Phocuswright's latest research, Niche No More: European Short-Term Rentals, developed in partnership with AirDNA and Transparent, finds gross bookings for the European short-term rental (STR) market declined by 33% in 2020, totaling €25.3 billion, a level last seen in 2010.
But with COVID cases beginning to fall sharply and an increasing share of the European population being vaccinated, the recovery accelerated in spring and early summer 2021 and bookings were projected to rebound by 31% versus 2020.
By the end of 2022, gross bookings will reach €37.5 billion, and a full market recovery to pre-pandemic levels is projected to occur in 2023.
And by 2025, the short-term rental segment is projected to reach €44.3 billion.
The five core markets – United Kingdom, Germany, France, Italy and Spain – account for about 70% of the total European STR gross bookings. Recovery is expected to be the fastest in the U.K., exceeding pre-pandemic levels by the end of this year, while France will not see full recovery to 2019 levels before 2024.
Online bookings continue to grab the majority of share in the European STR landscape. From 77% in 2019, online penetration is expected to grow to 85% in 2025.
Intermediaries like third-party platforms and OTAs have the lion's share in this online market. In 2021, with a share of 70% of STR bookings, intermediaries outperformed online-direct (9%) by a factor of seven.
The major players in the online space include Airbnb, Booking.com, Vrbo (and other Expedia Group brands such as FeWo-direkt in Germany and Abritel in France) and Awaze with multiple brands in the U.K.
Other important players include OYO Vacation Homes, HomeToGo (including Casamundo and other metasearch sites), Interhome Group, and e-domizil Group, to name a few. The vast majority of mid-tier and smaller intermediaries feature robust internet booking engines that deliver fast search results, but they lack the deep pockets for online marketing/SEM and growth is limited due to their comparatively low website traffic.
Close to a third of European travelers stayed in a STR in 2020, but hotels remain the leader in accommodation with an incidence rate of stay of over 75%.
Those that do choose rentals tend to skew younger, with Italian (47%) and French (42%) travelers in the 18-34 age group having stayed in a STR at least once.
More than 40% of travelers in the U.K., Germany and France considered only STRs for their last trip. And value for money is the most important reason overall for choosing STRs, with 37% of European travelers citing it. Spanish travelers (44%) are the most value-conscious while for travelers from the U.K., location (45%) is the most important factor.
And looking ahead, more than a quarter of travelers say they intend to stay in a short-term rental on a trip in the next 12 months. While this trails intent for hotel stays, it nevertheless bodes well for an industry still in its infancy.
BY PHOCUSWRIGHT RESEARCH