From emerging to mainstream: internet platforms Airbnb and HomeAway are transforming the Puerto Rico lodging infrastructure

January 28, 2019

The various impacts of the sharing economy are being felt worldwide, and Puerto Rico is no exception. The Island”s hospitality sector is being transformed by the short-term rental business, with rental platforms like Airbnb and HomeAway generating new vacation-related business and spreading tourist dollars beyond the typical hotel and tourism districts.

The short-term rental business has been mostly incremental to the traditional hotel business

The short-term rental business in Puerto Rico has experienced a remarkable growth in the past few years. Its contribution to the local economy is rapidly approaching the size of the traditional hotel sector. As can be observed in Figure 1, the short-term rental activity increased from a monthly average of 17k room nights booked* in 2015 to a monthly average of 109k and 149k in 2017 and 2018, respectively. If this trend continues, the short-term rental sector may surpass the hotel sector in terms of room nights in 2019.

The expansion of the short-term rental business has not translated into a smaller traditional hotel sector. Even after the devastating effects of Hurricane María, with numerous large hotels closed during most of 2018, total hotel room nights in 2018 were only 14% below 2017 numbers for the January to August period. We expect total room nights rented in hotels to jump above 2016 and 2017 numbers as hotels continue to reopen and projected expansions materialize.

The average daily rate of lodgings endorsed by the Puerto Rico Tourism Company (PRTC) was $157 in 2018 with an average of 1.74 guests per room. This compares to an average daily rate of $186 and an average maximum number of guests of 5.3 for the short-term rental sector. These numbers confirm that short-term rental properties are, in general, more affordable and convenient for larger groups of people.

The short-term rental business has brought an additional source of income to Puerto Ricans that has helped to soften the impact of the economic crisis. The total revenues generated by short-term rentals reached $170M in 2018, an outstanding increase compared to the $18M of 2015 (see Figure 2).

Revenues reach an important number of individuals, but are quite concentrated

We estimate that revenues generated by short-term rentals in 2018 were spread across approximately 7k-7.5k hosts using mainly Airbnb and HomeAway. The average income of Airbnb hosts in 2018 was $19.9k and the median income $6.7k, with 31% of those hosts receiving more than $15k in that year.

However, both the revenues generated and the number of properties were quite concentrated in a somewhat reduced number of hosts. The top 20% Airbnb revenue generators made up 73% of the total 2018 revenues of Airbnb short-term rentals in Puerto Rico. The number of properties that each host manages is, obviously, a key driver of revenue generation. As can be observed in Figure 3, a total of 301 Airbnb hosts (5% of Airbnb hosts) own or manage more than five properties and make up 30% of the total Airbnb short-term rental properties and 36% of its rental revenues. Another 1,549 Airbnb hosts (27% of Airbnb hosts) manage between 2 and 5 properties and make up 36% of the Airbnb rental properties and 34% of the Airbnb properties revenues. The remaining 68% of the Airbnb hosts manage or own 1 single rental property, making up 34% of all Airbnb rental properties and earning the non-negligible amount of $34M in 2018 (30% of total Airbnb properties revenues).

Apartment listed through Airbnb, the typical short-term rental in Puerto Rico

More than 40% of the properties listed in Airbnb and HomeAway are apartments which, on average, have 1.5 bedrooms, 1.4 bathrooms and accommodate a maximum of 4.5 guests (place cursor on Figure 6 to see the details). The total number of short-term rental apartments increased by 76% in 2015, 124% in 2016, 82% in 2017 and 20% in 2018 (see Figures 4 and 6, select the category Apartments in Figure 6 to see growth rates of Apartments in Figure 4).

The second most important property type are houses, which represent 21.5% of total short-term rental properties in Puerto Rico. On average, they have a maximum number of guests of almost 7 people with an average daily rate of $234, 63% above the average daily rate of apartments. Finally, it is important to mention that properties listed as Villas are clearly targeted to large groups of visitors with high-end preferences. They represent 6.8% of the total short-term rental properties and have an average maximum number of guests of 8.3 and an average daily rate of $428 ($24M revenues generated in 2018).

Airbnb is the main listing choice with 74% of total properties, but Home Away has an important share of 20.5% (see Figure 5). Finally, 6% of properties are marketed through both Airbnb and HomeAway.

Size, location and active management, key elements to become a top producer

So far we have looked at the size of the short-term rental business in Puerto Rico as well as at the main types of properties. But what distinguishes the top producing properties from the rest? To do that, we have compared the top 100 producing apartments in 2018 against the rest of the apartments that generated revenue in 2018. In Figure 7 we can see how the Top 100 accumulate 14% of the total 2018 revenues despite representing just 1.65% of short-term rental apartments in Puerto Rico. The average 2018 revenue generated by the Top 100 was $84.4k (median of $58.2k), compared to $8.7k (median of $5.6k) for the rest of apartments. They are obviously larger than the rest (maximum number of guests of 7.4 vs 4.4), but size alone does not explain their more than 3 times higher average daily rate ($464 vs $139).

Location seems to be another key variable. Sixty of the Top 100 apartments are in the San Juan coastal area, particularly in Isla Verde, Condado, Ocean Park, Santurce and Old San Juan. Isla Verde has the largest concentration of top producing apartments with 25 in total. The area between Avenida Isla Verde and Calle Tartak alone, has 10 apartments that generated more than $50k in 2018. Ocean Park is another area with top producing apartments. Between Calle McLeary and the beach front there are 7 top producing properties in a 4-block span (between Taft and Yadley Place). Outside the immediate metro area, Dorado tops the list with a total of 15 Top 100 apartments, most located in the Dorado Beach and the Dorado Country Estates areas. Finally, other top apartments areas are Río Grande, Culebra, Isabela and Rincón.

Aside from larger size and top notch location, the top 100 apartments also show a much better occupancy rate (73%) compared to the rest of the apartments (42%). This could be the result of a better location but also highlights the importance of actively managing these properties, which is explained by the fact that 42% of the Top 100 apartments’ hosts are superhosts**. Finally, it is important to mention that 51% of the Top 100 apartments were listed in HomeAway compared to just 21% of the rest of apartments.

The increasing importance of the short-term rental sector for Puerto Rico is clear. Instead of emerging from a dedicated and planned strategy, the short-term rental markets have flourished organically fulfilling an untapped need in the tourist industry. The challenge now for policy makers and industry leaders is how to integrate this sector into the overall economic development strategy to strengthen the Puerto Rico’s tourism infrastructure.

One of the first steps should be to understand the profile of the short-term rental visitor vis-a-vis hotel and cruise visitors. Once the market profile is defined and understood, the promotional efforts will need to incorporate their distinct needs and preferences.

At the same time, there is a question of how much more the short-term rental sector can grow. And how this expansion will impact the community cohesion, the housing and long-term rental prices, and the competition with some segments of the traditional hotel sector. Regarding competition, the local administration should make sure that all players compete on a level playing field, particularly in terms of taxation and regulatory requirements. City officials around the world are working with the short-term rental platforms, the local communities and the hotel sectors to improve their coexistence. As an example, the Los Angeles City Council approved new regulations for short-term rental housing on Airbnb and other vacation rental websites last December after 3 years of debate. The new regulation prohibits apartment conversions into so called “rogue hotels&quot but, at the same time, allows homeowners with a good record as a short-term rental host to petition to go above the current 120 days cap.

In conclusion, the short-term rental industry is playing a key role in bringing tourists to Puerto Rico and spreading tourist dollars beyond typical hotel and tourism districts. During 2019, efforts should be made to allow this sector to keep flourishing, monitoring and addressing the possible negative externalities that this sector could bring.


* Room nights booked in short-term rental properties are calculated multiplying the number of bookings and the number of rooms by property** As stated in the Airbnb website “Superhosts are experienced hosts who provide a shining example for other hosts, and extraordinary experiences for their guests. Once a host reaches Superhost status, a badge will automatically appear on their listing and profile to help you identify them&quot


Puerto Rico Tourism Company, AirDNA, Airbnb web site, Puerto Rico newspapers articles.


Accuracy and Currency of Information: Information throughout this “Insight” is obtained from sources which we believe are reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. While the information is considered to be true and correct at the date of publication, changes in circumstances after the time of publication may impact the accuracy of the information. The information may change without notice and V2A is not in any way liable for the accuracy of any information printed and stored, or in any way interpreted and used by a user.

to our newsletter

Scroll to Top