Key Details:
Airline performance often signals the future health of the travel industry. “If you don't have a job, you're not going to go buy an airline ticket,” observed one low-cost airline CEO to Reuters. Simply put, when money gets tight, travel is one of the first things people cut back on.
And things are getting tighter. Tariff threats, government spending cuts, and stubborn inflation are making everyone nervous. Consumer confidence hit a four-year low in March 2025, according to The Conference Board.
Even small drops in how people feel about the economy can hit travel hard. Reuters reported February 2025 saw air ticket sales drop 8% in just one month – a red flag for travel demand.
Major U.S. airlines didn't waste time responding. Delta, American, Southwest, JetBlue, and others all lowered their financial forecasts in March, blaming economic worries that are affecting both vacation and business travel. To avoid flying half-empty planes and protect their profits, these airlines quickly cut back on flights planned for spring and summer 2025.
The question becomes - What does this mean for STR hosts?
Our Take:
What This Means for the Travel Industry & Short-Term Rental Hosts
When consumers start pinching pennies, airlines feel it first, and their pullback usually signals rough waters ahead for everyone else in the travel ecosystem.
Here's how it typically plays out:
- Money worries and economic uncertainty cause travelers to hold off on booking trips and buying flights
- Airlines respond to the weakening demand by cutting future flights to avoid empty seats and keep prices up
- Fewer flights and economic uncertainty means fewer travelers overall
- With fewer people traveling, downstream sectors like Hotels and Airbnbs feel the pinch later, since many stays are booked months in advance
- Fewer tourists means reduced demand for experiences—think tours, attractions, restaurants, and shopping—creating a ripple effect in local economies.
Should STR Hosts Be Worried?
A little concern makes sense—but don't panic yet.
STRs have weathered storms before, and turned out to be really resilient. When times get tough, travelers look for better deals and more flexible options. Amy Hinote of VRMIntel points out that STRs have "seen notable growth during down markets."
Remember: Airbnb was born during the 2008 financial crisis, when travelers traded fancy hotels for more affordable home stays. And "Staycations" are now popular as families pick nearby getaways instead of expensive resorts, which helps STRs.
While vacation travel might slow down, STRs remain a top choice for budget-conscious travelers who want flexibility, kitchens, and more space for their money.
Impacts Will Vary Based on Market Segment
City Properties: Urban STRs serve all kinds of guests: business travelers, tourists, family visitors, and long-term stays. After the pandemic slump, city rentals bounced back as offices reopened and tourists returned. City hosts might see fewer bookings if both vacation and work travel slow down.
That said, the mix of different types of travelers and the limited growth of new listings in regulated cities gives urban hosts some cushion against downturns.
Suburban Properties: Rentals in the suburbs—often homes in neighborhoods just outside city centers—do well with people visiting friends and family, taking "staycations," or planning small group getaways.
These guests tend to be cost-conscious but will still travel for family events or quick weekend trips. Suburban hosts might even win guests who skip pricier city stays. However, competition could heat up as more homeowners turn to STRs for extra income when money gets tight.
Vacation Properties: These properties—like cabins, lake houses, and beach condos—mostly attract vacation travelers. These markets saw huge demand during the pandemic as people flocked to open spaces, but this led to an oversupply of STRs in many vacation destination markets.
Vacation rental hosts could see a bigger drop in bookings if families rethink major vacations, especially if their market is oversaturated. Still, well-located properties offering good value will continue to attract travelers choosing closer destinations over international travel. The good news: supply growth (new STRs opening up) in these markets seems to be balancing out after the wild growth of 2022-2023.
Luxury Properties: High-end rentals—whether city penthouses, designer suburban homes, or remote luxury retreats—cater to a different crowd. These guests aren't as bothered by economic ups and downs. In fact, recent surveys show 63% of households earning $200K+ plan to maintain or increase luxury spending in 2025.
However, expectations are much higher at this level. Luxury hosts must deliver exceptional service, smooth experiences, and flawless properties to stay competitive.
Bottom Line
Falling consumer confidence and airline pullbacks are clear warning signs—but they don’t mean doom for STR hosts. The impact will vary depending on your location, the type of travelers you attract, and how you run your business.
The most successful hosts in a cooling market will be those who adjust quickly—on pricing, guest experience, and positioning—and understand what their target guests want better than ever.
