Luxury Vacation Rentals Market Is Flying High

25.08.2023 - 14:00 / skift.com / Srividya Kalyanaraman / Merilee Karr / William Parry

Remember the Skift 2023 megatrend forecasting that luxury hospitality will go a step further?

We’re barely a quarter into the year, and the luxury rental market from Phuket to Provence is blooming with lavender and gardenia.

In the U.S., the luxury segment would see both average daily rates and length of stay double by December 2023, compared to January 2022 — from $492 to $854. The average length of stay during the same period is projected to grow from an average 6.66 nights to 12.43 nights, according to short-term rental data provider KeyData.

Looking ahead, The global luxury sector in vacation rentals is expected to be valued at $82 billion by 2031, registering a growth of 13.1 percent this decade (2021-2031).

Vacation rental company Evolve announced in January that it will offer luxury and premium properties in partnership with Homes & Villas by Marriott Benvoy. And, London-based Onefinestay, which specializes in luxury private rentals, launched in New York City with 16 homes, as well as launched a luxury villa collection in Provence, France. There is also speculation that Airbnb is leaning into luxe.

Across the pond, London-based hospitality and property management company Altido, which has properties ranging from student accommodations to luxury villas, has started segmented its inventory and launched its “Luxury Collection” earlier this year and will continue to add to it this year. 

“Increasing average daily rates is the name of the game,” said Altido CEO William Parry. “We have always aimed to catch the higher-end of the market, which makes much more sense for the economics of the business.” 

Altido’s average daily rates for luxury rentals has increased by 19 percent compared to the same time last year in the UK. Parry added that what property managers lose in occupancy, they make up for in higher rates. And during a recession, luxury vacation rentals often act as a shock absorber, in case of a dip in budget stays. 

Merilee Karr, founder and CEO of London-based Under The Doormat Group, concurs with the trend but isn’t surprised by it.

“It’s not a surprise,” Karr said. “If anything, interest rates going up means that the wealthy are those who benefit from this, and have more cash to spend. That’s true both in cities and holiday destinations.” 

Unique or “experiential stays” that are often old, family-owned estates or second homes owned by the wealthy may not serve as the primary income for owners, but in a downturn, upkeep can get expensive.

And there’s a reason for that. 

When the world was fighting a pandemic, there was a new billionaire every 17 hours — making 2020 a record-setting year for the world’s wealthiest. 

There were 500 new billionaires in 2021 with a net worth of at least a