Vacation Rentals Surge, Hotels Under Pressure
The global travel industry showed moderate growth in May 2025, with the Skift Travel Health Index reaching 102, indicating 2% growth year-on-year.
A deep dive into sector performance, however, reveals diverging trends between the two accommodation sectors: vacation rentals, which are soaring, and hotels, which are softening.
According to the latest Skift Travel Health Index report, vacation rentals are experiencing a surge, growing 12% relative to May 2024, while hotels witnessed a slowdown (2% year-on-year) in the face of growing economic uncertainties.
Skift Travel Health Index Score by Sector
Region Feb-25 Mar-25 Apr-25 May-25 Airlines 103 105 105 102 Hotels 100 105 103 98 Vacation rentals 113 108 113 112 Car rentals 98 107 105 109
Vacation Rentals: The Star Performer
Short-term rentals emerged as the top performer in May, with its index rising 12% year-on-year. This strong growth highlights continued appetite for alternative accommodations among travelers. Brazil led with a strong 105% increase in short-term rental bookings in May.
While global short-term rental occupancy dipped during the month – likely due to supply growth outpacing demand after April's Easter holiday surge – the outlook for summer remains strong.
AirDNA forecasts continued momentum for short-term rentals in the U.S., projecting 3–4% RevPAR growth from 2024 to 2026. The growth is primarily driven by a forecasted increase in average daily rate (or ADR).
U.S. Short-Term Rental Industry: Historical Performance and Forecasts
Year-on-Year Percentage Change
Region 2022 2023 2024E 2025F 2026F Nights listed 22% 8% 7% 5% 5% Demand 15% 2% 7% 5% 6% Occupancy -4% -4% 0% 0% 1% ADR 5% -3% 3% 3% 2% RevPAR -2% -9% 3% 3% 4%
Source: Reproduced from 2025 U.S. Short-Term Rental Outlook Report, AirDNA, data as of June 2025.
Hotels: Slight Softening
In contrast, the hotel sector declined by 2% in May. New hotel bookings for the coming months have slowed across the board, with the exception of Latin America, which saw a 6% increase. This broad slowdown is likely due to a shortening of booking windows, a common trend during periods of economic uncertainty.
Key performance indicators for hotels, such as occupancy and ADR, presented a mixed picture. While they increased in some regions, they declined in Europe (3% year-on-year) and North America (1% year-on-year).
In the U.S., ADR fell by 4% and occupancy by 2%, suggesting hotels may be strategically lowering rates to stimulate demand.
This has led PwC to lower its 2025 U.S. hotel performance forecast. The updated projections anticipate that U.S. RevPAR will rise only by 0.9% to $101, a reduction from previous estimates. ADR is now expected to increase by just 0.8% to $160, with occupancy growth remaining minimal at 63%.
PwC's Quarterly U.S. Hotel Outlook
Region Q1 2025 Q2 2025 Q3 2025 Q4 2025 Full Year 2025 Occupancy 58% 66% 67% 61% 63% Y-o-Y growth 0.40% -0.90% 0.30% 0.60% 0.10% ADR $158 $160 $162 $161 $160 Y-o-Y growth 1.90% -0.30% 0.80% 1.10% 0.80% RevPAR $92 $106 $109 $97 $101 Y-o-Y growth 2.20% -1.20% 1.10% 1.80% 0.90%
Source: STR; U.S. Bureau of Economic Analysis; U.S. Bureau of Labor Statistics; S&P Global (forecast released May 2025); CoStar; PwC. Data as of June 2025.
PwC attributes this revision to economic uncertainty, geopolitical tensions, and a soft second quarter this year. While a rebound is anticipated for the second half of 2025 as economic conditions stabilize, the immediate outlook remains cautious.
The Skift Travel Health Index is a real-time measure of the performance of the travel industry at large, and the core verticals within it, which provides the travel industry with a powerful tool for strategic planning. We have been tracking travel for 22 of the largest global economies since 2020, with consistent monthly data inputs across 88 indicators that are aggregated to cover categories such as aviation, hotels, short-term rentals, and car rentals.
Access the Skift Travel Health Index: May 2025 Highlights for an in-depth analysis and the Travel Health Index dashboard to visualize the data.
Skift Travel Health Index: May 2025 Highlights
In May 2025, Skift Travel Health Index, at 102, indicates a period of balanced growth in the global travel industry. While the hotel sector faces challenges and revised forecasts, the strong performance of vacation rentals and steady growth in other segments paint an optimistic picture for global travel. Read More
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