Short-term rental operators have spent years manually pricing, responding to guests’ messages in the middle of the night and chasing cleaners between checkouts. A growing number have stopped: artificial intelligence (AI) now handles pricing, communicating with guests, scheduling staff, and coordinating maintenance. Some operators spend $30,000-$50,000 a month on it. At least one company needs to create a finance role dedicated solely to managing AI spending.
More than 70% of vacation rental managers now use AI tools in some form, according to Hostawaynearly double the share six months ago. This puts short-term rentals ahead of most other real estate sectors in deploying AI. Operators say the tools have gone beyond basic automation.
How operators are deploying AI
The most common entry point is pricing. AI platforms like PriceLabs and Wheelhouse leverage historical booking data, seasonal demand, local events and competitor rates to automatically adjust nightly rates, eliminating the need for daily manual updates. Hostaway reports that operators who use these tools see stronger occupancy rates and cash flows compared to fixed pricing models.
Communication with the guest follows immediately. Vinayak MahtaniCEO and Co-Founder of Holiday homes at bnbmeHe said Forbes Their company’s in-house AI assistant, built on a large business language model customized for their systems, autonomously handles about 70% of guests’ needs. Humans only take over when the system is less than 90% confident. “The assistant is literally the guest’s whisper,” Mahtani said, noting that he manages inquiries across multiple time zones and languages without adding to the headcount.
In addition to messaging, AI handles post-checkout task assignment, identifies maintenance issues before they become fixes, syncs availability across booking channels to prevent double bookings and scans guest reservations for indicators of fraud. Mahtani reported that internal efficiency, speed of lead qualification, and marketing deliverables all improved after deployment, without an increase in team size.
When costs and model capabilities matter
Efficiency gains come with higher prices. Graham DonoghueGroup CEO Forge Holiday Collection, He said His company is spending between $30,000 and $50,000 a month with Anthropic on AI tokens and is considering creating a dedicated finance role to manage token optimization.
Advertisement: Scroll to continue
Steve SchwabFounder and CEO of Casago, He said Token costs represent only 20% to 30% of total computing expenses today.
“We would be in a situation where investors would say, ‘We have to make money,’ and the computational cost of running these courses would be too expensive,” Schwab said. He added that arbitrage strategies and structural changes in AI infrastructure may be needed to maintain economic viability for operators of all sizes.
Donoghue said Forge began using AI more than a year ago, starting with repetitive tasks like photo retouching and call transcription before moving on to what he described as complex algorithmic operations. Tasks that previously took weeks now take days. The company has also built an AI tool called Vivid Stay that turns static property images into video and drone-like footage in 25 minutes, at a fraction of the $2,000 to $3,000 it previously cost per property.
However, not all initiatives were successful. Donohue pointed to failed experiments in conversational search and the difficulty of convincing employees to adopt AI tools without making them mandatory.
How compliance and distribution come into the picture
The adoption of AI for short-term rental management is also moving into regulatory infrastructure. Holmes Beach, Florida, saw a significant rise in compliance for short-term rentals after the city implemented an AI-powered monitoring platform. According to WFLA. The system tracks unauthorized activity and code violations on a scale that manual implementation cannot match.
On the distribution side, both Donoghue and Schwab raised the possibility that AI could eventually challenge the position of large online travel agencies. Donoghue said groups of consumers will become comfortable enough with AI that it disintermediates some large online travel agencies. Schwab put it more directly: He believes someone is currently writing code that will change how rental hunting works in ways the industry can’t yet anticipate.
For all of PYMNTS AI and digital transformation coverage, subscribe to our daily newsletter Artificial Intelligence and Digital Transformation Newsletters.
