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When did the short-term rental industry start?
The short-term rental industry in its modern form began in 2008, when Airbnb launched and popularized the idea of renting out homes, apartments, and spare rooms directly to travelers. It actually started out as the company’s co-founders renting out an air mattress in their San Francisco apartment! However, the roots of the industry go much further back.
For decades, travelers have rented vacation homes, ski cabins, beach houses, and countryside villas through local property managers and real estate agencies — with listings traceable to the 1950s and 60s in Europe and North America.
What made Airbnb and other platforms revolutionary was the scale, technology, and trust systems (like online payments, reviews, and host verification) that brought vacation rentals into the mainstream.
Today, what started as “home sharing” has grown into a global industry attracting both individual hosts and large-scale professional property management companies.
Who typically uses short-term rentals?
Short-term rental guests are diverse, and that diversity is part of what has fueled the industry’s growth.
Families often book vacation rentals for extra space and kitchens, giving them more comfort compared to hotel rooms. Groups of friends or extended families choose STRs to stay together under one roof instead of splitting into multiple hotel rooms. Business travelers increasingly rely on STRs for longer stays or “bleisure” trips, where they combine work and leisure. Digital nomads and remote workers are another fast-growing demographic, staying weeks or months at a time in locations around the world. STRs are also popular among younger travelers who prefer authentic, localized experiences rather than standardized hotels.
This wide appeal ensures that STR demand comes from multiple guest segments, making it resilient even during economic shifts.
How can I estimate how much income my Airbnb or short-term rental will make?
Estimating potential short-term income involves looking at several key factors: location, property type, seasonality, and nightly rates in your market. A tool like SummerOS’ Airbnb Income Estimator makes this much easier.
Start by researching comparable listings (“comps”) in your neighborhood—similar size, style, and amenities—to see what they charge per night and how often they’re booked. Many hosts use tools like Airbnb’s occupancy calculator or third-party platforms such as SummerOS, which provide data on market demand, historical occupancy, and average daily rates (ADR).
Keep in mind that gross revenue is not the same as net income. You’ll need to account for cleaning fees, host fees (Airbnb and Vrbo typically take around 3–15%), utilities, maintenance, property management fees, and local lodging taxes. A realistic estimate should also factor in seasonality—for example, coastal properties may earn the majority of their income in summer months, while ski towns peak in winter.
The best practice is to build both optimistic and conservative projections, so you understand your potential range of income.
What is the future of the short-term rental industry?
The short-term rental industry is expected to continue growing and professionalizing.
Demand from travelers remains strong, especially as remote work and digital nomad lifestyles expand. Analysts predict more consolidation, with small operators increasingly joining property management companies or leveraging tech platforms for efficiency.
Data and revenue optimization will be at the center of this shift, as top operators use tools like SummerOS to forecast revenue, benchmark performance, and respond quickly to market changes.
Guest expectations are also evolving — travelers want hotel-like service combined with the uniqueness of STRs, pushing operators to raise standards. On the investment side, institutional capital is entering the market, treating STRs as a mainstream asset class alongside multifamily and commercial real estate. Over the next decade, the industry will likely become more regulated but also more sophisticated, with technology driving a new era of transparency and profitability.
What can STR owners do to ensure a positive experience for neighbors and guests?
The best hosts see themselves as community stewards. Responsible operators implement guest screening tools, install noise monitoring systems, and set clear house rules (no parties, quiet hours, guest limits). They communicate openly with neighbors, share contact details for emergencies, and address concerns promptly.
Supporting local businesses—by hiring local cleaners, contractors, and vendors—adds economic value back into the neighborhood. Staying compliant with local regulations is equally important, as responsible operators often help shape more balanced policies in their cities. Professional managers, in particular, excel here: with standardized operations, 24/7 guest support, and advanced tech tools, they minimize risks before they become problems. At the end of the day, the operators who succeed long-term are those who integrate into the community, not those who exploit it.
How big is the short-term rental industry today?
The global short-term rental (STR) market is valued at well over $125 billion and continues to expand as traveler demand shifts from hotels toward more flexible accommodations.
In the United States alone, there are over 1.4 million active listings, with Airbnb representing the majority share. Globally, estimates suggest there are more than 7 million listings across Airbnb, Vrbo, and other platforms.
Demand surged after the COVID-19 pandemic, as travelers sought private, spacious, and longer-term stays. This rapid growth has also attracted professional investors, institutional property managers, and new technology platforms that help operators manage everything from revenue optimization to guest experience.
What are the main benefits of short-term rentals for property owners?
For property owners, short-term rentals offer multiple advantages over traditional long-term leasing.
The biggest benefit is typically higher income potential — a well-managed STR can earn significantly more annual revenue than a standard long-term rental, especially in high-demand markets.
Owners also enjoy flexibility, as they can block off time to use the property themselves while still generating income when it’s vacant.
STRs also open the door to diversification: owners can spread investments across multiple properties in different markets rather than being tied to one long-term tenant. Finally, STR ownership offers a sense of personal use and lifestyle investment, as many owners purchase properties in destinations they love visiting themselves.
What challenges do STR operators face?
While profitable, the STR business does come with challenges. Regulations are one of the largest. Many cities and counties restrict how many nights a property can be rented or require special permits, licenses, and tax collection.
STR operators must also manage seasonality, as revenue can fluctuate depending on the time of year and market demand. Guest management is another hurdle: handling check-ins, cleanings, maintenance, and customer service requires time and organization, especially as a portfolio grows.
Competition is fierce, with operators needing to stand out through professional photos, high review scores, and competitive pricing. Finally, revenue optimization is complex, requiring constant monitoring of market trends, demand spikes, and pricing strategies.
This is why many STR pros rely on software platforms like SummerOS to grow their portfolio, make smarter investments, and stay ahead of problems before they affect revenue.
What are the positive aspects of having short-term rentals in a city?
Short-term rentals provide cities with a flexible and scalable lodging solution that hotels alone can’t meet. During peak seasons, festivals, or large-scale events, STRs absorb overflow demand and prevent hotel price spikes. They also diversify where visitors stay: instead of concentrating tourism in downtown hotel corridors, STRs spread guests into residential neighborhoods, bringing new business to local cafés, restaurants, and shops.
For example, during Art Basel in Miami, thousands of visitors stay in neighborhoods like Wynwood or Little Havana—not just South Beach. This puts tourism dollars into communities that wouldn’t normally benefit from high-end hotel traffic. STRs can also support cities that don’t want large hotel developments changing the character of their neighborhoods, offering a more distributed and sustainable approach to hospitality.
What regulations govern short-term rentals?
STR regulations vary city by city and can change quickly. Some municipalities, such as New York City, have introduced strict requirements—hosts must register their property, live on-site, and limit guest numbers. Other markets, such as parts of Arizona and Florida, have far more relaxed rules. Common forms of regulation include permit requirements, occupancy taxes, annual night caps, zoning restrictions, and mandatory safety standards.
The debate centers around balance: no one wants neighborhoods overrun with hotel-like operations, but banning STRs outright creates unintended consequences, such as higher hotel prices and reduced travel accessibility. For example, in New York City, eliminating most Airbnb listings has driven hotel prices to record highs, limiting affordable options for visitors. Well-structured regulations—like requiring responsible hosting practices, data-sharing with cities, and fair tax collection—allow STRs to coexist with community needs.