The vacation rental market is a dynamic landscape, continuously shaped by shifting traveler preferences, regulatory changes, and market saturation levels. While certain hotspots like Miami and San Diego continue to thrive, others are experiencing a downturn in occupancy rates, making them less attractive to real estate investors and Airbnb hosts.
In this blog post, we'll explore some of these "not-hot" vacation rental markets for 2025. By understanding these trends, real estate investors, Airbnb hosts, and vacation home owners can make more informed decisions regarding their short-term rental investments.
Understanding the "Not-So-Hot" Markets
Before we take a closer look at specific areas, it's crucial to understand the factors contributing to the declining popularity of these vacation rental markets:
- High Supply Levels: An oversaturation of rental properties can lead to a price war, resulting in reduced profitability for individual hosts.
- Stringent Short-Term Rental (STR) Regulations: Increasing regulatory pressures can limit rental opportunities and increase operational risks.
- Limited Demand: Changes in tourism trends, such as a shift towards urban centers or emerging destinations, can reduce the number of potential guests in certain areas.
Short-term Rental Markets
Now, let's examine some of the markets that have shown declining occupancy data over the past 12 months:
Memphis
Occupancy This Year: 38.20%
Memphis has been facing challenges in attracting enough short-term rental demand. The decline in occupancy highlights a competitive regional market with high supply and limited interest from tourists.
Big Bear Lake
Occupancy This Year: 32.40%
Big Bear Lake, known for its charming cabins and beautiful landscapes, has seen a slight drop in occupancy. This change may be due to increasing competition in similar nature-centric destinations.
Flathead National Forest
Occupancy This Year: 30.70%
Despite its stunning natural beauty, Flathead National Forest's occupancy rates have decreased, which might be attributed to stricter STR regulations and limited local tourism initiatives.
Eastern Oregon
Occupancy This Year: 31.60%
Eastern Oregon's rugged terrain and outdoor adventures haven't translated into increased demand for short-term rentals, evidenced by its continued low occupancy rates.
Atlantic City
Occupancy This Year: 34.60%
Atlantic City remains stagnant with no growth in occupancy, possibly due to heightened competition and evolving traveler expectations favoring alternative destinations.
Lake of the Ozarks
Occupancy This Year: 35.10%
With its scenic views and leisurely activities, Lake of the Ozarks is still struggling with lower occupancy rates compounded by an excess supply of vacation rentals.
Jasper
Occupancy This Year: 36.30%
Jasper's appeal as a nature retreat is not enough to counteract declining occupancy rates, suggesting possible shifts in visitor preferences or investment saturation.
Sun Valley
Occupancy This Year: 37.00%
Sun Valley, despite its year-round attractions, is experiencing a significant drop in occupancy, perhaps due to increased competition from similar resort towns.
How to Thrive in a Challenging Market
If you’re already invested in one of these markets, there’s still potential to stand out and attract bookings. Here’s how:
- Optimize Pricing: Use dynamic pricing tools to adjust rates and stay competitive.
- Highlight Unique Features: Promote standout amenities like hot tubs, game rooms, or pet-friendly options.
- Upgrade Your Listings: Professional photos and compelling descriptions can make your property irresistible.
- Offer Deals: Discounts or bundled experiences, like tickets to local attractions, can capture interest.
- Appeal to New Audiences: Shift focus to remote workers, eco-conscious travelers, and others.
- Maximize Guest Experience: Turn first-time visitors into repeat guests with stellar service and personalized touches.
Even in a declining market, these strategies can help your property outshine the competition and secure more bookings.
For real estate investors, Airbnb hosts, and vacation homeowners, understanding these trends is vital for making strategic decisions in the short-term rental markets. While these "not-hot" markets present challenges, they also offer opportunities for those willing to adapt and innovate.
Consider re-evaluating your marketing strategies, adjusting pricing, or diversifying your property portfolio to mitigate risks in these areas. Additionally, staying updated with rental market trends and regulatory developments will help you remain competitive and capitalize on potential growth opportunities.
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