The Strategy Behind Luxury Vacation Rental Properties

The short-term rental industry is evolving and luxury vacation rentals are taking center stage. With the global vacation rental market valued at $89.32 billion in 2023 and projected to grow steadily, high-end travelers are seeking more than just a place to stay — they want an experience. Millennials, in particular, are driving this shift, spending around $180 billion on travel each year.

Gone are the days when hotels were the go-to choice for upscale getaways. Today, luxury rentals — whether sleek city penthouses, serene beachfront villas or historic countryside estates — are redefining the way people travel. But what’s fueling this demand for exclusive stays? In this article, we’ll explore the key factors behind the rise of high-end vacation rentals and what it means for short-term rental hosts and property managers looking to tap into this lucrative market.

The Growing Market: Trends and Opportunities

Luxury rentals aren’t just a passing trend — they’re a booming segment of the short-term rental industry. As travelers seek more personalized and high-end experiences, this market continues to expand, offering exciting opportunities for property managers and investors.

Market size and growth

The demand for luxury rentals is on the rise, with the market reaching $82 billion by 2023. This sector has been growing at an impressive rate of 13.1% over the past decade, reflecting a shift toward unique, high-end stays that go beyond traditional accommodations. Travelers are increasingly willing to pay a premium for properties that offer exclusivity, comfort and immersive experiences.

Surging demand for luxury rentals

Between 2021 and 2022 alone, luxury short-term rentals saw a 30% surge in bookings, often outpacing supply in popular destinations. High-end vacation homes in hotspots like Croatia, Italy and Spain are in particularly high demand, creating a lucrative opportunity for hosts and investors who can meet this growing need.

Emerging luxury destinations

While classic vacation destinations like France and Italy remain strongholds for luxury rentals, new markets are gaining traction. The UAE, Mexico, the U.S., Caribbean islands and New Zealand are quickly becoming sought-after locations for upscale vacation stays. As more travelers look for fresh and distinctive experiences, these emerging destinations present exciting possibilities for those looking to expand their luxury rental portfolio.

What Defines a Luxury Vacation Rental?

Luxury in vacation rentals goes beyond just stylish décor or expensive furnishings. Today’s luxury travelers can spot mass-produced designs and generic experiences from a mile away. What truly sets a luxury rental apart isn’t just how it looks — it’s how it feels. The key elements?

Exclusivity

Luxury travelers aren’t looking for a stay that anyone can book. They crave exclusivity — a unique, tailored experience they can’t find anywhere else. Like premium fashion brands such as Louis Vuitton and Gucci that curate their collections, property managers of high-end rentals should focus on select platforms that attract elite guests rather than mass-market OTAs.

Whether it’s a stunning location, limited availability or bespoke services, exclusivity is what drives high-value bookings.

Personalization

A true luxury experience is one that feels personal. Understanding your guests' needs and tailoring their stay accordingly can transform a great vacation into an unforgettable one. Consider asking key questions, such as:

• Are they traveling solo, with a partner or with family?

• Do they have any dietary preferences, restrictions or special requests?

• Are they celebrating a special occasion, such as a birthday or honeymoon?

• Do they prefer a relaxing retreat or an adventure-filled getaway?

Many high-end travelers work with travel agents, making them a valuable point of contact for gathering guest preferences in advance. Anticipating needs before check-in allows you to go the extra mile, ensuring an experience that feels both seamless and thoughtfully curated.

Experience-driven luxury

Luxury travel is about more than just a beautiful property — it’s about unforgettable experiences. Guests want moments that last a lifetime.

Take a step back and look at your rental — what story does it tell? Enhance the stay with unique offerings like a private chef, a curated local itinerary or in-villa spa treatments. Thoughtful touches turn a great stay into an extraordinary one.

How to Market a Luxury Vacation Rental

Successfully marketing a high-end rental requires more than just listing a unique property — it’s about crafting an experience that resonates with high-end travelers. From creating an exclusive brand to ensuring impeccable service, apart from the key elements that make a high-end vacation rental, here are other important strategies to attract and retain luxury guests and stay competitive.

1. Invest in professional photography & videography

First impressions matter — especially in luxury travel. High-quality photography is non-negotiable when marketing a premium vacation rental. Investing in professional photographers ensures your property is presented in the best light, making it irresistible to potential guests.

For even more impact, drone videography can highlight your property’s exclusivity with breathtaking aerial views, capturing the beauty and prestige that set it apart from other similar properties.

2. Elevate the interior design

A luxury rental should not only look spectacular in photos but also feel exceptional in person. Thoughtfully designed interiors set the tone for an upscale experience. Invest in:

• Exclusive furnishings – Comfortable yet stylish pieces that balance form and function.

• Premium linens and bedding – High-thread-count sheets, plush pillows and perfectly made beds.

• Minimalist yet elegant décor – Neutral palettes with statement accents to create a timeless aesthetic.

• Thoughtful details – Fresh flowers, branded bathrobes and curated decorative pieces that enhance the ambiance.

Staging your rental to perfection ensures that guests feel immersed in luxury the moment they walk through the door.

3. Partner with luxury brands

Luxury isn’t just about the space — it’s about the experience and the brands that define it. Collaborating with premium brands enhances your rental’s reputation and adds an extra layer of exclusivity.

Consider incorporating:

• High-end toiletries from brands like Aesop or Le Labo.

• Locally sourced gourmet treats, such as artisanal cheeses, fresh pastries or fine wines.

• Designer home essentials, from plush towels to statement glassware.

Partnering with renowned or local luxury brands creates a sense of rarity and uniqueness, making your property stand out among high-end travelers.

4. Provide high-end amenities

Basic amenities won’t cut it for luxury travelers. To exceed expectations, ensure your property is equipped with top-tier offerings, including:

• State-of-the-art appliances (smart home technology, high-end kitchenware)

• Secure storage and safes for valuables

• Premium entertainment options (home theaters, Sonos sound systems, game rooms)

• Wellness amenities (private pools, hot tubs, saunas or in-house gyms)

Maintaining and regularly inspecting these amenities is key to delivering a flawless experience every time.

5. Build an optimized website

Creating a professional, optimized website is essential for attracting high-end travelers and with tools like Hostaway’s website builder, it’s easier than you think. A well-designed site not only keeps you connected to multiple sales channels but also showcases your rental’s exclusivity.

Highlight key details like extra services, a 3D photo gallery and clear pricing to give potential guests a glimpse of the luxury experience that awaits them.

6. Upgrade the welcome experience with technology

A welcome book is a standard feature in vacation rentals, but why not take it to the next level? Instead of a traditional printed guide, consider providing a tablet or iPad loaded with:

• A digital welcome book featuring local recommendations, property guidelines,band interactive maps.

• Exclusive concierge services allowing guests to book experiences or request services with ease.

• Smart home integrations enabling them to adjust lighting, temperature and access entertainment effortlessly.

This small yet impactful upgrade enhances convenience and reinforces the high-end feel of your rental.

Pricing Strategies for Luxury Rentals

Setting the right luxury rental pricing is crucial for attracting high-end travelers while maximizing revenue. Unlike standard rentals, luxury properties require a strategic pricing model that reflects their exclusivity, amenities and location.

1. Understand market demand

Analyze seasonal trends, competitor pricing and traveler demand to determine optimal rates. High-end properties in sought-after locations can command premium nightly rates, especially during peak seasons.

2. Factor in unique amenities

Exclusive features such as private pools, concierge services, oceanfront views and spa-like bathrooms significantly impact pricing. Highlight these luxury amenities to justify higher rates and attract discerning guests.

3. Implement dynamic pricing

Luxury rentals benefit from dynamic pricing strategies that adjust rates based on demand fluctuations, local events and booking trends. Using pricing tools or revenue management software ensures your rates stay competitive.

4. Offer value-driven packages

Luxury travelers are not always enticed by lower prices so instead of discounting, enhance value by bundling personalized experiences like guided tours or exclusive access to local attractions. These curated offerings appeal to affluent travelers willing to pay for an exceptional stay.

5. Leverage length-of-stay pricing

Encourage longer stays by implementing weekly and monthly discounts, which provide guests with added value while securing higher overall revenue. Many luxury travelers seek extended getaways, making this an effective strategy.

By aligning your luxury vacation rental pricing strategy with demand, amenities and exclusivity, you can attract high-paying guests and maximize your property’s earning potential.

The Future of Luxury Vacation Rentals: Elevate, Innovate, Succeed

The high-end vacation rental market is thriving, offering unparalleled opportunities for hosts and property managers who understand what high-end travelers truly seek. Exclusivity, personalization, and experience-driven stays are the key ingredients to standing out in this competitive space.

By investing in premium amenities, five-star services, strategic pricing, and top-tier marketing, you can position your rental as a must-visit destination for affluent guests. As the industry continues to evolve, those who prioritize innovation and exceptional guest experiences will lead the way.

Luxury is more than just a price tag — it’s about creating unforgettable moments.