Airbnb Trends to Watch: What to Expect in 2024
2023 has undoubtedly been a year of economic uncertainty. However, that doesn't mean that Airbnb and short-term rentals are in a bad spot.
In fact, between various economic trends, the future use of AI in the Airbnb platform, increased cross-border travel, and even an upcoming solar eclipse, there's a lot of excitement on the horizon for Airbnb hosts in 2024.
Short-Term Rental Trends
The STR industry has offered consumers who are hunting for a good deal on travel during economically tough times unprecedented opportunities, meaning that companies like Airbnb and its hosts have managed to grow and even thrive.
Consider that overall travel demand has grown (with the demand growth rate for 2024 projected at 8.5% compared to 5.5% in 2022 and 10.4% in 2023) in tandem with projected year-over-year (YOY) growth in the overall housing supply.
At the same time, although YOY occupancy rates are expected to decline, the projected 2024 rate (56.7%) still beats out pre-pandemic levels. All of these factors point to a healthy economy for the STR industry.
Another good sign is that the Bernstein Private Wealth Management group issued a note describing Airbnb as one of its top stock picks for 2024, suggesting a strong degree of confidence in the ongoing growth and economic viability of the company even with the expectation of moderating travel trends throughout the year.
Some of the factors affecting the expectations of advisors like Bernstein include limited growth in the supply of available hotels, continued spending from well-off customers who aren't afraid of STR price tags, and events that should cause a major spike in travel (more on that in the sections below!).
Unfortunately, the situation isn't all wine and roses. For instance, making substantial gains in average daily rate (ADR) has been difficult for many hosts, likely as a consequence of customers who are already economically burdened being more sensitive to perceived high costs than ever before. Airbnb hosts can hope for ADR gains in the neighborhood of 1-2%.
With that being said, on balance, the STR industry is doing well and is expected to continue growing into 2024.
Trends in the US Economy
The US economy has been sluggish for a few years at this point, ever since coming back to life following the height of the COVID-19 pandemic. Concerns of a recession, ongoing inflation, and supply-chain crises have all affected prices. The economy continues to bear other signs of instability, such as bank failures (Silicon Valley Bank being a major example).
However, several economic factors have shown promise. For starters, although the annual inflation rate in the US reached nearly record highs in 2021 (at 7.0%) and 2022 (6.5%), that same rate dropped to 3.1% in 2023.
While that's still well above the Federal Reserve's desired 2% inflation rate (a goal that is comparable to the pre-pandemic rates of 1.9% in 2018 and 2.3% in 2019), the trend toward declining inflation is nevertheless a positive development.
In addition, the US job market continues to be healthy, with more jobs available, decreasing unemployment rates (including hitting all-time lows in January and April 2023), and slowly increasing wage growth.
If these trends continue without any major economic surprises, the US economy could potentially make a full recovery by mid-2024, which would obviously be a tremendous boon for Airbnb hosts and other STR owners hoping for a travel rebound.
Airbnb AI Integration Plans
One exciting development that the Airbnb platform itself is offering in 2024 is the implementation of various AI integrations. Airbnb CEO Brian Chesky envisions Airbnb becoming a digital travel assistant, and AI will be an essential part of making that dream come true.
The company already uses AI for tools such as the Photo Tour feature, which allows hosts to create photo tours that show off their homes or other properties in the best possible light.
However, Airbnb plans to take its use of AI even further by overhauling the Airbnb host app with an engine that has been custom-built for the company, with the biggest changes taking place in mid-2024. Some of those significant changes will include incorporating artificial intelligence technology developed by GamePlanner.AI, a tech startup purchased by Airbnb in November 2023.
Proposed AI benefits will include improving the Airbnb app's technical performance, providing more consistent and reliable listings that have been optimized for the sake of both hosts and guests, and enforcing Airbnb rules that forbid parties that could potentially lead to damage to a host's property.
Travel Across Borders
With the pandemic and its related lockdowns and restrictions in the rearview mirror at this point, traveling from country to country has resumed, though perhaps not to the same level as pre-COVID, or at least not in a way that is evenly distributed across various countries.
For instance, the US dollar's economic strength has allowed American tourists to enjoy either domestic travel or travel outside of the country with relative ease, which benefits both them and the overseas travel industry as a whole.
As you might imagine, increased travel bodes well for the STR industry in particular, with open borders for tourists leading to greater numbers of reservations at STR properties.
Still, more US tourists are visiting foreign countries than the reverse, meaning that Airbnb hosts in the States may not be seeing as much inbound travel from out-of-country visitors at their property when compared to the years before the pandemic.
Fortunately, travel spending is trending toward recovery, increasing the demand for STR properties (including Airbnb listings) located within the US.
The summer travel season should offer great opportunities for both US-based Airbnb hosts hoping to snag bookings from international tourists and non-US hosts hoping to book American tourists traveling overseas in the coming year.
2024 Solar Eclipse
Economic factors are always important considerations when planning your prospects for the upcoming year, but an astronomical event could also have a significant impact on Airbnb hosts.
Specifically, North America will experience a total solar eclipse on Saturday, April 8, 2024. This event, which some reports have referred to as "the Great North American Eclipse," will be the first total solar eclipse in the United States since the eclipse of August 21, 2017.
The upcoming 2024 eclipse will be an even bigger event than the one in 2017, as astronomers have calculated that it will be the only total solar eclipse in the 21st century that residents of Canada, the US, and Mexico will all be able to see throughout the course of the day.
The rarity of celestial events like this one has created a buzz in the travel industry since many people are already excited to travel to a city or town that falls within the path of the eclipse. This includes locales that aren't usually considered travel hotspots, such as Kerrville, TX; Indianapolis, IN; and Louisville, KY.
Airbnb hosts in the following states can expect to see increased travel volume in the month and days leading up to the date of the total solar eclipse: Texas, Oklahoma, Arkansas, Missouri, Kentucky, Illinois, Indiana, Ohio, Pennsylvania, New York, Vermont, and Maine. Many of the best sites for viewing the event will be towns that aren't usually considered major travel destinations.
In fact, US-based Airbnb traveler searches for listings between April 4-7, 2024 spiked by over 300%.
Major Events and the Holiday Season
The annual holiday season always has a major effect on travel, which means it has an impact on the Airbnb industry as well. And with hotel supply still failing to keep up with overall demand, that puts Airbnb hosts in a good position for 2024.
And we don't just mean the usual holidays, either. When the 2024 touring season heats up, Taylor Swift will be on the next leg of her ongoing "Eras" tour (currently the highest-grossing musical tour of all time!). In the US alone, the music superstar will be touring from Miami in mid-October to Indianapolis in early November, with several shows in New Orleans in between.
Other major 2024 events that are expected to boost travel and lodging demand include Super Bowl LVIII scheduled for February 11 in Paradise, Nevada) and the 2024 College Football Playoff National Championship (currently scheduled to be held at Texas's NRG Stadium). European Airbnb hosts can expect to see major boosts during the Paris 2024 Summer Olympics.
Despite some volatility in the global market due to ongoing geopolitical conflicts, economic trends, and more, Airbnb as a whole is in good shape and continues to experience solid success overall, with several major events its hosts can look forward to.
Contact Us Today!
Do you want to maximize your Airbnb earnings and minimize the time and effort spent this upcoming year? Are you an Airbnb newbie hoping to take advantage of the opportunities that 2024 is projected to offer?No matter how long you've been in the short-term rental game, Vello is here to help. Our expert team of property management professionals is here to optimize your Airbnb listing, provide top-notch concierge service, and run your property to its greatest efficiency. Contact us today to learn more!
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