The short-term rental (STR) sector is about to undergo a major shift in the way people search for a place to stay. But overall, the major players are scratching their heads.
The problem is, no one knows how much artificial intelligence (AI)-powered search and (eventually) delivery will disrupt traditional booking patterns, and more importantly, which large-scale language models (LLMs) will ultimately become dominant.
For now, LLMs like ChatGPT and Claude are jockeying for position as they test consumer appetite for advertising. Google is also experimenting with advertising in AI mode. This early stage of development could pave the way for startups to enter products that support rental managers.
early signal
Digital search guru Graham Donoghue’s advice is simple. Act now to avoid risks.
“This is not a fad. This is not a bubble. There is an arms race going on and you need to understand how the game is played to participate,” he said.
“LLM is still trying to figure it all out. They’re all slightly different. Our philosophy is we need to stand out. When the LLM bots come knocking on our door, we need to make sure we’re open and inviting them.”
According to Phocuswright research, travel searches through LLM more than doubled from early to late 2025, but traffic remains relatively low.
Donoghue, CEO of UK-based Forge Holiday Group, which operates brands such as Sykes Holiday Cottages and Forest Holidays, puts this figure at 7% of traffic, with 6% coming from Google and Microsoft Bing AI overviews (also known as zero-click search results) and 1% coming directly from LLM.
Property management specialist Pass the Keys shared similar numbers with PhocusWire. Marketing director David Judd estimates that zero-click results contribute 8-10% of traffic. Like Donahue, he urges the industry to adapt.
“If you don’t invest the time, your business won’t exist in about two years,” he said. “This is one of those things that sometimes happens where you can choose to do it or not. There’s no choice in this. This has fundamentally changed the search environment and the buying heuristic.”
why is it important
The STR sector stands to benefit from AI as there is room for growth in direct booking. According to a recent report from property management software Hospitable, nearly 4 in 10 hosts (38%) report receiving no direct bookings in 2025, and nearly half (48%) report receiving 1% to 10% of their bookings directly.
Research in Hostaway’s 2026 Short-Term Rental Report found that while 70% of operators have a direct booking website, almost two-thirds (62%) receive less than a quarter of their direct bookings through direct channels, and 18% receive no bookings at all.
According to short-term rental platform Simply Owners, 61% of owners get more than half of their bookings directly, but 60% said this share has not increased over the past year.
When asked which trend will most impact their business in 2026, 17% of hosts cited direct bookings, Hospitalable said in the report. The largest share (25%) selected smarter automation and AI as a top trend.
attribution game
Pass the Keys’ Judd believes STR companies need to “redesign” both their websites and user journeys. However, adapting to the new world of AI-powered search is not for the faint of heart.
Just as brands used platforms like Hitwise in the early days of the web, they now need to embrace new tools.
Donahue said Forge uses a variety of methods to track referrals, and it’s also possible to track zero-click results from the AI overview. Search engines are also starting to shed light on how brands appear in summaries, with Microsoft introducing AI performance to Bing Webmaster Tools in early February.
“For the first time, with clear visibility into which URLs are being referenced and how citation activity changes over time, we can understand how often our content is cited in generative answers,” the company said in a blog post.
Forge also uses new tools such as Peec AI.
“We take two, three million keywords, we build long-form prompts from those keywords, and we generate the 2,000 to 3,000 prompts that we think are the most appropriate, because people are having conversations. Then we track those and look at shares,” Donahue said. “My advice is that this is new and emerging and there are a lot of bugs, but you need to keep an eye on it.”
Pass the Keys sets up specific channel groups on top of Google Analytics because “search engines themselves are slow to identify AI channels.”
“We’ve noticed an increase in direct and organic traffic, but that’s probably not the case. [enough] “This is to make up for the 15% that traditional search might drop,” he said.
“As we know in the marketing industry, sourcing and attribution has always been a nightmare. There’s an old adage: ‘50% of marketing is effective, but you only know half of it.'”
Democratizing search
The generative AI revolution is behind a new wave of startups in the STR space, including HostAI, the PhocusWire Hot Travel Startup for 2026. The company is working with vacation rental managers to help increase direct bookings.
CEO Amirali Mohajar said, “We started this business because we believed that AI would be a huge tailwind for direct distribution.” “There are two reasons. Many people are moving from Google search to AI travel planning. The second is that it levels the playing field in terms of distribution capabilities.”
He said the amount of traffic his clients get from AI platforms has “increased 24x year over year” and now accounts for a “high single digit” share of overall traffic.
“Obviously, it started from a small base, but it’s becoming a meaningful channel. The traffic that actually comes through is very intentional traffic, so it converts better than organic. [the user] We have already done a lot of thinking and comparing options,” Mohajer said.
“There are still many questions remaining about how this whole sector will shape up, and it’s important for us to move the needle in that direction for our clients,” he said. “The contribution is even greater when you have unique inventory – an interesting asset that you can differentiate.”
Enter the funnel consideration stage
Annie Munro Sloan, co-founder and CEO of The Host Co, a 2024 PhocusWire Hot Travel Startup, says most rental properties have an advantage in the AI world because they tick the boxes of being “unique” or “interesting.”
Munro Sloan is on a mission to help the industry tell more stories through The Host Co, a retail solution that allows hosts to sell products and services in short-term rental spaces.
Customers sell everything from extra firewood and baby supplies to services like Reiki healers and mobile tattoo artists, and even IV hydration. Romance packages are also popular and include fake flower petals and flameless candles on the bed.
“These stories are what get people to book, and this is related to AI. These stories get people into the consideration funnel very quickly,” she said. “The way the LLM works is at the top of the funnel. This is where the shortlist becomes more important. You need specificity that the LLM can capture.”
Pierre-Camille Hamana, founder and CEO of Hospitable, agrees.
“More travelers are starting to use AI conversationally, asking very specific questions about where they’re staying, what fits their needs, and what they can trust, so it’s more about details than brand recognition,” he said.
The added experience is also a factor in guest reviews, another influential source of information for LLM. However, Sloan points out that the industry will eventually reach the agent level rather than the “top of the funnel.”
Navigating uncertain situations
Agent models have advanced significantly in recent weeks, with the new “WebMCP” standard proposed by Google and Microsoft and the launch of Google’s Universal Commerce Protocol highlighting the pace of innovation. However, a more pressing concern for the STR sector is adapting to the new advertising models that are being introduced to LLMs.
“The unknown for us is what happens as soon as paid media enters LLM.” Forge’s Donahue said the company is considering the beta program despite the barriers for companies based only in the United States.
As momentum grows, AI-native search can quickly turn into a measurable acquisition channel. STR companies that treat this as a viable performance channel early on will be better off in the long run.
“Once the dust settles, we will see 20% of our client bookings coming from AI-referred traffic,” Mohajer said. “Within five years, we will see an additional 15% to 20% increase in transactions through AI apps.”
