Key Data’s Q2 U.S. short-term rental report shows rates holding steady but occupancy slipping, widening the gap between high and low-performing regions, and major shifts underway in booking channel share. After encouraging signs of a STR market recovery in April and May, June reversed course, with the Key Data Demand Index slipping to -0.02. Forward booking trends point to more turbulence ahead, putting pressure on property managers to act quickly to protect revenue.
Here are the 3 key takeaways:
#1 Occupancy Softens While Rates Hold Steady
The most immediate challenge for the STR market is occupancy. August bookings are running 6% lower than the same time last year, and September is down 11%. Rates, however, have held steady, with Average Daily Rates (ADR) up about 1% for both months. That stability hasn’t been enough to offset the slowdown in bookings as September’s revenue per available room (RevPAR) is already pacing 10% lower year-over-year. The result is a clear revenue squeeze for operators who often rely on late-summer performance to carry them through slower seasons.
Managers now face a choice between holding rates, chasing occupancy, or adopting a more dynamic approach. Maintaining rates preserves margins but risks more empty nights. Discounting can fill calendars but erodes profitability and may trigger price wars. Key Data suggests the most resilient strategy is often a dynamic pricing model that adjusts rates in real time, fills gaps like orphan nights, and avoids blunt across-the-board discounts. The goal is not just to sell nights but to sell profitable nights.
#2 Regional Performance Gap Widens
Performance is also varying sharply by region, creating clear winners and losers. Mid-Atlantic markets are leading the pack, with RevPAR up 11% on the back of a 10% jump in occupancy and modest rate growth. New England follows closely, with a 10% RevPAR gain driven primarily by 9% ADR growth. These markets have pricing power and resilient demand, making them ripe for premium positioning, amenity upgrades, and expanded direct booking efforts.
On the other side of the spectrum, Southwest markets have seen RevPAR drop 4%, with rates down 6% year-over-year. Western markets managed only a 2% RevPAR increase, a sign of maturity and heavy competition. In these areas, success will hinge on cost control, sharper differentiation, and potentially pivoting to alternative demand sources such as corporate or extended stays. The data suggests operators should concentrate marketing and capital in high-performing markets while tightening operations in weaker ones.
#3 Airbnb Gains, Direct Bookings Lose Ground, Vrbo Slips
Channel mix is emerging as another critical factor in profitability. Airbnb continues to grow, now holding 45% of reservations and 35% of revenue (a gain of 4%-6% over the past three years). Direct bookings, which deliver higher ADRs, longer stays, and zero commission costs, remain the most profitable channel but have slipped from 28% to 26% of reservations. Vrbo’s share has eroded even more sharply, falling to 21% of reservations and 24% of revenue.
The shift underscores that channel strategy is no longer just about marketing. Operators who can optimize content and pricing for each platform while building strong direct booking funnels will capture the best of both worlds: OTA reach and the economics of direct. Those who neglect their direct channels risk higher distribution costs and weaker pricing power.
Bottom Line
The report’s broader message is that the vacation rental market is maturing into a more complex, competitive environment. Success will depend on proactive strategies like fine-tuned pricing, region-specific tactics, and disciplined channel management rather than relying on the momentum of past demand cycles.
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