How to adapt your STR revenue strategy for summer 2025

Occupancy in the U.S. STR industry is softening, guest behavior has fundamentally split, and the gap between domestic and international travel is creating new pressures. In this environment, relying on last year’s pricing or a ‘set-it-and-forget-it’ approach is a direct path to falling behind. Success now demands a more sophisticated, agile, and data-driven revenue strategy than ever before.

This blog unpacks the critical insights shared in Episode 2 of our STR Rev Talk series, featuring industry leaders Sally Henry of Key Data, Marcus Räder of Hostaway, and our own revenue strategists Bart-Jan Leyts and Jarne Vancompernolle. 

You can watch the full replay of the deep-dive discussion below.

The STR market is going into cautious stability for now

The summer 2025 outlook for the short-term rental market reveals a landscape of subtle shifts and mixed signals. As Sally Henry from Key Data explained in the webinar, the era of easy, explosive year-over-year gains is behind us. Instead, we're entering a period of cautious stabilization, where national averages hide a much more complex and fragmented reality. To truly understand what's happening, we need to break down the three core metrics: Occupancy, ADR, and RevPAR.

1. Occupancy is pacing lower than expected

At the national level, Adjusted Paid Occupancy is pacing about 2% lower than this time last year, while we were expecting an increase of 3%. Sally described the overall market as "pretty flat," noting, "we're a little softer than where we were this time last year."

However, this seemingly small dip masks a dramatic regional divergence. While a -2% national average might not sound alarming, it’s the result of strong markets pulling up weaker ones.

• The Winners: Markets like the Hawaiian Islands (+7%) and the Midwest (+6%) are not just resilient; they are actively growing their occupancy, demonstrating sustained and robust demand.
• The Laggards: In sharp contrast, traditionally strong regions are feeling the pressure. The Mid-Atlantic is down -4%, and the Southeast is pacing -3% behind last year.

This split illustrates that a one-size-fits-all strategy is doomed. The key takeaway, as Sally stressed, is that operators must "dial into your specific geography to see how this is offering." Relying on national trends is no longer enough; success depends on understanding and responding to local demand patterns.

2. The ADR balancing act: Pushing rates to counter softness

With occupancy softening, the industry’s natural response has been to leverage pricing power. As Sally noted, "we can never look at occupancy... in isolation, we always need to look at it alongside those rates." Nationally, the Average Daily Rate (ADR) is holding on with a marginal 1% increase. This slight lift represents property managers' collective effort to "offset that softer occupancy" by commanding higher nightly rates.

Once again, the ability to do this successfully varies immensely by region:

• Successful Rate Growth: Hawaii, already enjoying strong occupancy, is also seeing a powerful +7% growth in ADR. The Midwest (+5%) and Rocky Mountains (+5%) are also successfully pushing rates higher. These markets demonstrate a healthy dynamic where demand can support both higher occupancy and higher prices.
• The Price-Sensitive Exception: The Southwest stands out as the only region with a rate decline (-2%), making it a challenging environment where neither occupancy nor rate is providing a lift.

This shows that raising rates is not a universal solution. It’s a delicate balancing act that only works where market demand is strong enough to absorb the increase.

3. The bottom line: RevPAR reveals who's really winning

Revenue Per Available Rental (RevPAR) is the ultimate metric because, as Sally explained, it "effectively takes our occupancy and multiplies it by our rates." It cuts through the noise and tells us the real story of market health.

Nationally, RevPAR is pacing slightly down at -1%. This confirms the critical insight of the current market: on average, the slight increase in ADR is not enough to make up for the dip in bookings. In Sally’s words, "that softer occupancy isn't countered by those marginally higher rates."

The RevPAR data paints the clearest picture of the fragmented battlefield:

• Thriving Outperformers: The Hawaiian Islands are seeing a massive +15% jump in RevPAR, and the Midwest is enjoying a very strong +11% growth. For operators in these regions, the market is buoyant and highly profitable.
• Struggling Strongholds: Meanwhile, the Southeast and Southwest are both seeing RevPAR decline by -3%.

This is the "mixed bag" Sally referred to. While some property managers are experiencing double-digit growth, others are fighting to avoid a decline. The so-called "flat market" is anything but. It is a mosaic of micro-climates, and navigating it successfully requires a granular, data-driven strategy tailored to the unique dynamics of your specific location.

The hidden forces reshaping demand in 2025

The most successful operators are those who look past the headline numbers and understand the underlying currents driving change. Our panel identified several critical forces that are actively recalibrating the STR landscape.

1. The widening gap: Why international travel trends matter more than ever

One of the most significant and under-discussed trends is the growing divergence between inbound and outbound U.S. travel. The data is stark:

• Americans are traveling abroad in droves. U.S. outbound travel is now 25% above 2019 pre-pandemic levels.
• International visitors are not returning at the same pace. Inbound international arrivals to the U.S. are still lagging, down 12% from 2019 levels, a trend that has worsened since January.

The Implication: This creates a significant demand deficit. For years, U.S. property managers, especially in key destinations, could rely on a steady stream of high-value international guests who typically book longer stays and further in advance. Now, that stream has slowed to a trickle, while the domestic travel pool is simultaneously being reduced as more Americans choose international vacations.

This puts immense pressure on domestic-focused property managers to attract a more competitive, price-sensitive, and often shorter-booking local traveler. 

2. The shrinking timeline: Shorter stays and booking windows are the new norm

The data confirms what many managers are feeling on the ground: guest behavior is becoming more spontaneous and less committed.

Average Length of Stay (ALOS) is contracting, declining 2% nationally to 5.3 nights. New England saw a particularly sharp drop of 6%.

The Average Booking Window is shrinking, down 3% to 133 days.

This is more than a simple data point; it’s a fundamental shift with serious operational consequences. Shorter stays mean more frequent turnovers, which directly increases operational costs, more cleaning fees, higher utility usage per booking, and increased wear and tear. It also means your team is managing more check-ins and check-outs to achieve the same revenue, straining your resources.

As one panelist emphasized, "If your length of stay is contracting... you're just going to have to sell more to keep your percentage revenue and your percentage occupancy level even." This compressed timeline forces a more reactive stance and makes it harder to build a stable occupancy base far in advance.

Segmenting strategy for a split consumer market

Perhaps the most crucial strategic insight from the webinar is the emergence of a "split consumer." Macroeconomic pressures have divided travelers into two distinct camps, each with radically different behaviors, expectations, and impacts on your business.

The High-Expectation, Budget-Conscious Traveler

At the lower end of the income spectrum, families are feeling the pinch of inflation and economic uncertainty. For them, a vacation is not a casual expense; it is a major, carefully considered investment.

As Marcus Räder of Hostaway explained, "If you're marketing your properties to, let's say, the bottom 40% of income earners, probably this is the only vacation they'll take this year."

The paradox is that this budget-conscious guest often comes with the highest expectations. Because it's their one shot at a perfect getaway, everything needs to be flawless. This traveler is more likely to scrutinize every detail, notice every flaw, and leave a critical review if their high-stakes vacation doesn't meet their lofty expectations.

The value seeking, frequent luxury traveler

On the other end, high-income earners and affluent travelers are booking more trips than ever. For them, a single vacation is one of five or ten they might take that year. Their primary driver isn't finding the lowest price, but securing the best value and a seamless, high-quality experience.

This guest is often easier to please. They are experienced travelers who understand that minor issues can occur. If one trip isn't perfect, it's not a disaster; they have nine other vacations to look forward to. Consequently, they are often more forgiving and more likely to leave positive reviews when they receive excellent service, even at a premium price point.

Strategic Takeaway: This divide is directly reflected in performance data. As a chart from Key Data shows, budget-tier properties (under $200/night) are seeing the steepest RevPAR decline, down 5% year-over-year, while luxury properties (over $1000/night) are holding steady.

Your revenue strategy can no longer be one-size-fits-all. You have to segment your approach based on the type of guest you are attracting. For budget properties, the game is about flawlessly managing expectations and perfecting the basics. For luxury properties, it's about delivering exceptional service and justifying the premium.

The three levels of an agile revenue plan

In this recalibrated market, "dynamic pricing" is no longer a strategy, it's table stakes. True agility comes from a multi-layered approach that aligns your entire operation, from brand positioning down to the pricing of a single Tuesday night. Our panel broke this down into three essential levels.

Level 1: The brand level - Define your North Star

Before you touch a single rate, you must answer a fundamental question: What game are you playing?

• Are you a value brand chasing occupancy? If so, your strategy should revolve around competitive pricing, flexible cancellation policies, and playing the volume game. This means accepting lower ADR in exchange for higher and more consistent occupancy.
• Are you a premium brand focused on profitability and RevPAR? Your strategy must shift to value-based targeting. This involves setting higher rate floors, holding firm on pricing during peak periods, and optimizing for the guest who is willing to pay more for a superior product.

Our experts noted a common pitfall: the Inconsistency Trap. Many managers say they are focused on maximizing RevPAR, but their actions, like offering aggressive discounts on one channel while maintaining strict policies on another, suggest they are still chasing occupancy. A successful strategy requires ruthless consistency. Your actions must reflect your stated goals.

Level 2: The market level - Context is everything

Once your brand position is clear, you must adapt it to your specific market conditions. This means moving beyond your own portfolio and accounting for:

• Regional seasonality: Understanding the unique demand drivers of your location.
• Demand pacing: Tracking how your market is booking for future dates compared to last year.
• Competition: Knowing how your direct competitors are priced and positioned.

This is where objective, third-party data becomes your most powerful tool. It provides the context needed to make informed decisions and, just as importantly, to communicate those decisions to property owners.

Level 3: The property level - Translating strategy into tactical action

This is where the strategy becomes real. At the property level, you translate your high-level goals into fine-tuned rules and settings. This includes:

• Pricing rules: Setting clear rate floors and ceilings based not just on the calendar, but on lead time, compression, and channel performance.
• Length-of-Stay (LOS) policies: Dynamically adjusting minimum stays to fill gaps without sacrificing longer, more valuable bookings.
• OTA Setup and optimization: Ensuring every listing is perfectly calibrated to attract your target audience on each specific channel.
• Cancellation policies: Using flexibility as a strategic lever to encourage earlier bookings during soft periods.

As Jarne Vancompernolle emphasized, this is a top-down process. "A strong strategy needs to flow from the top down... you define your positioning at the brand level, you account for the market, and then at the property level, you translate that strategy."

A channel-specific approach is non-negotiable

The battle for bookings is increasingly being fought on the terrain of the major OTAs, and the ground is shifting. Data on booking sources for summer 2025 reveals a clear reordering:

• Airbnb is Gaining Ground: Now accounting for 31% of reservations and 23% of revenue, Airbnb continues to grow thanks to its powerful brand recognition and user-friendly experience.
• VRBO is in Decline: VRBO has lost significant share in both reservations and revenue, a trend likely driven by increased competition and a slower pace of innovation.
• Booking.com is an Emerging Threat: While still a small player in the U.S. STR market, Booking.com is slowly gaining share.
• Direct Bookings are Under Pressure: Direct bookings have dipped slightly, highlighting the immense challenge of competing with the marketing budgets and technological prowess of the OTAs.

The takeaway is clear: property managers must be strategic about their platform mix. It’s not about being everywhere; it’s about being optimized where your target guests are.

This means developing a channel-specific strategy. The guest behavior on Airbnb, which has an average booking window of 36 days, is fundamentally different from a direct-booking guest, who books 71 days out. You cannot apply the same pricing, policies, or promotions to both.

For example, if you're playing a RevPAR game, you might set higher price floors on VRBO and Direct to capture high-value, early-booking families. If you're chasing occupancy, you might use more aggressive last-minute discounts and flexible policies on Airbnb to fill final vacancies. The new VRBO Promotion Suite, for instance, offers a powerful tool to target specific traveler types, but it must be used in service of your overarching strategy, not as a standalone tactic.

Why listing optimization is the new frontier

In a market where every booking counts, the most overlooked aspect of revenue management is often the most critical: listing quality and optimization.

Marcus Räder shared a powerful example: an analysis of Hostaway users found that a surprising number of properties that were, in fact, beachfront did not have the "beachfront" amenity checkbox ticked in their listing.

In the past, writing "beachfront" in the title might have been enough. Today, it’s a critical failure. Travelers use filters. If your listing isn't tagged correctly, it becomes invisible to your most qualified potential guests. The price doesn't matter if the listing is never seen.

This extends beyond simple amenities. It’s about nailing the fundamentals of the guest experience, which in turn fuels the most powerful revenue driver of all: five-star reviews. As our panel discussed, small oversights can lead to major disappointment. Marketing a property for six guests but only providing five forks is a classic beginner's mistake that even large operators sometimes make as they scale.

The path to premium revenue is paved with positive reviews. Achieving "Guest Favorite" status on Airbnb isn't just a vanity metric; it’s a psychological trigger that allows you to command higher rates. Guests will pay a premium for the certainty of a good experience.

This requires a holistic view of revenue strategy that goes beyond the pricing engine. It involves:

1. Auditing listings: Using tools to systematically identify and fix missing attributes and weak descriptions.
2. Perfecting the basics: Ensuring your properties are perfectly equipped for the number of guests they accommodate.
3. Managing expectations: Using descriptions and photos to accurately represent the property.
4. Driving reviews: Understanding that operational excellence is the foundation of any successful revenue strategy.

Adapting with confidence in the new era of STR

The short-term rental market has entered a new phase of maturity. The easy wins are gone, replaced by a complex landscape that rewards sophistication, agility, and strategic foresight. The operators who thrive in this Great Recalibration will not be those who simply drop their prices the fastest. They will be the ones who:

• Build a layered strategy: Aligning their brand, market, and property-level tactics toward a single, clear goal.
• Use data as a language: Leveraging objective market data to make informed decisions and foster transparent, trust-based relationships with owners.
• Master channel dynamics: Treating each OTA as a unique market with its own rules of engagement.
• Obsess over the guest experience: Recognizing that operational excellence and five-star reviews are the ultimate drivers of pricing power and long-term profitability.

The challenges are real, but so are the opportunities. For the prepared and strategic property manager, this market offers a chance to pull away from the competition and build a truly resilient and profitable business.

Looking to build an agile revenue strategy that thrives in this changing market? Book a call with our team today to see how AutoRank combines expert oversight with powerful technology to optimize your pricing, visibility, and performance across all channels.

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