The success of a short-term rental business can depend on various factors, including location, demand, regulations, and the local tourism industry (writes James Varley).
Most investors prefer a tourist hotspot or seaside location for their rentals – but it’s perfectly possible to run a successful property off the beaten track.
When considering a location for a short-term rental business, it's important to conduct thorough research, including an analysis of local regulations, market demand, and competition. Additionally, being aware of trends in the travel industry and understanding the preferences of your target audience can contribute to the success of your venture.
There are many locations globally which host thriving short-term rental businesses – below are just a few of the most successful regions and cities.
Cities with high tourist demand are often lucrative for short-term rentals. Popular tourist destinations such as London, Paris, Rome, New York City, Tokyo, and Barcelona attract millions of visitors, creating a robust market for vacation rentals. However, with regulation starting to bite in London and New York – plus other locations – some investors will be looking elsewhere.
Coastal areas and beach destinations are frequently sought after by travellers. Places like Bali, the Maldives, the Amalfi Coast, and the Hawaiian Islands can offer excellent opportunities for short-term rentals.
Here in the UK, there is a thriving market for seaside breaks. Devon and Cornwall are particularly popular locations, along with many other coastal locations. Scotland and Wales are also famous for their holiday rentals. Special mention to the Yorkshire coast – I spent many happy stays in Filey when I was growing up.
Scenic mountain areas, especially those popular for outdoor activities, can be ideal for short-term rentals. Locations like Aspen, Chamonix, and Queenstown are known for attracting visitors seeking adventure and relaxation. Ski and snowboard areas are well-known for attracting a strong luxury market also – particularly across Europe and North America.
Cities with rich cultural attractions, museums, and historical sites can attract a steady flow of tourists. Examples include cities like Florence, Vienna, Kyoto, and Prague. Having spent city breaks in Vienna and Prague in recent years, I can attest to their suitability as short-term rental locations.
Event and festival cities
Cities hosting major events, festivals, or conferences can experience increased demand for short-term rentals. Consider locations like Austin during SXSW, Cannes during the film festival, or Munich during Oktoberfest. Much closer to home, we have Leeds Festival, which always boosts occupancy and rates on the August bank holiday weekend in my neck of the woods.
Business and tech hubs
Cities with a strong business or tech presence often have a demand for short-term rentals, particularly for business travellers. Places like San Francisco, London, Singapore, and Shanghai fall into this category. And, having visited San Francisco and experienced eye-watering hotel rates, I can attest to the thriving short-term rentals space. It is, after all, where Airbnb was founded – and for good reason!
Islands, especially those with a mix of natural beauty and tourist infrastructure, can be attractive for short-term rentals. Examples include Santorini, the Seychelles, and the Caribbean islands. Also, there are many islands much closer to home. I was lucky enough to spend three years in the Channel Islands, living in Alderney, an island with a population of just 2,000 people. It is only a 45-minute flight from Southampton and well worth a visit – as are the other islands: Jersey, Guernsey, Sark, and Herm.
National parks and nature reserves
Proximity to national parks and natural attractions can be a draw for travellers seeking outdoor experiences. Areas like Banff, Yellowstone, and Costa Rica's rainforests can be suitable for short-term rentals. Here in the UK, the Cotswolds, Lake District, Yorkshire Dales, and Peak District, among others, attract many tourists.