Average Daily Rate (ADR)

Average Daily Rate:

The Palm Springs short-term rental market experienced a healthy year-over-year increase of 4% in Average Daily Rate (ADR) in 2025, reflecting overall pricing strength and sustained demand. This growth was driven primarily by performance during the peak season.

At the start of the year, external factors played a notable role. As previously mentioned, in January of 2025 a series of devastating wildfires across Los Angeles displaced many residents, leading to a surge in short-term, last-minute bookings throughout the broader region. This unexpected demand contributed to elevated occupancy and rate support during what is typically an already strong period.

As the year progressed into peak and shoulder seasons, the market demonstrated clear pricing power, particularly in the spring and again during the holiday season. April stood out as a defining month, signaling a strong return of festival-driven demand and reinforcing the area’s position as a premier seasonal destination.

Consistent with historical trends, the summer months brought a seasonal slowdown, largely driven by extreme desert temperatures. This resulted in softer ADR performance and highlighted an ongoing challenge for maintaining rate strength during this period.

The year concluded on a high note, with November and December delivering strong ADR growth, underscoring Palm Springs’ continued appeal as a warm-weather holiday destination. Travelers are increasingly drawn to the region’s climate and relaxed atmosphere, making it an attractive choice for gatherings with friends and family.

Market Occupancy

Occupancy:

The Palm Springs short-term rental market recorded an overall 1.4% year-over-year decline in occupancy in 2025, signaling a modest softening in demand despite stable increasing pricing. This divergence suggests that, while rate strategy remained strong, booking volume did not fully keep pace.

At the start of the year, January stood out with a notable increase in occupancy, largely influenced by the devastating wildfires. These events led to a surge in last-minute bookings as displaced residents sought temporary accommodation, creating a boost in demand not likely replicated in the future.

April also delivered a meaningful uptick in occupancy, reflecting the continued recovery of festival-driven travel in the Coachella Valley. This performance signals a broader return toward pre-pandemic demand patterns during peak event season and reinforces the region’s reliance on large-scale attractions to drive compression.

The summer months followed expected seasonal trends, with softer occupancy levels due to extreme desert temperatures. However, the decline was slightly more pronounced than typical, with September marking the lowest point of the year. This dip can be partially attributed to more structured school calendars limiting family travel, as well as a potential slowdown in international visitation—possibly influenced by broader economic uncertainty and geopolitical factors.

Moving into fall, November underperformed relative to prior years, with occupancy declining even as rates remained elevated. This dynamic may indicate increased price sensitivity among travelers, particularly during the early holiday booking window, as households adjust travel plans in response to economic pressures.

Overall, while 2025 reflects a softer year for occupancy, peak season resilience remains evident. The data highlights a clear opportunity to rebuild demand during shoulder and low seasons, where targeted strategies—such as value-driven promotions, adjusted rate positioning, and expanded market reach—can help offset seasonal volatility and improve overall occupancy performance.

Revenue Per Available Rental (RevPAR):

Revenue Per Available Rental (RevPAR):

Overall, 2026 began with strong momentum, highlighting the revenue potential during peak season. However, performance softened through the summer months before showing signs of recovery toward the end of the shoulder season.

During peak season, January experienced a notable increase, largely driven by displacement demand from the Los Angeles fires. March saw a slight dip, though performance remained strong overall. This softening can be partially attributed to a shift in booking behavior, with more guests opting for stays longer than 30 days. These extended stays either fall under length-of-stay discounts or are excluded from standard reporting metrics, impacting on reported short-term rental RevPAR.

April emerged as a particularly encouraging month, outperforming prior years. This suggests that festival season demand is rebounding and trending closer to pre-pandemic levels, an important signal for continued peak-season strength.

As expected, summer performance softened into early fall, reflecting typical seasonal demand patterns in the market, though the declines were more pronounced this year. Despite this, late shoulder season showed improvement, with December finishing strong. This gain was supported by holiday travel demand and indicates positive traction heading into year-end.

RevPAR is considered the gold standard metric in the vacation rental space, as it balances occupancy and rates.