It's a cruel, unpredictable summer for Airbnb and Vrbo hosts — but it also might be the new normal

• Americans are still booking short-term rentals for the summer at record rates, beating expectations.
• But the growing pool of Airbnb and Vrbo hosts means some hosts are seeing revenue drop up to 18%.

Across the country, Airbnb and Vrbo hosts are scratching their heads.

Last July, Arizona short-term-rental host Jen Kelman brought in $3,700 in Airbnb bookings alone, managing a two-bedroom rental in the mountain escape of Pine that attracts Phoenix daytrippers looking to beat the heat.

Now, she's staring at a more bare booking calendar, checking prices daily to stay competitive, and waiting on last-minute guests to make up their minds.

"It's possible that the new normal is just more sporadic and not so reliable," she told Insider.

The status quo of post-lockdown travel, where hosts raked in record amounts of revenue and could stay reliably booked with little effort, has officially shifted. Hosts who expect guests to pay top dollar and book months in advance are waking up to a different reality, where shorter stays are the norm, last-minute bookings prevail, and slashing nightly rates has become more common.

It's not all bad news. Americans are still voraciously booking short-term rentals, despite economic uncertainty — and are even outpacing expectations.

In January, analytics site AirDNA forecasted demand for short-term rentals, as measured by nights booked, would grow by 5% in 2023. It has now increased that forecast to 10% based on the first half of the year.

"Travel brands and the service economy have outperformed expectations, and short-term rentals are no different," said Jamie Lane, chief economist at AirDNA.

Travelers this year, however, are noticeably more price conscious, he told Insider.

A survey from rental site Vacasa showed that 90% of summer travelers this year changed their plans for travel to be more budget-friendly, including choosing driving over flying or choosing a cheaper day to travel.

Guests are booking the high and low end, putting a squeeze on the middle

In Lake Arrowhead, California, Katie Kay Mead manages seven properties for hosts and said two types of properties are doing well: the cheap and the high end.

One of her rentals is a five-bedroom luxury home with a hot tub, game room, and sweeping views of the lake. It rents for $600 per night and Mead said it's already booked for every weekend this summer.

On the other end, a fairly basic two-bedroom rental is getting consistently booked at $150 per night, though last summer she said it went for closer to $199.

For the rest of the rentals in the middle, she told Insider hosts and managers are forced to dance back and forth with the market, trying to find a "breakeven price" where it's "worth it to rent, but people still see it as a good enough deal."

The purchasing power of guests comes from their expanded choice in rentals. Active listings reached 1.4 million in April 2023, an 18% jump compared to the same time last year, according to AirDNA.

Hosts find other ways to entice renters to book their properties

Some hosts are playing with algorithms like video games. In Arizona, Kelman is redeeming Vrbo "power-ups" she's accrued based on performance metrics like answering guests in a timely manner.

Using those points, she's able to "boost" her listing on the Vrbo algorithm and hopefully get her rental in front of more eyeballs.

In Tennessee, Melinda Johnson manages 27 rentals across the Great Smoky Mountains and has some homes sitting empty for previously reliably Fourth of July.

"We're still struggling to fill July," she told Insider.

Johnson said she has greatly compromised on her cancellation windows and minimum-night stays hoping to entice guests who may still be on the fence.

She's dropped her cancellation window from 60 days to 30, and minimum nights from four to two. She believes the current market won't bend to demanding hosts.

"It's definitely a value customer this year," she said of the types of reservations she's getting.

But, one difficult summer isn't scaring Johnson away from an industry she's been in for seven years.

"It's the current market. I'm not concerned about the long term," she told Insider.