The U.S. government’s sweeping new tariffs have triggered an unprecedented crisis for short term rentals across the country. In April 2025, the administration implemented tariffs reaching up to 54% on products from China and several EU member states, while imposing a 10% blanket tariff on imports from most other countries, including major trading partners. Consequently, international tourism has plummeted, with U.S. visitor arrivals dropping by 11.6% in March 2025 compared to the same month in 2024.

This sharp international tourism decline has created immediate challenges for the hospitality industry. Economists project these measures could increase annual household costs by approximately $3,800, alongside a 2-3% rise in overall consumer prices. Furthermore, Canadian tourism—traditionally the largest source of international visitors—is expected to decline by over 20%, potentially eliminating $9 billion in U.S. tourism revenue. The impact of tariffs on tourism extends beyond visitor numbers, as U.S. hotel occupancy fell by 2.3 percentage points in March 2025, while revenue per available room dropped by over 4%. As these economic pressures intensify, property managers and hosts must navigate a rapidly changing landscape that threatens the sustainability of their operations.

Key Takeaways

The short-term rental industry faces an unprecedented crisis as new U.S. tariffs reshape global tourism economics, forcing operators to adapt quickly or risk business failure.

• Tariffs devastate international tourism: U.S. visitor arrivals dropped 11.6% with Canadian tourism declining 20%, eliminating $9 billion in potential revenue.

• Operating costs surge dramatically: Furnishing expenses increased 20-30% while maintenance costs rose 15-20%, shrinking profit margins from 30-40% to 20-25%.

• Supply chain disruptions cripple operations: Delivery times extended from 3-5 days to 2-3 weeks, complicating property setup and maintenance schedules.

• Technology adoption becomes survival strategy: Smart access solutions like keyless entry systems reduce operational overhead while maintaining guest experience quality.

• Market focus shifts domestically: Properties pivot toward domestic travelers as international bookings plummet, though this rarely offsets international losses completely.

The industry’s recovery depends on policy stability and innovative cost-cutting measures. Operators who embrace technology and adapt their business models will be best positioned to survive this economic storm and capitalize when international tourism eventually rebounds.

Tariffs Reshape Global Travel and Hospitality Economics

The administration sweeping trade policies have fundamentally altered the economic landscape for global travel and hospitality. The implementation of these tariffs marks the most significant shift in international trade relations in decades, with profound implications for short term rentals and the broader tourism ecosystem.

U.S. imposes up to 54% tariffs on key goods

The administration has established a baseline tariff of 10% on all imports, alongside significantly higher rates for countries deemed “worst offenders”. China faces the most severe impact, with a new 34% tariff on top of an existing 20% levy, bringing total duties to at least 54%. Similarly, Vietnam and Cambodia have been hit with 46% and 49% tariffs respectively, despite their recent popularity as manufacturing alternatives to China. Additionally, the tariff structure targets Japan (24%), India (26%), and various other trading partners.

For the hospitality sector, these measures directly affect materials essential to operations. Steel and aluminum, critical components in hotel construction and furnishings, now face approximately 25% tariffs. Previously exempt low-value parcels from China have also lost their protected status, with the “de minimis” rate dropping to 54% from 120%.

Ripple effects hit airlines, hotels, and vacation rentals

The aviation industry was among the first to signal distress, with major carriers including American Airlines and Delta withdrawing their 2025 profit forecasts due to economic uncertainty. Despite global airfares dropping slightly by 2.2% year-to-date, the industry faces mounting challenges from increased component costs and declining passenger volumes.

The hotel sector reports similarly concerning trends:

• Hotel occupancy fell by 2.3 percentage points in March 2025
• Revenue per available room (RevPAR) dropped by over 4%
• Mid and high-tier chains have delayed renovations due to rising costs

For short term rentals, the impact has been particularly severe. Furnishing costs have surged 20-30%, adding $300-$500 per room. Moreover, maintenance and cleaning expenses have increased 15-20%, representing an additional $30-$40 in monthly costs. Supply chain disruptions have extended delivery times from 3-5 days to 2-3 weeks, complicating property setup and maintenance. Consequently, host profitability has declined from 30-40% to 20-25% as these rising costs erode margins.

Tourism-dependent economies brace for downturn

International visitor arrivals to the U.S. fell by 11.6% in March 2025 compared to the previous year. Tourism Economics projects significant declines from Canada (-20.2%) and Western Europe (-4.9%) throughout 2025. Since Canadian tourists constituted approximately one-quarter of all foreign visitors to the U.S. in 2024 and spent $20.5 billion, this reduction represents a substantial economic blow.

Domestic business travel has likewise shown concerning trends, as corporate uncertainty leads companies to reconsider conferences and events. In response, popular tourist destinations are shifting focus toward attracting domestic travelers, albeit with limited success in offsetting international losses.

Inbound and Outbound Travel Patterns Shift Dramatically

Travel patterns across the globe have undergone dramatic shifts as tariffs reshape tourism economics. These changes present significant challenges for short term rental operators who must adapt to new market realities.

U.S. sees 11.6% drop in international visitors

Recent federal data reveals a sharp decline in foreign visitors, with overseas arrivals to the United States plummeting 11.6% in March 2025 compared to the same month last year. This downward trend appears to be accelerating, as international arrivals decreased by 3.3% during the January-March period. Canadian tourism—traditionally the largest source market—faces a projected 20.2% decline, with flight bookings to destinations like Nashville dropping by 70%. Accordingly, Tourism Economics has reversed its earlier forecast of 9% growth, now predicting a 9.4% decline in international visitors for 2025.

Outbound American travel declines due to weaker dollar

The U.S. dollar has fallen approximately 10% against major foreign currencies in 2025, making international travel increasingly expensive for Americans. This decline has effectively increased prices by 8-14% for U.S. travelers, especially those visiting Europe and Asia. Though many Americans had already booked trips before the currency shift, they now face higher costs for food, transportation, and activities at their destinations. Initially strong in previous years, the dollar’s downturn stems primarily from uncertainty over trade policies and tariffs.

Other destinations like Japan and Thailand gain traction

Meanwhile, alternative destinations have capitalized on shifting travel patterns:

• Japan expects 9.3 million Chinese visitors in 2025, a 33% increase driven by proximity and currency advantages
• Thailand maintains ambitious targets of 35.5 million foreign visitors despite a 5.62% decline in arrivals during early 2025
• South Korea has surpassed the United States as the top destination for Japanese tourists

These changing patterns have created significant operational challenges for furnished short term rentals dependent on international tourism, especially in major U.S. markets.

Short-Term Rentals Struggle to Adapt to New Realities

Property managers across the nation report unprecedented challenges as rising tariffs ripple through the short-term rental industry. The economic strain has created a perfect storm of operational difficulties that threaten business viability.

Furnished short term rentals face sourcing challenges

Operators now confront a 15-25% surge in fit-out and furnishing costs for properties. Supply chain disruptions have extended delivery times from 3-5 days to 2-3 weeks, complicating property maintenance schedules. Renovation expenses have increased by approximately 10%, forcing owners to reconsider property improvements.

Hosts delay upgrades and reduce service offerings

“Cancelations from Latin American and Canadian guests and a noticeable drop in new bookings from these markets” have become common, notes Heleena Sideris of Park City Lodging. In response, many hosts are reducing amenities and postponing upgrades. Airbnb’s updated payment terms, effective September 2025, create additional uncertainty with increased risk of chargebacks and payment reversals even after guests check out.

Apartment short term rentals lose appeal to budget travelers

As accommodation costs rise, budget-conscious travelers seek alternatives to traditional short-term rentals. Many cities have implemented new regulations, including limits on stay length and licensing requirements, further challenging profitability.

Industry Looks to Innovation and Policy for Recovery

Amid economic uncertainty, the hospitality sector increasingly turns to technology and policy reform as pathways to recovery. The search for solutions comes as businesses adapt to a changing landscape.

Smart locks like EzyLock improve guest experience

Keyless entry systems have emerged as essential tools for short term rental operators. These technologies eliminate the need for physical key exchanges, reducing wait times and stress associated with coordinating schedules. Property managers report higher guest satisfaction from seamless check-in experiences that create positive first impressions.

Facing rising costs and shrinking margins? It’s time to rethink how you manage your short term rentals. Discover how EzyLock’s smart access solutions can help you cut operational overhead, improve guest security, and stay competitive—no matter how the travel market shifts.

Policy clarity and trade stability needed for recovery

The hospitality sector requires consistent trade policies to regain stability. Current tariff uncertainty has fundamentally altered booking patterns, with Trivago noting a 25% year-over-year increase in domestic travel bookings for July-September in the UK. As Johannes Thomas, Trivago CEO observed, “In times of uncertainty, people stay closer to home”.

Hospitality industry trends shift toward domestic focus

Notably, bookings data shows London becoming the top destination for British tourists, followed by Edinburgh where demand increased nearly 30%. This domestic shift reflects broader industry adaptations, as hotels monetize assets by investing in spa-style facilities and flexible co-working spaces.

Property management challenges drive tech adoption

Property management companies face rising operational costs, with 43% concerned about maintaining high occupancy rates in 2025, up from 35% in 2024. Subsequently, AI adoption has surged from 21% in 2024 to 34% in 2025. Approximately 65% of property management companies now use AI-driven tenant screening tools.

Conclusion

The tariff crisis presents unprecedented challenges for short-term rental operators across the United States. Rising costs coupled with plummeting international tourism have created a perfect storm that threatens the viability of many properties. Property managers now face a stark reality: furnishing expenses have surged 20-30%, maintenance costs have increased 15-20%, and profit margins have shrunk from 30-40% to 20-25%.

Additionally, shifts in travel patterns have fundamentally altered the market landscape. Canadian visitors—traditionally the largest source of international tourists—may decline by over 20%, potentially eliminating $9 billion in tourism revenue. Meanwhile, alternative destinations like Japan and Thailand have gained significant traction as travelers adjust their plans accordingly.

Most rental operators have responded to these pressures through various adaptation strategies. Many hosts delay property upgrades, reduce amenity offerings, and seek cost-cutting measures to preserve profitability. Others turn toward domestic travelers, though this market segment rarely offsets international losses completely.

Therefore, technology adoption has emerged as a critical lifeline for struggling properties. Smart access solutions like EzyLock eliminate physical key exchanges while reducing operational overhead and improving security. Such innovations allow operators to maintain service quality despite financial constraints.

Above all, the industry requires policy clarity and trade stability to chart a sustainable path forward. Until then, short-term rental operators must balance cost management with guest experience enhancement to weather this economic storm. Those who successfully adapt through technological innovation and market repositioning will likely emerge stronger when international tourism eventually rebounds.

FAQs

Q1. How have recent tariffs affected the short-term rental market in the US? Recent tariffs have led to a significant decline in international tourism, with US visitor arrivals dropping by 11.6%. This has resulted in decreased occupancy rates and revenue for short-term rentals, forcing many operators to adapt their business strategies.

Q2. What are the main challenges faced by short-term rental operators due to the current economic situation? Short-term rental operators are facing increased costs for furnishings (20-30% surge) and maintenance (15-20% increase), along with supply chain disruptions extending delivery times. These factors have reduced profit margins from 30-40% to 20-25%.

Q3. How are short-term rental hosts adapting to the new market realities? Many hosts are delaying property upgrades, reducing amenity offerings, and implementing cost-cutting measures to preserve profitability. Some are also shifting their focus towards attracting domestic travelers to offset the loss of international guests.

Q4. What role is technology playing in helping short-term rental businesses survive the crisis? Technology adoption has become crucial for survival. Smart access solutions like keyless entry systems are helping operators reduce operational overhead, improve guest security, and enhance the overall guest experience while managing costs.

Q5. What is the outlook for the short-term rental industry’s recovery? The industry’s recovery largely depends on policy clarity and trade stability. While the current situation is challenging, operators who successfully adapt through technological innovation and market repositioning are likely to emerge stronger when international tourism eventually rebounds.