Short-term rentals face more regulation but expect dynamic growth

The global short-term rental (STR) market is entering a new phase of structural transformation, moving from rapid, less-controlled expansion to a period of increased oversight and regulation. This shift follows a dynamic post-pandemic growth spurt, with the market's booking value expected to climb from $219.9 billion in 2025 to $270.6 billion by 2029, according to a Phocuswright report. Three major trends will define the STR landscape in 2026: enhanced market control, technological innovation, and evolving traveler expectations. As regulations tighten, the availability of listings in key markets may be affected, signaling a move toward more structured operations. Simultaneously, advancements in generative artificial intelligence and strategic shifts by booking platforms, such as Airbnb expanding beyond accommodation, are reshaping how travel is planned and purchased. Travelers' increasing demands for trust, predictability, and value are also driving a closer convergence between STR and traditional hotel services.

North America continues to be a strong driver of growth, with STR booking values expected to increase by 5% to $81.8 billion in 2026, outpacing the projected 3% growth for the U.S. hotel market. The frequency of STR use among American leisure travelers has risen to 30% in 2024/25, up from 24% in the previous period. This growth is partly fueled by longer trips, with the average stay increasing from 6.2 to 7.2 nights and the proportion of trips lasting at least 14 days rising from 16% to 21%. In Europe, STR is even more established, with usage rates comparable to or exceeding those in the U.S. France leads at 44%, followed by the UK at 31% and Germany at 26%. The European market is projected to reach $79.7 billion in gross booking value in 2026.

The Asia-Pacific region is anticipated to exhibit the fastest growth in the coming years, with its market value projected to expand at an annual rate of 8.9% to reach $49.3 billion by 2029, buoyed by a post-pandemic recovery. Latin America saw the highest regional growth in 2025, driven by strong travel demand and increased bookings in countries like Brazil and Mexico. The Middle East and Africa remain the smallest market, with growth in 2026 likely to be constrained by regional conflicts. By 2029, the gross booking value in this region is expected to reach $10.3 billion.