What the Latest Data Shows in 2026
Short-term rentals are no longer a small side category in the lodging market. In San Diego, they now represent a measurable share of total visitor demand and are directly impacting how hotels perform during peak travel periods.
Recent CoStar Analytics data shows that short-term rental demand has grown from roughly 10% of hotel demand before 2020 to nearly 20% today.
In San Diego, the impact is especially visible.
STRs Now Represent a Major Share of Lodging Supply
San Diego is one of the country’s most active short-term rental markets.
According to CoStar’s analysis:
- Short-term rental inventory in San Diego is equivalent to roughly one-quarter of total hotel room supply
- San Diego ranks among the highest STR penetration markets in the country, alongside Los Angeles
- Many STR listings are one-bedroom units, which compete directly with traditional hotel rooms
This means STRs are not just adding more options for travelers. They are now part of the same lodging demand pool as hotels.
STRs Are Absorbing Peak Travel Demand
Hotels still maintain stronger and more consistent occupancy than short-term rentals.
However, CoStar’s data suggests that STRs are absorbing a growing share of excess demand during peak travel periods.
When San Diego experiences high visitor demand, STRs help capture overflow that may have otherwise gone to hotels.
That has changed the ceiling for hotel performance, especially during high-season travel windows and major events.
Hotels and STRs Perform Differently
Hotels and short-term rentals do not perform the same way.
Hotels generally show:
- Higher occupancy
- More consistent demand
- Stronger performance from business travelers and repeat customers
Short-term rentals generally show:
- Higher average daily rates
- More variation by season and location
- Stronger pricing power for larger spaces, privacy, and flexible stays
In San Diego, STRs often command higher nightly rates than hotels, even though hotels tend to maintain higher occupancy.
San Diego’s STR Market Is Heavily Regulated
San Diego’s short-term rental market is also shaped by local regulation.
The city’s Short-Term Residential Occupancy ordinance includes:
- A license cap for whole-home STRs
- A separate category for Mission Beach
- License requirements for operators
- Compliance requirements tied to platforms like Airbnb and Vrbo
As of recent estimates:
- Roughly 6,500 to 7,000 whole-home STR licenses are permitted citywide
- Total active STR listings may be higher when including partial rentals and non-compliant units
- Coastal submarkets continue to see the strongest performance
Coastal Areas Continue to Lead
STR performance is not evenly distributed across San Diego.
The strongest-performing areas are typically coastal and tourism-driven, including:
- Mission Beach
- Pacific Beach
- La Jolla
- Ocean Beach
- Downtown San Diego
These areas benefit from beach access, walkability, tourism demand, and higher nightly rate potential.
Typical stronger coastal STR markets often see:
- Annual occupancy in the 65% to 75% range
- Average daily rates ranging from roughly $275 to $500+, depending on asset quality, season, and location
Inland areas generally see lower rates, lower occupancy, and more seasonal variation.
The Line Between Hotels and STRs Is Blurring
Another major shift is that hotels and STRs are becoming more connected.
Airbnb and similar platforms now list boutique hotels and offer more hotel-style services. At the same time, hotels are adding extended-stay formats and more residential-style accommodations.
Travelers are increasingly choosing between hotels and STRs based on price, location, space, flexibility, and availability.
The result is a lodging market where hotels and STRs are no longer separate categories. They are competing within the same broader demand pool.
Key Data Takeaways
- STR demand has grown from roughly 10% of hotel demand pre-2020 to nearly 20% today
- San Diego STR inventory is equivalent to about one-quarter of hotel room supply
- Hotels still maintain stronger occupancy
- STRs often command higher nightly rates
- STRs absorb excess demand during peak travel periods
- San Diego remains one of the most active and regulated STR markets in the country
- Coastal neighborhoods continue to outperform inland areas
Final Thought
The latest data shows that short-term rentals are now a permanent part of San Diego’s lodging market.
Hotels still lead in consistency and occupancy, but STRs are capturing a meaningful share of demand, especially during peak travel periods.
For San Diego, the shift is no longer theoretical. It is visible in the data.
If you’d like to discuss the realistic value of your property or explore current market conditions, our team is always happy to provide insight. You can give us a call or fill out our confidential valuation form. Check out Christina Labowicz resume at Homes.com