The Future of Short-Term Rentals in Asia: Market Trends, Technology Impact, and Growth Opportunities

By Keith Cowarn, Founder STRA - Short Term Rentals Asia & Popup-travel.com

February 2025

Introduction

Asia’s short-term rental market has rapidly expanded over the past decade, fueled by increasing travel demand, urbanization, and digitalization. The region’s diverse economic landscape and varied regulatory approaches present both opportunities and challenges. Unlike Western markets, where STRs are largely consolidated under a few dominant platforms, Asia remains a fragmented market with regional nuances that global players often overlook.

Market Overview and Key Statistics

The short-term rental (STR) market in Asia is experiencing significant growth, driven by several key factors:

1. Rising Middle-Class (300M) and Disposable Income: The expansion of the middle class in many Asian countries has led to increased disposable income, enabling more people to travel and seek diverse accommodation options, including STRs.

2. Preference for Unique and Local Experiences: Modern travelers are increasingly seeking authentic and personalized experiences. STRs offer stays in local neighborhoods, providing a more immersive cultural experience compared to traditional hotels.

3. Technological Advancements and Digital Platforms: The proliferation of digital booking platforms has made it easier for property owners to list accommodations and for travelers to find and book STRs. This accessibility has contributed to the rapid expansion of the STR market.

4. Urbanization and Tourism Infrastructure Development: Urban development and improved tourism infrastructure in many Asian cities have made them more accessible and attractive to tourists, further boosting the demand for STRs.

5. Post-Pandemic Travel Recovery: As travel restrictions ease and international tourism resumes, there is a pent-up demand for travel. Many travelers are opting for STRs due to perceptions of better hygiene, privacy, and flexibility.

Market Projections:

The STR market in Asia is projected to continue its upward trajectory. According to Statista, the vacation rentals market in Asia is expected to grow by 4.43% between 2025 and 2029, resulting in a market volume of approximately $35.89 billion by 2029.

Recent data highlights:

The robust growth of STRs in Asia, with major markets experiencing exponential increases in listings and bookings:

• Thailand: With tourism contributing over 12% to GDP, STRs have gained traction, especially in cities like Bangkok, Chiang Mai, and Phuket. Regulations vary, with restrictions in urban areas but looser enforcement in resort destinations.
• Vietnam: Ho Chi Minh City and Hanoi are leading markets, with a growing supply of urban and coastal rentals. The STR market has grown by 40% since 2019, fueled by rising domestic and inbound tourism.
• Malaysia: Kuala Lumpur and Penang are STR hotspots. Malaysia sees a strong mix of leisure and business travelers, with OTAs reporting a 35% increase in bookings year-over-year.
• Indonesia: Bali remains the epicenter of STR activity, but Jakarta and Lombok are emerging markets. The industry faces regulatory scrutiny, yet growth continues with a 50% increase in listings since 2020.
• Japan: The introduction of the "minpaku" law in 2018 created a structured framework for STRs. Tokyo and Osaka dominate, with rural and ski destinations seeing increased demand.
• Philippines: Manila and Cebu lead the STR market, with a significant share of travelers opting for alternative accommodations over traditional hotels.
• China: The STR market is substantial, with major cities like Beijing, Shanghai, and Guangzhou witnessing strong growth. Domestic platforms such as Tujia dominate over Airbnb due to regulatory restrictions.
• India: The STR market is expanding beyond metro cities to second-tier destinations, driven by a shift toward alternative accommodations among domestic travelers.

In summary, the STR market in Asia is booming, driven by economic growth, changing traveler preferences, technological advancements, and the ongoing recovery of the tourism sector.

The Role of Technology in STR Growth

Property Management Systems (PMS)

PMS technology has revolutionized short-term rental operations across the world by streamlining booking management, guest communication, and revenue optimization. Cloud-based solutions have enabled hosts and property managers to scale their businesses efficiently while improving the guest experience.

Estimating the exact percentage of short-term rental (STR) property managers in Asia who utilize Property Management Systems (PMS) is challenging due to limited region-specific data. Globally, PMS adoption rates vary based on the size of the property management company:

• Small Property Managers (1–99 properties): 68% use third-party PMS solutions, 23% do not use any PMS, and 9% have developed in-house systems.
• Medium Property Managers (100–499 properties): 64% use third-party PMS, 29% have built their own, and only 7% do not use a PMS.
• Large Property Managers (500+ properties): All utilize some form of PMS, with 58% having developed their own and 42% using third-party solutions.

Given that the STR market in Asia comprises a significant number of small to medium-sized property managers, it is plausible that PMS adoption rates in Asia are lower than global averages. Factors such as market maturity, technological infrastructure, and regulatory environments may contribute to this variance. While precise data for Asia is not readily available, it is reasonable to estimate that a majority of small to medium-sized STR property managers in the region may not yet have adopted PMS solutions leading to some estimates believing that only 28% of property managers have implemented fully comprehensive PMS solutions currently.

Investing in PMS technology can offer substantial benefits, including increased occupancy rates and revenue. As the STR market in Asia continues to grow, it is anticipated that PMS adoption will rise, enabling property managers to enhance operational efficiency and guest experiences.

OTA Connectivity and Global Platforms

Airbnb, Booking.com, and Agoda continue to dominate the Asian STR market. However, OTA connectivity remains a challenge for independent hosts, as many rely on multiple distribution channels for visibility. The integration of channel managers has mitigated this issue, but many properties still lack sophisticated connectivity solutions.

The Need for Regional OTAs

Global platforms often miss localized preferences and cultural nuances. This creates opportunities for regional OTAs such as Tujia (China), Traveloka (Indonesia), and Rakuten LIFULL (Japan) to thrive by catering specifically to domestic travelers. Investing in local OTAs can help property managers capture market segments that global players overlook.

The adoption of Property Management Systems (PMS) in Asia's short-term rental (STR) sector remains notably low compared to global standards, leading to operational inefficiencies and limiting market potential.

In Asia, only about 15% of PMS solutions are integrated with major OTAs, such as Airbnb, Booking.com, and Agoda. This low integration rate hinders hosts' ability to manage bookings efficiently across multiple platforms, often resulting in overbookings, pricing inconsistencies, and missed revenue opportunities. In contrast, in regions like North America and Europe, PMS-OTA integration rates exceed 60%, reflecting a more mature technological adoption in the STR industry.

Future Trends in Asia’s STR Market

• Regulatory Developments: Governments across Asia are introducing more structured STR regulations, impacting licensing, taxation, and zoning.
• Domestic Market Expansion: As international tourism fluctuates, domestic travelers are becoming an increasingly vital revenue stream.
• AI and Automation: The adoption of AI-driven pricing strategies, smart locks, and automated guest messaging will continue to enhance operational efficiency.
• Sustainability Initiatives: Eco-conscious travel is shaping demand for sustainable STR options, with travelers seeking energy-efficient properties and carbon offset programs.
• The Rise of Hybrid Accommodation Models: Blurring the lines between hotels and STRs, serviced apartments and extended-stay rentals are gaining popularity in major cities.

Key insight: Asia is not one market—it is 48 markets. Success requires hyper-localized strategies

Infrastructure Challenges

Asia’s STR growth is limited by infrastructural deficits, particularly in rural and second-tier destinations:

• Digital Connectivity Gaps: A significant percentage of rural ASEAN STRs lack stable internet access, preventing full participation in OTA platforms.
• Transportation Bottlenecks: The ADB estimates substantial infrastructure investment is needed by 2030 to support tourism, including airports, roads, and high-speed rail connections.

Investment in transportation and digital infrastructure is critical for unlocking STR sector growth in emerging destinations.

Regulatory Diversity Across Asia

Key Policy Barriers

The regulatory landscape for STRs in Asia remains inconsistent, with policies varying widely across key markets:

• Japan: The 2018 Minpaku Law restricts STRs to 180 operating days per year, leading to a 40% decline in listings.
• Thailand: STRs renting for more than 30 days must register as hotels, yet only 12% of operators comply.
• Indonesia: Bali introduced a 15% homestay tax, discouraging informal STR operators from entering the market.

Policy Recommendations

Efforts to streamline STR regulations are underway:

The ASEAN Secretariat ASEAN’s 2026 Tourism Strategic Plan: Advocates for a unified STR licensing framework that could reduce compliance costs by 30%.

Asian Development Bank (ADB) Green Tourism Initiative: Offering grants for eco-certified STRs, targeting a 25% reduction in carbon emissions by 2025.

Quote:

“Harmonizing STR policies is critical to unlocking ASEAN’s $4.2 trillion tourism potential.”

— H.E. Dato Lim Jock Hoi, Former ASEAN Secretary-General

Call to Action:

The STR industry in Asia is poised for sustained growth, but success depends on embracing technology, understanding regulatory shifts, and leveraging domestic market opportunities. As the Founder of Short-Term Rentals Asia (STRA), I encourage industry stakeholders to participate in the upcoming STR Gather, Connect & Grow Conference in Bangkok 12-13 November 2025 . This event will bring together property managers, technology providers, and investors to discuss best practices and shape the future of the industry.

Follow STRA - Short Term Rentals Asia for updates.

Reach out for Sponsor packs: [email protected]

References and Data Sources

• Tujia (China STR Market Report 2024)
• Airbnb Market Insights (2024)
• Booking.com APAC Trends (2024)
• Agoda Southeast Asia Travel Report (2024)
• STR Global (Asia Hospitality Report 2024)
• Local tourism boards and government statistics (Thailand, Vietnam, Malaysia, Indonesia, Japan, Philippines, China, India)
• Industry reports from Skift, Phocuswright, and STR Asia

This article seeks to serve as a resource for investors, property managers, and policymakers navigating Asia’s dynamic STR landscape. For further engagement contact me email: [email protected] or follow us at the STRA - Short Term Rentals Asia for updates on the conference November 2025, where industry leaders will share insights and strategies for sustainable growth.