The short-term rental (STR) market continues to evolve, with some locations thriving while others struggle due to changing travel trends, local regulations, and economic shifts. As we move deeper into 2025, smart investors need to stay ahead of the curve by identifying emerging markets that still have strong growth potential.
If you’re looking to expand your STR portfolio in the latter half of 2025 and beyond, here’s how to pinpoint the next hot market and make a profitable investment.
1. Follow the Shift in Travel Demand
Post-pandemic travel trends led to a boom in vacation rentals, but 2025 is shaping up differently. Some markets are cooling off, while new ones are heating up.
Where is Demand Growing?
- Mid-sized cities with a lifestyle appeal – Places like Boise, Greenville, and Chattanooga are attracting remote workers and digital nomads.
- Affordable international destinations – Countries like Mexico, Portugal, and Colombia continue to appeal to expats and long-stay travelers.
- Experience-driven locations – Travelers are looking for unique stays, such as eco-retreats, tiny homes, and themed rentals.
Tip: Monitor occupancy rates and tourism trends to spot areas where STRs are still gaining traction.
2. Watch for Regulation Changes
Regulations have tightened in major STR hubs like New York and Los Angeles, leading investors to seek out less restrictive markets. Before purchasing a property, investigate local STR laws.
What to Look For:
✅ STR-friendly cities with clear permitting processes
✅ Areas where STRs are a recognized part of tourism
✅ Places with investor-friendly tax policies
Avoid: Cities considering new bans or heavy restrictions. A profitable investment today could become a liability if laws change.
3. Evaluate Profitability Beyond Hype
A market can have high demand but still be a poor investment if costs outweigh revenue.
How to Assess a Market’s ROI:
- Check ADR (Average Daily Rate) – Compare nightly rates in your target area.
- Analyze Seasonality – A strong year-round market is more stable than one reliant on peak seasons.
- Calculate Cash Flow – Factor in property taxes, HOA fees, cleaning costs, and management expenses.
Use AirDNA, Mashvisor, or Transparent to analyze STR performance data before committing to an investment.
4. Choose the Right Property Type
Not all properties perform equally in a given market. The type of STR you buy should match traveler expectations.
What’s Performing Well in 2025?
- Luxury & boutique rentals – Upscale travelers are willing to pay premium prices for high-end, well-designed spaces.
- Eco-friendly and sustainable stays – Properties with solar power, composting, and natural building materials are in demand.
- Properties with unique amenities – Think hot tubs, game rooms, fire pits, and fully equipped workspaces for remote workers.
Investing in the right property style ensures higher occupancy and better guest satisfaction.
5. Look for Markets with Long-Term Growth Potential
Tourism isn’t the only factor that makes an STR market successful. Economic growth and infrastructure development play a major role.
Indicators of a Strong Market:
- New airport expansions – More flights mean higher visitor traffic.
- Upcoming major events – Sports events, festivals, and conferences drive short-term demand.
- Strong local economy – Cities attracting businesses and new residents will sustain STR demand beyond tourism.
Markets that balance tourism with economic stability offer more consistent returns.
Best STR Markets to Watch for Late 2025 and Beyond
🏙 Emerging U.S. Cities – Think mid-sized cities with strong job growth and low competition.
🌿 Eco & Adventure Destinations – Nature-driven STRs near national parks, hiking trails, and wellness retreats are thriving.
✈ International Hubs with Favorable Laws – Countries with affordable real estate and tax incentives continue to attract investors.
By staying ahead of market trends, choosing the right location, and analyzing key data, you can position yourself for STR success in the evolving 2025 market.
