Luxury vacation homes redefined the concept of accommodation for travelers. The key differences between standard and luxury short-term rentals are the attention to detail and level of service. These are beautifully designed homes with the amenities and privacy of a personal residence.
That said, luxury short-term rentals ensure a more relaxed experience through exclusivity, premium amenities, and high-end services.
The Boom of Luxury Short-Term Rentals: Critical Insights
Over the past few years, prime global luxury STR markets have been growing exponentially. Knowing the luxury travel market size will help you scale your STR portfolio as a property manager.
According to Grand View Research, the estimated international luxury travel market size was around $1.38 trillion in 2023. The skyrocketing growth indicates that more high-value travelers seek unique and luxurious experiences. With an expected CAGR (Compound Annual Growth Rate) of 7.9%, the demand for premium short-term rentals will also boost in the coming years.
The growing interest among travelers in premium stay experiences is also drawing the attention of property investors. Based on the Host Financial report, loan requests shot up more than 6% for buying high-end STR properties valued above $750,000 between 2022 and 2023.
Even Business Insider recently reported over 50% of high-value pre-construction condos in Miami are for luxury STR businesses.
Undoubtedly, the demand for property managers will also rise in the coming years as investment in higher-end properties increases.
Three Major Factors Contributing to the Luxury STR Growth
Let’s look at the success metrics of the luxury STR market globally.
1. Increased Disposable Income
Economic growth is a key reason for the spurt in the demand for luxury short-term rentals. As wealth grows, so does the demand for premium properties managed by professionals.
Statista’s user demographic analysis shows that 57% of high-income travelers preferred to book unique vacation rental homes. The increased household and disposable income makes high-end vacation homes affordable for many.
2. Elevated Comfort with Personalized Services
Luxury short-term rentals are gaining traction due to their personalized approach. These vacation homes ensure exclusive services and premium amenities. They may include arranging local excursions, outdoor barbeque equipment, rooftop jacuzzi, pool tables, babysitters, or a private chauffeur.
A manager also considers food preferences, dietary restrictions, or special event arrangements tailored to each guest.
In an interview, James Bisset (owner of a premier luxury property management company, Absolute Property Care) said he provides airport pick-up and concierge services to add extra value for his guests.
Such high-end features and exclusive services entice travelers to spend more on their stay and promote word-of-mouth recommendations.
3. Preference for Privacy and Space
Instead of booking small rooms and shared amenities, people are willing to spend more to have private, safe spaces. Luxury short-term rentals offer a secluded haven where guests can relax without intrusion. COVID-19 also had an after-effect on consumer behavior, and they are now looking for properties with fully equipped kitchens, including all the tableware, cookware, and appliances.
The privacy element with smart technologies appeals to elite and selective travelers seeking a retreat from the public eye.
Strategies to Market Your Luxury Vacation Rental Homes
A rental marketing strategy for vacation homes will get your listings in front of your target audience and potentially convert them.
Choose the Right Channel
Listing your properties on the perfect combination of channels is crucial to improving luxury rental revenue.
Ask yourself:
- Which guests do you want to attract? Families with pets? Couples?
- How can they find you?
- And where can you find them?
Answering these questions will help you pick the right OTA channel for listing your property. For example, your opulent hillside villa will gain more traction on the Luxe Airbnb as it usually attracts a younger audience.
So, choose channels that fit your high-end STR portfolio and target clients.
Get Listed on Local & Niche Websites
You’re better off when you list your property on regional and niche luxury websites. A multi-channel distribution strategy will increase your property’s visibility and diversify your revenue.
Post-covid staycations and drive-to destinations became a fad as people look for short getaways close to home. Websites focusing on a particular geographical area provide hyper-local expertise and tailor their inventory accordingly.
Similarly, listing on premium/luxury niche platforms enables you to target travelers looking for upscale stay options. The high-value travelers sometimes search for accommodations other than regular OTAs, such as Top Villas, StayOne, and Smiling House.
Price Optimization
Property managers must reduce nightly pricing to reach occupancy goals when supply outstrips demand in an area. On the contrary, higher pricing is necessary to boost per-booking profit margins in the less saturated luxury rental market. The cost per night also varies based on peak and off-season trends. Integrating the PriceLabs Dynamic Pricing tool enables property managers to get advanced insights into their luxury STR portfolio performance and benchmark against competitors. This data will help you optimize stay rates on a particular day, week, or month. Besides, adjusting nightly costs and filling gaps in your calendar will become easy with its Orphan Day Prices feature.
Key Takeaways
- Market Growth: The luxury short-term rental (STR) market reached $1.38 trillion in 2023, with a 7.9% expected annual growth rate.
- Investment Surge: High-end STR investments rose over 6% from 2022 to 2023, reflecting increased interest in luxury properties.
- Growth Drivers: Key factors include higher disposable incomes, personalized services and premium amenities, and a preference for privacy and space.
- Marketing Strategies: Effective tactics include selecting the right OTA channels, listing on local and niche websites, and using dynamic pricing tools like PriceLabs.
- Rising Demand for Managers: The growing luxury STR market will drive demand for professional property managers.
About PriceLabs
PriceLabs is a revenue management solution for the short-term rental and hospitality industry, founded in 2014 and headquartered in Chicago, IL. Our platform helps individual hosts and hospitality professionals optimize pricing and revenue management, adapting to changing market trends and occupancy levels.
With dynamic pricing, automation rules, and customizations, we manage pricing and minimum-stay restrictions for any portfolio size. Prices are automatically uploaded to preferred channels such as Airbnb, Vrbo, and 100+ property management systems and channel integrations.
Every day, we price over 350,000+ listings globally across 135+ countries, offering world-class tools like the Base Price Help and Minimum Stay Recommendation Engine. Choose PriceLabs to increase revenue and streamline pricing and revenue management. Sign up for a free trial at pricelabs.co today.