When it comes to pricing strategy, hoteliers keep a close eye on competitor hotels, but they often neglect vacation rentals.Â
And that’s a missed opportunity. Travelers don’t just look at hotels when planning a trip. They browse all kinds of accommodation options, including vacation rentals. If you’re not paying attention, you could be mispricing your rooms and losing bookings without even realizing it.
Vacation rentals (VRs), also known as short-term rentals (STRs) or private rentals, are often misunderstood by hoteliers. Let’s clear up some common misperceptions.
Myth #1: Short-term Rentals Are a Tiny Slice of the Market
Is $129 billion considered “tiny”? Because that’s how much revenue short-term rentals generated in 2023.Â
STRs represent about 14.2% of the $908 billion global market for accommodation, according to Skift – and as much as 20% in the U.S.Â
And they’re growing fast. Since the pandemic, vacation rental revenue has been climbing across North America, Latin America, Europe, and Asia-Pacific.Â
While some cities are cracking down with stricter regulations (or outright bans), short-term rentals aren’t going anywhere. It’s time for hotels to start treating them as the direct competitors they are.
Myth #2: Vacation Rentals Aren’t on the Radar for Most Travelers
Think again. Even if you’re not paying attention to short-term rentals, travelers certainly are.
STRs appear right alongside hotels on Booking.com, Expedia, Google Hotel Search, and Tripadvisor – not just on Airbnb and Vrbo. A traveler searching for a hotel could easily get distracted by a tempting vacation rental deal and never look back.
If short-term rentals are showing up in your guests’ searches, they should be on your radar, too.
Myth #3: Vacation Rentals Are Always Cheaper Than Hotels
At first glance, STRs may look like the budget-friendly option – especially since they often have extra space and kitchens.Â
But once you add in service fees and cleaning charges, the per-night costs can shoot up. In fact, the total cost at checkout for vacation rentals is 20% higher on average than the price advertised in searches.
When everything is factored in, hotels are often the more economical choice – especially for short stays.
So, don’t assume STR guests are bargain hunters. Hoteliers are often surprised to see how closely vacation rental pricing aligns with their own pricing.
Myth #4: Travelers Only Book Vacation Rentals When They Need More Space
Not true! A Skift survey found that the #1 reason travelers choose STRs isn’t space – it’s location. STRs often pop up in unique locations where hotels aren’t available.
The second and third reasons? Comfort for longer stays and cost savings.
It’s not just about square footage – travelers are looking for the right mix of convenience, flexibility, and value.
Myth #5: Only Families Stay in Vacation Rentals
Families and groups do love vacation rentals, but they’re far from the only guests.
More solo travelers, couples, and remote professionals than ever are choosing short-term rentals, according to AirDNA. Many now prefer smaller, high-end spaces with premium amenities over sprawling multi-bedroom properties.
In other words, today’s STR guests look a lot like hotel guests.
Not only that, but STR guests also book further in advance and stay longer, making them a particularly attractive market segment for hotels.
Myth #6: Short-term Rentals Are Only Popular in Vacation Destinations
Actually, STRs are more popular in cities than in rural areas.
In major cities, where hotels can be expensive, STRs often provide a more spacious and budget-friendly option. They’re especially appealing for longer stays and price-conscious travelers.
So, if you think STRs aren’t pulling guests away from your urban hotel, think again.
Myth #7: One Apartment Can’t Compete with a Hotel
One apartment? Maybe not. Fifty apartments? That’s a different story.
A single STR listing on an OTA takes up as much space in search results as a 500-room hotel. And today, many STRs are managed by professional property management companies that use sophisticated marketing and pricing strategies – just like hotels.
So, if you think vacation rentals’ positioning and pricing aren’t a direct threat, you might be in for a surprise.
Myth #8: It’s Impossible to Track Vacation Rental Pricing
Not anymore!
Until recently, rate shopping and pricing tools only compared hotels to hotels. Now, RoomPriceGenie allows hotels to benchmark against the vacation rental market and incorporate STR data into their pricing strategy.
Hotels gain access to a Vacation Rental Benchmarking dashboard, providing insights into the following areas:Â
- Vacation rental demand scoresÂ
- Number of active listings (compared to last week)
- Number of room nights sold (compared to last week)
- Median lead time and length of stayÂ
- Index comparisons for occupancy, ADR, and RevPAR
- Daily comparisons of hotel demand vs. vacation rental demand
Keep Your Friends and Competitors Close
By benchmarking against the full range of competitors – including both hotels and short-term rentals – you can reduce uncertainty in pricing and ensure you’re always positioned to maximize revenue.
Want to see how RoomPriceGenie’s Vacation Rental Benchmarking tools can help? Book a demo with our revenue experts and start your free trial today.
To learn how RoomPriceGenie can help your property increase your property’s profitability, start your free trial of our automated pricing solution today!
