Is the Airbnb Short-Term Rental Market Slowing Down? What Landlords Need to Know

Over the past few years, short-term rentals seemed like a reliable path to rental income. Property owners converted spare rooms, investment properties, and vacation homes into Airbnb listings, attracted by stories of high nightly rates and strong occupancy. But recently, many hosts have noticed something changing. Bookings are down, competition is fiercer, and guests are increasingly choosing hotels instead.

For landlords evaluating their rental strategy or considering entering the short-term rental market, understanding these shifts is critical. The decisions you make now about how to rent your property can significantly impact your cash flow and stress levels for years to come.

Revenue Declines: What Hosts Are Reporting

Across various markets, short-term rental hosts are reporting noticeable revenue drops compared to previous years. Some operators are seeing declines of 30 to 40 percent year-over-year. Others report that while their total revenue hasn't changed dramatically, occupancy rates have dropped and they've had to lower prices to stay competitive.

These aren't just isolated complaints. The pattern appears consistent across different property types and locations. Urban listings, which once attracted steady business travelers and weekend tourists, are experiencing longer gaps between bookings. Vacation destinations that were fully booked last summer now have significant availability even during peak season.

The decline isn't universal. Some markets and property types continue performing well, but the overall trend suggests the easy money phase of short-term rentals may be over. Hosts who entered the market during the boom years are now facing a more competitive, more challenging environment.

Why Guests Are Returning to Hotels

Understanding why guests are shifting back to hotels helps explain the revenue pressure hosts are experiencing. Several factors are driving this change in consumer behavior.

Fee Fatigue and Pricing Transparency

One of the most common complaints from travelers is the disconnect between advertised nightly rates and final prices. A listing might show at $200 per night, but after platform fees, service charges, and cleaning fees, the total cost for a few nights can nearly double.

Hotels, by contrast, offer more predictable pricing. When you book a hotel room for $180 per night, the final price is close to that amount. There are no surprise cleaning fees or per-person charges. For many travelers, especially those on tighter budgets, this transparency has real value.

Cleaning Fees Plus Cleaning Chores

The frustration around cleaning has become a major talking point. Guests are increasingly vocal about being charged substantial cleaning fees while also being required to complete a list of chores before checkout. Starting laundry, taking out trash, washing dishes, and stripping beds feel excessive when you've already paid $100 or more for cleaning.

Hotels don't ask guests to clean. You leave your room as is, and housekeeping handles everything. For travelers who view vacation time as a break from household responsibilities, this difference matters.

Consistency and Reliability

Hotels offer predictable experiences. You know what you're getting in terms of cleanliness, amenities, and service standards. With short-term rentals, quality varies wildly. One listing might be immaculate and well-maintained, while another in the same price range might have cheap furniture, poor cleanliness, or misleading photos.

Additionally, hotels have built-in problem resolution. If something is wrong with your room, the front desk can move you to another room immediately. With a short-term rental, fixing issues requires contacting the host, waiting for a response, and potentially dealing with platform customer service, which can be slow and unhelpful.

Safety and Standards

Hotels are subject to regular inspections, fire safety codes, and health standards. Guests staying in hotels can reasonably expect working smoke detectors, proper emergency exits, and compliance with safety regulations.

Short-term rentals operate with less oversight. Some properties meet or exceed hotel standards, but others cut corners. Guests who prioritize safety, especially those traveling with children, may prefer the regulated environment of a hotel.

Market Saturation: Too Many Listings

One of the primary drivers of declining revenue is simple supply and demand. During the boom years, the success stories attracted new hosts. Property investors, homeowners with spare space, and real estate speculators all entered the market, dramatically increasing the number of available listings.

In some markets, the growth has been staggering. Cities that once had a few hundred short-term rental listings now have thousands. On any given weekend, there might be over a thousand available properties competing for the same pool of travelers.

This oversupply creates downward pressure on prices and occupancy rates. Hosts who want to maintain bookings have to lower their rates, offer discounts, or accept shorter stays. Those who keep prices high see more gaps in their calendar.

The saturation problem is particularly acute in certain property segments. Studio and one-bedroom units, which are the easiest and cheapest to convert into short-term rentals, face the most competition. Larger properties with unique features still have an advantage, but even they're feeling the pressure.

Regional Differences Matter

Not all markets are experiencing the same trends. Location, property type, and local regulations all play significant roles in determining whether a short-term rental will succeed or struggle.

Markets That Are Struggling

Urban markets with high hotel density are seeing some of the steepest declines. Business travelers, who once filled short-term rentals during the week, have largely returned to hotels. Cities with oversaturated short-term rental markets, particularly in states like Arizona, Florida, and parts of the Northeast, are experiencing significant revenue drops.

Properties in areas with many comparable listings face intense price competition. When travelers can choose from dozens of similar apartments in the same neighborhood, they'll pick the cheapest option or switch to a hotel if the pricing isn't compelling.

Markets That Are Holding Strong

Vacation destinations with limited hotel infrastructure continue to perform well. Mountain towns, lakefront properties, and rural getaway locations where hotels are scarce or non-existent maintain strong demand. Families and groups looking for multi-bedroom properties with kitchens and outdoor space still prefer short-term rentals over multiple hotel rooms.

Unique properties also have an advantage. A cabin in the woods, a beachfront cottage, or a home with special amenities like a private pool offers something hotels can't match. These properties can command premium prices and maintain higher occupancy even in a more competitive market.

The Economics: Short-Term vs. Long-Term Rentals

For many landlords, the fundamental question is whether short-term rentals still make financial sense compared to traditional long-term rentals. The answer depends on your specific property, market, and tolerance for active management.

Revenue Potential

At peak performance, short-term rentals can generate significantly more revenue than long-term rentals. A property that might rent for $1,500 per month long-term could potentially generate $3,000 to $5,000 per month as a short-term rental during high season.

However, those peak figures rarely tell the whole story. Occupancy rates, seasonal fluctuations, and the actual number of booked nights dramatically impact real revenue. A property with a $200 nightly rate that only books 10 nights per month generates $2,000, potentially less than it would as a long-term rental.

Operating Costs

Short-term rentals carry higher operating costs. Cleaning between every guest, restocking supplies, higher utility usage, increased wear and tear, platform fees, and property management expenses all add up. Many hosts underestimate these costs when calculating profitability.

Long-term rentals, by contrast, have more predictable and typically lower operating costs. Tenants pay their own utilities, handle routine cleaning, and generate less turnover. Maintenance is still required, but the frequency and intensity are generally lower than with short-term rentals.

Time and Effort

Managing short-term rentals requires ongoing attention. Responding to inquiries, coordinating cleanings, handling guest issues, maintaining listings, and adjusting pricing all demand time and energy. Some hosts enjoy this active involvement, but others find it exhausting.

Long-term rentals require less day-to-day management. Once a good tenant is in place, the landlord's involvement is minimal, limited to occasional maintenance requests and annual lease renewals. For landlords who prefer passive income, this reduced workload has significant value.

When Switching to Long-Term Makes Sense

Many short-term rental operators are converting their properties to long-term rentals. This shift makes sense in several scenarios.

Declining Revenue and Increased Competition

If your short-term rental revenue has dropped 30 percent or more, and you're in an oversaturated market, the math may favor switching. Calculate your actual net income from short-term rentals after all expenses and time costs, then compare it to what you'd net from a long-term rental with minimal management.

In many cases, landlords discover that after accounting for platform fees, cleaning costs, higher utilities, increased maintenance, and their own time, the premium from short-term rentals has disappeared or shrunk to the point where it's not worth the extra effort.

Burnout and Lifestyle Changes

Short-term rental management can be demanding. Constant guest turnover, review anxiety, last-minute booking changes, and the pressure to maintain perfect ratings wear on hosts. For landlords with other jobs, families, or simply a desire for less stress, converting to long-term rentals offers peace of mind.

Several hosts report that switching to long-term rentals dramatically reduced their stress. Instead of managing dozens of guest interactions per month, they now communicate with one tenant occasionally. The reduced mental load, even at lower revenue, feels worth it.

Regulatory Pressure

More cities and counties are restricting or banning short-term rentals. Homeowners associations are also implementing bans. If your property is facing regulatory uncertainty or has already been restricted, switching to long-term rentals provides stability and avoids potential legal issues.

If You Stay in Short-Term Rentals: How to Compete

For landlords committed to staying in the short-term rental market, adapting to the new reality is essential. Success now requires more strategic management than it did during the boom years.

Transparent, Competitive Pricing

Reduce or eliminate excessive fees. Guests are increasingly sensitive to total pricing, and listings with reasonable all-in costs stand out. Some successful hosts have eliminated cleaning fees entirely, building those costs into the nightly rate. This approach makes pricing clearer and more competitive with hotels.

Competitive pricing doesn't mean racing to the bottom, but it does mean being realistic about what your market will bear. Overpriced listings sit empty while reasonably priced properties maintain steady bookings.

Eliminate Excessive Guest Requirements

Don't charge high cleaning fees and also demand that guests complete extensive chore lists. Pick one approach or the other. Better yet, keep checkout requirements minimal. Guests who feel they're being treated fairly leave better reviews and are more likely to rebook.

Focus on Quality and Consistency

In a competitive market, properties that offer genuinely good experiences earn repeat bookings and strong reviews. Invest in comfortable mattresses, quality linens, reliable WiFi, and proper amenities. Ensure every guest receives the same high-quality experience.

Hosts who cut corners on quality to maximize profit often struggle in competitive markets. Guests can tell the difference between a well-maintained property and one furnished with the cheapest possible options.

Target the Right Guests

Understand what your property offers that hotels can't match. If you have a large home that sleeps eight people with a full kitchen, market to families and groups. If you're in a unique location, emphasize the setting and experience. Don't try to compete head-to-head with hotels on convenience or price when hotels have those advantages.

What This Means for New Investors

For landlords considering entering the short-term rental market now, the environment is fundamentally different than it was a few years ago. The low-hanging fruit has been picked. Success now requires more capital, better properties, stronger management, and realistic expectations.

Buying property specifically to operate as a short-term rental carries significant risk in many markets. Higher interest rates have increased carrying costs, oversupply has compressed revenue, and regulatory uncertainty creates additional risk. The math that worked at three percent interest rates often doesn't work at six or seven percent.

A safer approach for new investors is buying property that works financially as a long-term rental, then testing short-term rental performance as a potential upside. If short-term rentals generate significantly higher revenue, great. If not, you can switch to long-term tenants without financial distress.

Buying property that only pencils out with optimistic short-term rental projections is much riskier now than it was during the boom. Many hosts who bought at peak prices with high financing costs are now struggling to cover their mortgages as revenue declines.

The Long-Term Outlook

Short-term rentals aren't disappearing, but the market is maturing. The phase where almost any property in any location could generate strong returns with minimal effort is over. Going forward, success in short-term rentals will likely require one or more of the following: exceptional properties, excellent management, competitive pricing, or locations with limited hotel alternatives.

For landlords already in the market, honest assessment is valuable. Look at your actual revenue after all costs, factor in your time and stress, and compare that to what a long-term rental would generate. The answer will guide whether staying in short-term rentals makes sense for your situation.

The key is avoiding sunk cost thinking. Just because you set up a property for short-term rentals doesn't mean you have to continue if the economics or lifestyle fit no longer make sense. The best rental strategy is the one that aligns with your current financial goals and life circumstances, not the one you committed to years ago under different market conditions.

Final Thought

The short-term rental market is shifting, and landlords need to adapt. Revenue pressures, increased competition, and changing guest preferences mean the strategies that worked during the boom years may not work today.

For some landlords, staying in short-term rentals and adapting to the new competitive reality makes sense. For others, converting to long-term rentals offers better economics and less stress. There's no universal right answer, only the answer that fits your specific property, market, and goals.

Whatever path you choose, base your decision on realistic numbers and honest assessment of current market conditions. The landlords who thrive long-term are the ones willing to adjust their strategies when the environment changes, rather than clinging to approaches that no longer deliver results.