Airbnb widens its lead as hotels hit a 2025 slowdown

Shifting demand, higher costs, and changing travel habits challenge hotel resilience while short-term rental growth accelerates

The article examines how Airbnb continues to push growth in 2025 while the traditional hotel sector fights to hold its ground — not in a straightforward victory for one or the other, but rather a shift toward a segmented lodging landscape.

Key takeaways

• Airbnb’s corporate momentum: Airbnb reported revenue growth (13 % Y/Y) and strong profitability in Q2 2025, signalling robust global demand for the short-term rental model.
• Host-level occupancy challenges: Despite aggregate growth, many U.S. hosts face declining occupancy (around ~50–56 %) as supply pours in, especially in suburban and rural markets.
• Pricing power in STRs: Short-term rentals are offsetting softer occupancy with rising ADR — up nearly 7 % Y/Y in summer and 24.9 % over a longer horizon — boosting host RevPAR.
• Hotel sector recovery stalls: The U.S. hotel industry in 2025 is in a near-zero growth phase (projected RevPAR growth ~0.1 %) with declining occupancy, signalling a plateau after the post-pandemic rebound.
• Margin squeeze for hotels: Rising operational costs — labour, insurance, utilities — are compressing hotel margins while price increases remain difficult amid aggressive STR competition.
• Segmented performance on both sides: Luxury hotels and high-end STRs show resilience, while economy and midscale hotels, along with budget STRs, face stronger pressure.
• Bleisure and extended-stay tailwinds for STRs: Longer stays and blended travel patterns continue to give STRs an edge through home-like amenities and flexible layouts.
• Regulation reshaping competition: STR traction is strongest in suburban, rural, and secondary markets, while strict urban regulations curb supply and indirectly support hotels.
• A new equilibrium, not a takeover: Hotels and STRs are settling into distinct roles — hotels defending short-stay, corporate, and amenity-rich niches; STRs expanding in experiential, longer-stay, and non-urban segments.

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