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The Impact of AI on the Short-Term Rental Industry

The Impact of AI on the Short-Term Rental Industry

The rise of artificial intelligence is ushering in a new era of efficiency and competitiveness in many sectors, and the short-term rental industry is no exception.

According to the 2024 Hostaway AI in the Short-Term Rental Industry report, a significant 70.1% of vacation rental property managers have integrated AI tools in their short-term rental operations, and the majority of them are optimistic about doing so. From price optimization and marketing to customer service, these tools are not just supplementary — 61.8% of users believe AI delivers a competitive edge in the marketplace.

In this article, we delve into the impact of AI on the vacation industry since OpenAI delivered AI to our fingertips with its release of ChatGPT.

Time Savings: A Clear Win

The most pronounced benefit of AI in the short-term rental sector is time savings.

Fifty-eight percent of respondents acknowledged that AI has saved them time and property managers with portfolios of over 25 vacation rental properties particularly agree. More than half are saving between two and five hours a week. That’s a minimum of four days a year.

By using AI to automate routine tasks like responding to guest inquiries, reservations and operational management, property managers are saving time that they are spending on growing their short-term rental business (37.6%) and improving guest experience (24.9%).

Nearly a third (28.5%) of vacation rental managers however are using the extra time for personal downtime, something that can lead to positive ripple effects like higher productivity and creative strategy over time but is hard to pin a dollar figure on.

Financial Impact: A Later Payoff

The financial implications of AI integration are more complex. While AI promotes operational efficiency and can lead to cost reductions in areas like energy management and targeted marketing, 66.2% of the surveyed group reported no noticeable cost savings.

This indicates a gap between potential financial benefits and their realization, which could stem from the early stage of AI tool integration or the initial costs associated with adopting new technologies. However, the strategic use of AI in price optimization — a critical task for maximizing revenue in the vacation rental industry — suggests that the financial benefits might accrue over the long-term.

Of the 33.2% of short-term rental managers who had a positive impact on their bottom line, 5.2% saw savings of up to $1,000 while 12.7% saved up to $500. Nearly half of short-term rental operators of large portfolios experienced monetary savings due to AI, showing the fiscal benefits add up as you scale.

Booking and Occupancy Rates: Room for Growth

More than three-fourths of respondents said they were not sure or didn’t see an impact on booking and occupancy rates from the use of AI.

This however might just be a problem of attribution, delayed effect, or both. For example, AI-driven price automation can be a significant contributor to bringing in more reservations while AI chatbots can enhance guest interactions leading to greater guest satisfaction, higher ratings and repeat bookings. But directly attributing the use of these AI tools to higher booking rates and occupancy can be challenging and their effects can take time to show.

Either way, AI’s role in targeted marketing, customer service and personalized guest experience holds great potential for substantially improving these metrics, far above the 23.2% who have discerned an increase in bookings and occupancy so far.

Looking Ahead: The Evolving Role of AI in the Future of Short-Term Rentals

The full effects on AI’s impact on the vacation rental industry is only just unfolding. And current trends and attitudes — a significant 75.6% of respondents are either highly optimistic or cautiously optimistic about the future of AI in their operations — show the outlook is promising. As the technology advances, AI will take on more and more challenging tasks for short-term rental managers, transforming the industry for both operators and guests.

Ready to find out how Hostaway can transform your business?

Hostaway is proud to support thousands of Property Managers and Airbnb Hosts Around the world. We take pride in being Top Ranked in Vacation Rental Software Review Sites: Capterra, G2, Software Advice, Trust Pilot, to name just a few! Check out our reviews and read the Hostaway Case Studies from real successful and growing Short-Term Rental Managers!