The History of Short-Term Rentals
Short-term rentals have had an incredible surge in popularity due to home-sharing platforms like Airbnb strongly gaining traction over the past decade. Before home-sharing platforms popularised short-term renting, the practice was still fairly common but more often found under a different name: vacation rentals. People looking to escape their everyday homes for a holiday would look to vacation rentals as an inexpensive alternative to a hotel. By the 1950s, renting a vacation home was a customary tradition for many, with advertisements and listings for short vacation rentals beginning to appear in newspapers.
The first online platform to enable vacation or short-term rental bookings was VRBO (Vacation Rentals by Owner) which launched in 1995. VRBO’s website allowed users to browse and book various vacation rental properties that were managed by their individual owners, with most of the website’s listings and bookings in the United States. A year later in 1996, another future giant in the industry was created when Booking.com was founded in the Netherlands. Booking.com was originally a travel fare aggregator, providing comprehensive searching of hotels and lodging options, but it also became the first hotel booking site to advertise vacation rentals.
Around the same time as VRBO and Booking.com were being created, Craigslist turned from a simple mailing list into a website for people to list ads and request services online. The website provided a more informal platform where advertisements for sublets, short-term, and even long-term rentals rentals were posted. In 2004, eBay purchased a 25% stake in Craigslist, but the company remains privately owned with the majority of ownership residing with the original creator, Craig Newmark. The mid-2000s also brought the launch of HomeAway, a merger of five different rental sites, which later acquired VRBO in 2006. Almost ten years later in 2015, Expedia purchased Homeaway to overtake Booking.com and become the world’s largest lodging seller in terms of hotels.
As online lodging companies continued to grow, Airbnb came onto the scene as a small San Francisco startup in 2008. While the previous companies offered various forms of vacation rentals and hotel bookings for short stays, Airbnb was the first company to allow guests to book a single room in a host’s home and pay using a credit card over the internet. Over the years, Airbnb has grown exponentially, going from 10,000 users and 2,500 listings in March of 2009 to the current estimates of around 150 million users and over 6 million listings around the world. The company has also started expanding outside of the short-term rental space with Airbnb Experiences, which allow users to host unique city tours, events, and classes that anyone can sign up for through the Airbnb website.
While not exactly a short-term rental platform, since 2004 Couchsurfing International has provided a form of short stays for travellers, and doesn’t look to monetise the operation for profit. Instead, the website incentivises couch-owners to offer their space voluntarily simply to meet travellers and new people. While Couchsurfing started as a non-profit organisation, in 2011 they made the switch to a for-profit corporation after the IRS rejected their application to be a non-profit organisation. Since its inception, Couchsurfing has had continuously increasing membership numbers, with over 14 million members currently sharing and surfing on couches today.
The past decade has seen the short-term rental space grow exponentially largely thanks to Airbnb bringing the concept of profitable and convenient home-sharing to the industry. Now, leading hotel companies like Marriott International are looking to expand their services to the home rental space, with their Homes and Villas division looking to bring 2,000 upscale homes for short-rental to the market. Meanwhile, Airbnb is preparing recently purchased suites in the Rockefeller Centre to create what seems like a more curated hotel experience. As these companies start to encroach upon each other’s markets, it’s clear that home-sharing and short-term rental companies have greatly disrupted the hotels and accommodation sector, and time will tell if traditional hotels will be able to keep up.
