As we head into 2025 and look back on the performance of the United States vacation rental industry in 2024, the question remains “Will supply and demand finally stabilize, and drive occupancy to remain consistent with 2024 and 2023?” Our same-store property managers’ direct data indicates that the gap is closing, with an annual guest nights (demand) figure that stayed stagnant while supply increased by only 3%, compared to an 11% increase in 2023. With supply growth slowing and demand stabilizing, it appears that 2025 will bring positive performance, but those are not the only two factors that drive the industry. Let’s dive into the impacts that decreasing occupancy, consistent rates, and increasing booking windows have on property managers across the United States.
U.S. Vacation Rental Performance for the Last Three Months/Next Three Months
Paid Occupancy %
Paid Occupancy paces behind last year until April as we move through Q1 2025
Paid Occupancy % = Nights Sold / Total Nights
- November 2024 performed slightly better than November 2023, while December finished behind 2023, and January occupancy was only slightly (1%) lower than in 2024.
- February and March 2025 are pacing 2% behind 2024, while April is pacing 1% higher than last year.
What does it mean?
- In 2024, supply growth slowed to a 3% year-over-year increase, while demand held steady. Increased supply is still contributing to decreases in occupancy.
- Shorter stay lengths are also contributing to a decrease in occupancy. Stay lengths have been shortening since 2021, as weekend and urban travel have recovered post-COVID. Guests take more trips per year but spend less time in their destinations. Try offering length-of-stay discounts to decrease orphan nights and entice people to stay longer.
- The shift in the Easter holiday significantly impacts the year-over-year shift in occupancy pacing. March occupancy last year was boosted by the March 31st Easter date and the corresponding March school break. With Easter being April 20th in 2025, that demand has shifted toward the end of April. Along with occupancy pacing 1% ahead, booking windows are about three weeks longer for April this year than last year. Ensure your marketing strategies are optimized to capture the early bookings for the Easter holiday and school break.
Average Daily Rate
Daily Rates are fairly consistent with 2024
ADR = Total Unit Revenue / Nights Sold
- In November and December 2024, booked rates were only slightly lower than in 2023. That trend continued into 2025 with January’s booked rates only $1 lower than last year’s.
- February 2025’s rates are on par with 2024, while March rates are lower (-$10). April rates are on par with last year.
What does it mean?
- While supply growth has slowed in 2024, the increase in supply still outweighs the increase in demand, causing lower occupancy rates and driving pricing power down. Additionally, with more options and inflation, consumers are more price-sensitive than they used to be.
- March rates are pacing behind due to the shift in the Easter holiday date since Property Managers can increase rates and capitalize on holiday demand. With April’s rates pacing similarly to last year, Property Managers may consider raising rates for this high-demand period.
RevPAR
Varied occupancy and rate performance lead to decreased RevPARs.
RevPAR = Occupancy x ADR or Total Unit Revenue / Total Nights in a given period
- November 2024 RevPAR was slightly higher than in 2023, but December and January RevPARs were driven down by decreased occupancy.
- February and March 2025 RevPARs are pacing $4 (4%) and $8 (9%) behind, respectively, while April is pacing $2 ahead of 2024.
What does it mean?
- RevPAR has been declining, driven by decreases in occupancy.
- Shoulder seasons offer the most opportunity for increased revenues, so continue refining your marketing efforts to secure their much-needed last-minute bookings, and plan for the summer season ahead.
U.S. Regional Vacation Rental Performance
Q1 2025 Paid Occupancy %
In Q1 2025, the United States is seeing differing trends across regions. The Midwest and Hawaiian Islands are seeing slight increases in Paid Occupancy, while the Mid-Atlantic States are seeing an 11% increase, during a shoulder season. New England is maintaining their Q1 2024 performance, while the Southwest (-1%), Rocky Mountain States (-2%), and Western U.S. (-4%) are seeing moderate decreases. The Southeast U.S. is seeing the largest year-over-year decline of 7%.
Regions that see a significant Canadian traveler base may start to see an impact in paid occupancy in the coming months. Key Data partners have seen a 21% drop in Canada to U.S. reservations compared to 2024. We will explore that in another piece, so keep an eye on our blog for further insights.
Q1 2025 Average Daily Rates
Regions seeing positive occupancy performance in Q1 2025 are seeing positive rate performance, excluding the Hawaiian Islands. The Mid-Atlantic States (+4%), Midwest (+3%), and New England (+1%) are seeing increases over their booked rates from last year. The Western U.S. is booking rates similar to last year. The Southeast U.S. (-1%), and Rocky Mountain States (-2%) are booking rates marginally lower than last year, while the Hawaiian Islands, and Southwest U.S. are seeing 4% and 5% decreases in booked rates, respectively. Again, these rate decreases can partially be attributed to the shift in Easter dates.
Q1 2025 RevPAR
Positive occupancy combined with increased rates are leading to positive RevPAR for the Midwest (+5%) and New England (+1%), and especially in the Mid-Atlantic States. Property Managers in the Mid-Atlantic are capitalizing on their increased shoulder season occupancy with higher rates, leading to a 16% increase in RevPAR over Q1 2024. Revenues are pacing 1% behind in the Hawaiian Islands, driven by a decrease in rates. The Rocky Mountain States are pacing 3% behind during their peak season. The remaining regions are pacing 4%-7% behind last year. Q1 starts to see bookings ramp up for beach markets and peak season for ski markets, so be sure to finalize your marketing strategies for the next few months.
State of the U.S. Economy
The inflation rate in the United States has been rising since September 2024, finishing at 3% in January 2025. In short, Americans paid an average of 3% more for goods and services than in January of last year. It is unlikely that the Federal Reserve will cut interest rates again, as they did in mid-September, as inflation rises.
Gasoline prices increased 1.1% from December 2024 to January 2025, and airfare increased 1.2% from last month, making airfare 7% more expensive than in January 2024.
A Trend to Keep an Eye On
American Travelers are exhibiting caution about spending on trips
Future Partners (f.k.a Destination Analysts) found that in January 2025, American travelers’ reported optimism about their personal financial outlook remains strong (51.5% expect to be better off financially in the next year) and though expectations of an impending economic recession remain at post-pandemic lows (35.6%), the percentage of American travelers who said that they are better off financially now compared to the year prior fell below 30 percent for the second time in three months (29.2%).
This decline in current financial sentiment among American travelers is mirrored in the downward trend in the percentage who feel that the present is a good time to spend on travel—down 4.4% from the month prior to 32.5% this month. Similarly, the share of American travelers who said travel will be a high budget priority in the next three months saw a -3.9-point dip from last month (to 54.3% from 58.2%). Additionally, after steadily trending upward over the past 6 months, the average expected annual leisure travel budget dropped over 15 percent from $5,898 to $4,973 since last month. Personal financial reasons and the overall costs of travel are reasons Americans cite as what’s deterring them from traveling, and these figures are at 12-month highs. Americans’ excitement for travel levels fell to an average 8.1 on a 0-10 scale, a 7-month low. These combined metrics indicate a growing sense of caution among American travelers.
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