Beyond “Airbnbust”—2023 Short-Term Rental Reality

There has been plenty of talk about an “Airbnbust.” More recently, however, the question is whether an “Airbnbust” itself is the real “bust.”  Let’s take a look at what’s actually happening beyond the “Airbnbust”—and the 2023 short-term rental reality.

Over the past few months, some have worried about a major collapse of short-term rental (STR) revenue for owners. The worry escalated after a tweet by a data analyst that suggested this was happening, went viral in June.  

STR Industry defying predictions of an Airbnbust

However, reports AirDNA’s 2023 Short-Term Mid-Year Outlook, “Economists and media outlets across the globe (including us) have been beating the same drum for months now: 2023 has been and will continue to be a year of economic uncertainty. But that doesn’t necessarily mean doom and gloom — particularly for the short-term rental (STR) industry, which has actually defied any predictions of a slowdown or ‘Airbnbust’ in recent months.” 

Eric Schueller, executive vice president of revenue at vacation rental management company Evolve recently told BiggerPockets, “Nationwide, both short-term rental market supply and demand are growing, with demand still hitting all-time highs. However, market supply growth is happening at a faster clip than market demand growth, causing total revenue per property to be down year over year.” 

Maybe not a bust … but things are changing

There may not be a major “bust.” But, the current changes taking place in the STR market are creating a more competitive environment for property owners. 

These changes include a swing in post-Covid travel preferences. As well, there is an increasing supply of short-term rentals. Add to this the impacts of fluctuating inflation, interest rates, housing prices, recession fears, and more. These factors are somewhat balanced by an increased demand for short-term rentals, and a positive outlook for the industry overall. 

As a lending company that funds STR properties, we know that short-term rental investments are like every other investment. General and local economies and regulatory actions carry a large influence. And, they are prone to difficulties within their own sets of variables and risks.  

Savvy investors and rental hosts will keep a close eye on the conditions within their individual markets and their competition. Investors need to stay ahead of the market and secure their investment income.  

(See “7 Key Insights for 2023 Short-Term Rental Owners” below.)  

An Airbnbust Viral Tweet 

Nick Gerli is the Founder and CEO of Reventure Consulting, a real estate investment data analysis and consulting company. On June 27, 2023, Gerli shared the chart below in a tweet, writing, “The Airbnb collapse is real.” He warned to “watch out for a wave of forced selling from Airbnb owners later this year in the areas hit hardest by the revenue collapse.”  

He noted that the data, showing over a 45% drop in RevPAL (Revenue Per Available Listing) in places like Phoenix, Austin, and Sevierville, was based on information from STR data provider AllTheRooms. The tweet went viral on what was then Twitter (later renamed “X”) and spread quickly to other media outlets.  

A Different Perspective

Shortly afterwards on Twitter, Jamie Lane, AirDNA’s chief economist and senior vice president of analytics, refuted Gerli’s analysis. “Let’s get some facts straight…” he wrote. “There is not a collapse in RevPAL happening. Is it down in 2023? YES. Is it down 40%? NO.” His dataset (below) showed the average RevPAL decreasing -3.6%, not -40.3%, a difference of 36.7%. 

Is the Airbnb collapse real? Airdna chart. Beyond “Airbnbust”—2023 Short-Term Rental Reality

Not all sunshine and rainbows

In a later podcast, Lane added, “… It’s not all sunshine and rainbows out there. There are some markets with significant declines in revenue happening … 15 to 25% declines YoY. It’s a combination of occupancy and ADR (Average Daily Rates), it’s some markets going back to more typical seasonality patterns, and some dealing with significant supply growth. Every market, though, is still significantly higher in terms of revenue than it was pre-pandemic. So, if you invested in 2020 or 2021 expecting those gains to stay, and you are seeing a moderation, that is causing pain for people. But there are a lot of people still doing really well.” 

An Airbnb company spokesperson, in a July statement to Fast Company, had something to say of Gerli’s numbers. “The data is not consistent with our own data,” he said. “As we said during our Q1 earnings, more guests are traveling on Airbnb than ever before, with Nights and Experiences Booked growing 19% in Q1 2023 compared to a year ago.”  

Evolve’s Schueller chimed in, telling BiggerPockets, “While it’s difficult to get a true apples-to-apples comparison of the data between all three sources with varying inputs and slightly different calculations, Evolve’s analysis most closely aligns with AirDNA … We see these changes in revenue as a normalization of the market coming off of the peaks in 2021 and 2022. This is not a market crash—2023 will still bring the most nights ever booked…” 

“Not as Dramatic as What Was Shown”

And Key Data’s executive director of data insights told Skift, “Our dataset shows declines in many of the markets that were cited in the original tweet, however, the declines are not nearly as dramatic as what was shown.” 

AllTheRooms, Gerli’s stated data source, has not commented. (Gerli reportedly contacted AlltheRooms about their data but has not heard back from them.) 

Understanding numbers this far apart is confusing, more so when trying to determine if there is an “Airbnbust,” and to find the short-term rental reality in 2023. As Drew Patterson, travel company Thermal CEO and STR data provider Transparent Intelligence cofounder explained to Skift, “… Running data sets around short-term rentals is a complicated exercise, and it’s hard to get right. A lot of things can compromise analysis.” 

You can read more about how companies come up with their numbers in these articles: 

Short-Term Rental Data: Behind the Complexity and the Nuances  

Behind the Source of the Viral Airbnb Collapse 

Is the Airbnb Collapse Actually Happening? Here’s What We Know 

Beyond Airbnbust: Short-Term Rental Supply

In 2019, the short-term rental market was offering a somewhat volatile, but increasing, growth opportunity for investors. 

Then came the pandemic. And short-term rental owners started seeing booking increases of 22.6% in 2021 and 18.1% in 2022, which attracted investors.  

 “The vacation rental space has benefited from unprecedented popularity since the onset of the COVID-19 pandemic,” explains AirDNA. “Many travelers initially felt more comfortable staying in rentals than traditional hotels, and historically low mortgage rates prompted a real estate gold rush.”  

The number of available listings on the market rose from 1.04 million in 2021 to 1.26 million in 2022. The forecasted available listings in 2023 was 1.45 million.

Reports Evolve, “Since August 2022, each month there has been YoY supply growth at a rate that continues to hover in the 20s, averaging right around 22% per month. This signals a stabilization trend in supply growth — more properties are being added to the vacation rental industry each month, but at a steady pace.”  

Beyond Airbnbust: Short-Term Rental Demand

Early in the pandemic, some areas, like large city urban and suburban areas, saw bookings decrease by more than 50%. Some areas, like small city/rural areas, mountain/lake destinations and mid-sized cities, saw a substantial increase (up to 55%) in bookings.  

When the pandemic ended, these trends began to adjust once again. Says AirDNA’s Lane, “We see people changing the locations. They’ve stayed domestic and within driving distance for three years, now they want to go to Europe, or out West. This is impacting markets.” 

Demand is lower than it was during the pandemic. However, AirDNA’s latest forecast is a 2023 demand growth of 10.4% YOY. They also expect the 2024 demand to grow at a rate of 8.5%. Investors need to keep in mind that Airbnb demand, like all real estate, can fluctuate widely based on local conditions.

Transparent reports an overall 14% gain in booked nights between 2022 and 2023 Q1’s and Evolve reports YoY demand growth in the low teens or single digits (see chart below). 

YoY Market Supply and Demand Growth Rates - Airbnb. Beyond “Airbnbust”—2023 Short-Term Rental Reality

Occupancy Rates, Average Daily Rates (ADR), and *RevPAR/RevPAL 

According to AirDNA, 2021 hit the high mark for short-term rental occupancy rates at 62% (5% higher than 2020 and 10% higher than 2019). 2022 occupancy rates were 59.5% and the forecast for 2023 is 57.6%, and 56.6% in 2024 (all higher than pre-pandemic rates). 

Key Data reported in July that “The US short-term rental market has struggled to keep up with the rest of the world so far in 2023.” It notes that while RevPar (Revenue per Available Room) increased in Europe and the UK, and globally during the first half of 2023, “…it’s clear the American market has been slowing more significantly, even though nightly rates remain comparatively high.” They cite a decrease in U.S. RevPAR of 3.3%, ADR of 2.3%, and occupancy rates of 1%.  

However, Key Data’s 2023 Q3 U.S. forecast is optimistic. They say, “The market is strengthening. RevPAR is seeing a dramatic swing into the positive territory (up 1.3% so far) indicating that, while revenues are still down in real terms, the States may be seeing a turnaround.” 

Note: *RevPAR vs. RevPAL differ in how they calculate blocked nights. RevPAR looks at revenue per night available, while RevPAL assumes all nights per month are available.  

Moving Beyond the “Airbnbust”

Where can STR owners go to get beyond “Airbnbust” — and tap into the short-term rental reality in 2023?

First, the U.S. Travel Association, reports travel spending up 4.7% year-to-date through June 2023. It also reports air travel demand increasing 12% in June compared to June 2022. 

Alongside a positive travel outlook, the short-term rental industry outlook in general also looks positive (see AirDNA chart below). However, it is clear that some property types and locations are seeing revenue decreases.

Airdna U.S. Short-Term Rental Industry Outlook. Beyond “Airbnbust”—2023 Short-Term Rental Reality

Says AirDNA’s Lane, “While there is some decline … I still see the industry as very healthy … and still see broadly that the industry is undersupplied in terms of how popular it is and how much further growth we are going to get next year or two. There are going to be some ups and downs, but probably we are on a growth path over the next couple of years.” 

Things are Changing Quickly: Owners Must Adapt

In their 2022 Winter Industry Trends Report, Evolve writes, “With vacation rental industry trends changing as quickly as they are—and in different ways across the U.S. … owners cannot take a one-size-fits-all approach to their revenue strategies. What’s more, relying on the exact same tactics used last year could be a recipe for less revenue.” 

Agrees Key Data, “All markets look to be strengthening in Q3 [2023] but U.S. property managers will still have to fight hard for revenue growth by adjusting their strategies in real-time.” 

The situation in the short-term rental industry is likely not as dire as some had feared. But, every property and location is different. Today’s STR investing will require owners to be more engaged than ever with their properties.  

As the industry adapts to new dynamics, prudent investors need to stay informed about market conditions and implement strategies to navigate these changes to protect their investment income. 


Beyond “Airbnbust”—Short-Term Rental Reality in 2023

7 Key Insights: Short-Term Rental

Getting beyond “Airbnbust” and moving forward into the short-term rental reality of 2023.

  1. Be Investor-Minded 

Short-term rental property investing is just like any other real estate investing. Watch and analyze your local STR real estate market, for both the near- and long-term potential and pitfalls. 

  1. Approach Funding Based on Long-Term, Not Short-Term Income Projections 

Investors can get into trouble with DSCR (Debt Service Coverage Ratio) loans that are based primarily on STR income projections, as when that income fluctuates, owners may not be able to make their payments. That is why some lenders (like i Fund Cities) focus our STR funding on properties where the numbers flesh out using long-term rental income projections. 

(For information on how to get a rental loan, see our article,

(For information on how to get a rental loan, see our article, Expert Guide: How to Get a Loan for a Rental Property). 

  1. Step Up Service, Amenities, Additional Revenue Streams, and Unique Experiences 

BiggerPockets’ Rob Abasolo (Robuilt) suggests adding amenities to properties to increase bookings over competitors. (He has recently added upgrades like home theatres, putt-putt golf courses, pickleball courts, and even jet ski rentals to his own properties.)  

Other experts suggest adding ancillary revenue streams like EV chargers and the opportunity for extended stays for renters already renting your property.  

Some investors are finding more unique experiences (tree houses, glamping, etc.) and other niches (like a Star Wars-themed house) to be attractive business models. 

  1. Be Proactive with Booking Windows, and How and What You Discount 

Pay close attention to booking windows, and discount accordingly. Be smart about how you discount. (I.e., Is it better to discount your rate and maintain occupancy, or keep your rate and take the hit on your occupancy?)  

Beyond “Airbnbust”—Short-Term Rental Reality in 2023
  1. Understand Your Platforms 

Keep up with how your platform is presenting your property. Recently, Airbnb added 55 new categories including every property type – from A-frames and amazing pools to yurts and vineyards. Make sure you know how you are being listed, and what impact that amy have on how your guests find you. 

  1. Stay On Top of Local Regulations 

Stay connected with your city and state current and potential future regulations, and the changing conversations by investors around these changes. Although some investors believe that investing in STR’s, where no regulation exists, makes the most sense, with supply increasing in some areas, some investors are now considering whether limits on STR supply could actually be a plus.  

  1. Consider Medium or Long-Term Renting 

If your bookings are down considerably, consider a move to medium or long-term rentals. 

That’s it, investors! We hope this article has helped you see beyond “Airbnbust,” and see into the short-term rental reality of 2023.  

If you have a short-term rental property you are looking to fund, we are always here to help!  

The i Fund Cities Team