Dive Brief:
- Short-term rentals outperformed hotels in every region of the U.S. in the second quarter of 2025, with an average RevPAR advantage of nine percentage points, according to short-term rental data and analytics platform Key Data and its Q2 2025 Vacation Rental Market Index.
- Despite the strong RevPAR performance, September occupancy at short-term rentals is already 11% below last year, a trend that’s also expected to hit the hotel sector in the latter half of 2025.
- The Key Data report shows that short-term rentals continue to increase their share of the accommodations market, but that growth may be leveling off as the sector matures.
Dive Insight:
While much of the travel sector contended with shorter booking windows, inflationary pressure and uneven demand in Q2, short-term rentals proved resilient, though their future growth outlook is less certain.
According to the Key Data index, which tracked real-time performance across thousands of short-term rental properties in all 50 states, hotels lost market share to vacation rentals in every U.S. region. The index includes anonymized reservation data from integrated property management systems, covering demand, revenue, pricing and guest behavior trends.
Vacation rentals saw year-over-year RevPAR growth in several regions, including the mid-Atlantic (defined as New York, Delaware, Maryland and Pennsylvania), where they experienced an 11% RevPAR gain, driven by a 10% increase in occupancy. Hotel RevPAR, however, was down 2% in that region, according to Key Data.
The Rocky Mountains (Montana, Wyoming, Colorado, Idaho and Utah) experienced a 9% bump in RevPAR, while hotel RevPAR declined 3% year over year in the area. Short-term rentals in the Hawaiian Islands, meanwhile, saw a 6% year-over-year RevPAR increase, as hotel RevPAR dropped 8% during the same period.
Both hotels and short-term rentals saw a steep drop in the Southwest (defined as New Mexico, Oklahoma, Texas and Arizona), with RevPAR falling 4% year over year for rentals and 7% for hotels.
After showing promising signs in April and May, the short-term rental market experienced a setback in June, with the Key Data Demand Index — which measures year-over-year change in reservations per property over a given period — slipping back into negative territory at -0.02.
An occupancy slowdown is also hitting the hotel sector, with projections being revised. CoStar and Tourism Economics project 2025 U.S. hotel occupancy will decline year over year to 62.5% from 63% in 2024, due in part to “unrelenting uncertainty and inflation.”
Additionally, several major hotel companies, including Choice Hotels International, Hilton and Wyndham Hotels & Resorts, posted revenue declines in the second quarter, in part due to a decline in international and government travel and canceled meetings, which affect hotel business more so than short-term rentals.
The Key Data index also noted changes in booking behavior patterns, including compressed booking windows and shorter stays. According to the findings, short-term rental guests appear to be researching destinations and properties earlier but waiting longer to make final booking commitments, suggesting increased price sensitivity and comparison shopping.
