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2025 Arizona Short Term Rental Owner Market Update

Short Term Rental Market Update

As we reflect on 2024 it’s important to analyze developments and trends shaping the Arizona short term rental market. As the industry continues to evolve, 2024 was marked by recovery, adaptation, and growth. In this update, we’ll highlight key industry statistics, recap 2024, and provide insights into what we could expect in 2025. Feel free to let us know your thoughts or any other information you would like to see in the future.

 

2024: A Year of Recovery and Stabilization

On a global scale, short term rental supply saw a significant decline starting the fourth quarter of 2023. The Arizona short-term rental market in 2024 continued to recover from the disruptions caused by the COVID-19 pandemic. According to Airbnb, the number of listings in our local market was down approximately 8% YOY in Q4 of 2024. This is likely due to some hosts exiting the market or choosing to repurpose their properties. This has led to a more competitive environment, with demand continuing to outpace supply.

The U.S. hit a low for average occupancy rates in April 2024, but experts anticipate steady recovery in 2025 and beyond. Occupancy rates are expected to slowly rise through 2025 and into 2026 as the market stabilizes. Despite this dip in occupancy, the overall demand for short-term rentals remains strong, particularly in popular spots like Phoenix, Scottsdale, and Sedona. In fact, data from Airbnb indicates that demand for short term rental properties remains robust, with YOY demand still exceeding available listings across all bedroom counts (from 2 to 6+ bedrooms).

Key Guest Preferences and Amenities

One of the most significant trends we’ve observed in 2024 is the continued importance of specific guest amenities. According to Airbnb, the top five most searched amenities by guests nationwide are:

  1. Pet Friendly – More travelers are bringing pets along, and properties that accommodate furry companions are seeing increased demand.
  2. Pool – Properties with pools are desirable.
  3. Wi-Fi – With remote work and virtual meetings becoming more common, fast and reliable Wi-Fi is a must-have.
  4. Kitchen – Guests continue to prefer properties with full kitchens to prepare meals, adding convenience and value to their stay.
  5. Spa – Wellness and relaxation amenities such as hot tubs and spas are growing in popularity.

Offering some or all of these amenities can continue to help ensure your property aligns with what guests are looking for.

STRM 2024 Internal Statistics

As your property manager, we are proud to share some key internal statistics that highlight the success of the properties we manage. These statistics cover our portfolio currently ranging from 2 bedroom condos to 6 bedroom homes in the Phoenix, AZ metro area. STRM averaged just under 50 managed properties for the year including mid-term rentals (30 day min. stays) which accounted for about 15% of our managed properties as well as properties that started up in 2024 and may still be gaining credibility and booking traction.

  • Total guest reservations: 1,843
  • Occupancy rate: 71%
  • Nights booked by owners: 1,177
  • Revenue per available listing (RevPAL): $144
  • Average nightly rate (ANR): $201
  • Average guest review rating: 4.8 out of 5 (based on 1,102 reviews)

These figures show that despite some market fluctuations, demand for short-term rentals in our portfolio remains strong, with a solid occupancy rate and consistently high guest satisfaction. The RevPAL of $144 is a positive indicator of revenue potential, and we continue to optimize pricing strategies to ensure your property generates returns.

Short Term Rental Industry Regulations

2023 saw the beginning of cities in the Phoenix, AZ area requiring permits to operate short-term rentals. This continued in 2024 and shows no signs of going away. Overall, the process is fairly painless for most cities with an online form and license fee being the standard. Some cities (i.e. Phoenix and Scottsdale) require some additional steps like formally notifying neighbors of the short-term rental and notarization of forms by owners and property managers.

Because Arizona is currently still a pro short-term rental state, typically regulations restricting property usage come from HOAs. Over the past few years there have been multiple HOAs that have enforced or attempted to enforce leasing restrictions. One of our own property owners was recently told by his HOA that short-term rentals were now banned in the community (his property has been active for 8 years now). It was discovered that the HOA board voted in this decision without involving the community’s vote, as required by all HOA rules in order to make alterations to community covenants/restrictions.

Check out this video from a local attorney who specializes in real estate and HOA law discussing recent HOA attempts.

2025 Tax changes

In an important AZ tax development effective January 1, 2025, Arizona municipalities will no longer require taxes for rental properties of 30 days or greater, . This means all properties with a 30 day lease restriction will not require taxes to be paid by tenants, reporting/filing of rental revenue to the state, and the need to acquire an annual TPT (transaction privilege tax) license. While owners of short term rentals with no lease restrictions will still require TPT licenses and filing and payment of taxes to the state, stays of 30 days or more at those properties will not require taxes to be charged to tenants.

 

Looking Ahead to 2025: Trends and Opportunities

A Stabilizing Market with Modest Growth

Markets will always find an equilibrium eventually and it appears our industry is beginning to find common ground. The short-term rental industry is expected to begin to stabilize by the end of 2025. The outlook for the Arizona short-term rental industry is positive, with industry experts projecting an overall growth rate of 5-7%. As the short-term rental supply plateaus and demand remains steady, the market will stabilize, but opportunities for revenue generation will continue to grow.

While competition increases, the need to remain proactive in setting competitive pricing, offering unique amenities, and ensuring compliance with local regulations. As demand outpaces available listings, there’s significant potential for well-positioned properties to capitalize on this imbalance.

Longer Stays and Remote Work Opportunities

Remote work continues to be a key driver in the short-term rental market. Travelers seeking a balance between work and leisure are increasingly booking longer stays in destination markets. For Arizona short-term rental owners, this presents an opportunity to cater to guests looking for properties with lap top friendly work spaces, high-speed Wi-Fi, and comfortable living arrangements.

The Rise of Sustainable Travel

Sustainability is becoming a top priority for travelers as well, and properties that contain and advertise eco-friendly practices could benefit. In 2025, possible upgrades could be things like:

  • Energy-efficient appliances and/or lighting
  • Solar panels or green energy options
  • Water-saving fixtures
  • Sustainable amenities such as eco-friendly linens and pillows

Not only will these upgrades appeal to eco-conscious travelers, but they can also help reduce operational costs over time.

Final Thoughts

As we head into 2025, we are confident the Arizona short-term rental market remains strong, with moderate demand and growth. With your continued partnership, we are well-positioned to take advantage of the opportunities ahead. Whether it’s optimizing your property’s amenities, adjusting pricing strategies, or staying compliant with the latest regulations, we are here to ensure your investment thrives.

Thank you for trusting Short Term Rental Manager with your property. We look forward to another year of success and growth together!

Warm regards,
Short Term Rental Manager

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