Market Dynamics and Global Trends
The short-term rental market in 2025 is witnessing a deceleration in supply growth, with an estimated increase of only around 4.7%. This is a marked contrast to the rapid expansion experienced in the post-pandemic period. Despite the moderation in supply, demand remains strong: AirDNA has reported a 7% year-on-year surge in demand for 2024, and occupancy rates are nearing those seen before the pandemic.
Rising competition is a significant concern for operators. More than half (55%) cite market saturation as their primary challenge, and approximately one in four hosts have ceased renting at least one property in the past year due to profitability pressures. Globally, average occupancy rates for Airbnbs are around 46–50%. This increased risk has prompted some hosts to exit the market or reduce prices to stay competitive.
Regulatory and Legislative Updates: Kenya & East Africa
The Tourism Regulatory Authority (TRA) of Kenya has registered 8,000 Airbnbs as part of a national campaign targeting non-compliant short-term rental operators. The initiative aims to enforce minimum safety and quality standards, with registration now mandatory for all operators. In addition, Airbnb is required to provide the TRA with a comprehensive list of all properties on its platform, ensuring thorough oversight of the industry. Unregistered Airbnbs and their landlords now face penalties, particularly in response to recent safety incidents in Nairobi.
The Finance Act 2025 has strengthened the Kenya Revenue Authority’s (KRA) mandate to enforce digital and rental tax compliance among Airbnb and other platform-based short-term rental operators, including non-residents. This has resulted in increased fiscal scrutiny of digital rental activities.
Observers in the Kenyan market have noted a 10% increase in Nairobi rents over the past two years, largely attributed to the high conversion rate of long-term rentals into Airbnb units. It is estimated that 15% of Nairobi’s housing stock now operates as short-term rentals, contributing to rising costs and a reduced supply of housing for local residents.
Platform and Operator Insights
According to Guesty’s latest industry report, operators are increasingly relying on technology-driven pricing strategies, reputation management, and streamlined operational models to remain profitable in this competitive environment. In Nairobi, the average Airbnb is booked for only 168 nights annually, equating to an occupancy rate of 46%, which illustrates the ongoing challenge of securing consistent income.
Booking.com and VRBO continue to hold significant market share in Kenya and East Africa, with their listings and demand growing, particularly during peak tourism seasons such as January–February and September. At GuestyVal 2025, Guesty’s flagship event, the importance of digital reputation management in driving bookings was emphasised, highlighting the need for operators to invest in reviews, ratings, and fraud prevention tools like TRUVI to secure ongoing success.
Policy and Operational Developments
New requirements for short-term rental properties are set to take effect in various regions, mirroring similar pending changes in other markets. In Greece for example, by 01/10/2025, operators must comply with technical, operational, and registration standards or risk removal from digital platforms and potential legal penalties. Local authorities are also increasing their efforts in accreditation and star-rating exercises to classify short-term rental offerings, with a focus on enhancing baseline standards, particularly in climate-sensitive regions and urban centres.
Conclusion
The developments of the past week highlight a maturing short-term rental industry in Kenya and East Africa, characterised by tighter regulation, intensified competition, and an increased focus on safety, compliance, and profitability. Homeowners and operators are advised to stay alert to evolving regulatory requirements and leverage technology and reputation management strategies to maintain their competitive advantage.