Diving or thriving? How COVID-19 reshaped Australian short-term rental submarkets

Short-term rental markets are constantly evolving in response to dynamic market conditions. Leveraging the large-scale external market shocks resulting from the COVID-19 pandemic, this paper aims to better understand how short-term rental submarkets are formulated in response to changing market conditions. Using sequence analysis on monthly booking records between mid-2019 and the end of 2022 in Australia, this paper identifies six distinct short-term rental types underlying their varying longevities on the market. Temporal, geographic, operational and hedonic characteristics are considered to differentiate thriving from diving market trends and derive a taxonomy that narrates six submarkets. The results reveal a shifting STR market landscape from central cities and longstanding tourist destinations to peri-urban regional towns and a shift from properties run by small-scale amateur hosts toward professionally operated rentals with substantially more space and amenities. This suggests that short-term rentals have emerged as a distinct accommodation class to hotels, albeit in ways that differ based on spatial context.