolving landscape of the STR market.
Discover more at PhocusWire.