The holiday rental history and where it is today


The mid-1600s dates the earliest record of a holiday or short-term rental home. The first holiday property, Louis XIV’s Palace of Versailles, acted as a hunting lodge for visiting politicians, royals, and other flashy Europeans. Another example of a historical short-term rental is the Japanese Ryoken - inns that offered everything a working Samurai might need during his all-expenses-paid assassination travels.

Although short-term rentals can be traced back centuries, the majority of its growth has only happened in the last 30 years. In Australia, holiday homes dotted popular coastal areas from the 1960s at the height of economic stability, and were enjoyed with friends and family instead of for making profit.

Over time, increases in costs and taxes as well as the appearance of the sharing economy saw these family-oriented holiday homes turn into profit-making assets. As globalisation continued to take over the world, we were soon introduced to game-changing platforms such as Airbnb, allowing anyone to open up their home to travellers for profit.

As big as Airbnb have become, they weren’t the first to do what they do. Launched in Colorado in 1995, the first company to enable short-term rental bookings was VRBO (Vacation Rentals by Owner). VRBO’s website allowed users to browse and book vacation rental properties that were managed by their owners. A year later in 1996, another future industry giant was created when was founded in the Netherlands. Originally a travel fare aggregator, provided comprehensive searching of hotel and motel options, and it also became the first to advertise holiday rentals.

Around the same time, Craigslist morphed 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 ads for sublets, short-term, and even long-term rentals were posted. In Australia, Gumtree became a popular tool for expats seeking rentals. The mid-2000s also saw the launch of HomeAway, a merger of five different rental sites which was later acquired VRBO in 2006. Fast forward to 2015, Expedia purchased Homeaway to overtake and became the world’s largest holiday rental platform.

As online short-term rental companies grew, Airbnb came onto the scene as a small San Francisco startup in 2008. While its predecessors offered various rental options, 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 from 10,000 users and 2,500 listings in 2009 to the current estimate of around 150 million users and over 6 million listings worldwide. The company has also expanded to include Airbnb Experiences, allowing users to host unique city tours, events, and classes that ingeniously complements their holiday rental offering.


The last 10 years has seen the short-term rental market grow rather aggressively, in large part due to Airbnb making the concept more accessible for everyone. Now, most traditional hotels have begun exploring this same avenue. For example, the Marriott hotel group have introduced a homes and villas division with the intent to bring 2,000 upscale homes into the competitive short-rental market.

Meanwhile, Airbnb has reportedly purchased suites in New York City’s Rockefeller Centre to create a more curated hotel experience. As these companies start to encroach upon each other’s markets, it’s clear that short-term rental companies have greatly disrupted the hotel sector, as we see them scramble to keep up.

Although hotels’ entry into the short-term rental industry has gained attention, other Airbnb competitors have also been hard at work to carve out their own piece of the market. While Indian accommodation giant OYO has received investment from Airbnb themselves, boutique companies like Sonder and StayAlfred are offering alternative stays for travellers that want the professionalism of a hotel mixed with the charm and comforts of a holiday rental.

These companies provide purpose-built suites that provide more flexible accommodation at more affordable prices. These properties are professionally prepared and managed, helping reduce the friction that inexperienced hosts on platforms like Airbnb can cause. As each of these companies continue to raise millions of dollars in funding, it's clear that the demand for short-term rental solutions continues to grow.

However, not everything in this industry is as crisp as freshly laundered hotel linen. Resistance from the local government, hospitality industry, and community create ongoing challenges for the short-term rental market as it reaches a new equilibrium point. The short-term rental market is expected to outgrow the hotel industry by as early as 2020, and issues around supply and demand will create an even greater competitive market.