Vacation rental
Temporary rental of furnished homes as hotel alternatives.
A vacation rental is the renting out of a furnished apartment, house, or professionally managed resort-condominium complex on a temporary basis to tourists as an alternative to a hotel. The term is mainly used in the US, with other terms including self-catering rental, holiday home, holiday let (UK), cottage holiday, and gite (France). Vacation rentals have long been popular in Europe, Canada, and are becoming increasingly popular worldwide.
- Global market size
- $100 billion (Evercore estimate)
- Market share for rent by owner
- two-thirds
- Commission range for management companie
- 20% to 50%
- Unsold timeshare inventory as vacation r
- 21%
- Value of unsold timeshare rental busines
- $1.9 billion
Lore & Background
Vacation rentals typically occur in privately owned properties such as villas, apartments, cottages, condominiums, townhomes, or single-family homes. They range from budget studio apartments to high-end private villas with amenities like staff, private beach access, boats, and private chefs. Some condominiums offer hotel-like services including front desk check-in, 24-hour maintenance, housekeeping, and concierge. At the other end are campervan and motorhome rentals.
Villa holidays are popular in Europe, with destinations including the US Virgin Islands, Italy, Spain, France, Germany, Greece, and Turkey. In the US, they are prevalent in Florida, Hawaii, California, and other coastal areas. The European vacation rental market is much larger than that of the US. Vacation rentals are arranged directly with owners or through agencies, often via the internet. Listing services display property information, while agencies handle reservations and billing, charging higher commissions.
Reader's Guide
Vacation rentals represent a significant segment of the global travel accommodation market, estimated at $100 billion, with two-thirds of that market being 'for rent by owner.' They provide an alternative to hotels, offering fully furnished spaces for temporary stays, often on a weekly basis. The industry includes various business models: direct owner rentals, listing services (e.g., Vrbo, HomeAway), agencies, and management companies that handle housekeeping and maintenance on commission (20%–50%) or through guaranteed rental arrangements.
Vacation rentals can positively impact local economies by encouraging longer stays and increased visitor spending, which creates employment. However, they can negatively affect long-term housing availability in tourism communities, though owner-occupiers renting out rooms while absent do not impact the long-term rental market. Travelers face risks such as properties being 'Significantly Not As Described' (SNAD) or fraudulent listings where the rental does not exist. User reviews help mitigate these risks. The industry has seen consolidation, with Expedia buying HomeAway (owner of VRBO) in 2015 to compete with Airbnb.
Did You Know?
- The term 'vacation rental' is mainly used in the US; in the UK it is called a holiday let or self-catering rental.
- Some luxury vacation rentals cost several thousand dollars per night and offer staff, private chefs, and cooking lessons.
- In 2014, unsold timeshare inventory made available as vacation rentals was a $1.9 billion business.
- Travelers may encounter fraudulent listings where the rental does not exist, leading to loss of payment.
Frequently Asked Questions
Who is Vacation rental?
Vacation rental is the practice of leasing a furnished home, apartment, or resort-condo to travelers for short stays as a non-hotel lodging option. The term is most common in the United States, while the UK calls it a 'holiday let' and France uses 'gite.'
What are Vacation rental's powers/role?
Its core ability is giving guests a self-catering, private space where they can cook and live like locals rather than check into a standardized hotel room. Roughly two-thirds of the market is driven by individual owners renting out their own properties, while management companies handle the rest for a 20% to 50% commission.
Why is Vacation rental important?
It reshapes how travelers experience a destination by offering a private, kitchen-equipped space instead of a generic hotel floor. Its $100-billion scale makes it a major force in both the hospitality and real-estate sectors globally.
What are Vacation rental's origins?
The tradition took root long ago in Europe and Canada, where renting out cottages and holiday homes was already a well-established custom. It later crossed into the US and has since expanded into a worldwide phenomenon with many regional names.
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