Lighthouse Quick Takes - Short term rentals absorb Ocean City's hotel demand

Ocean City, Maryland topped Lighthouse's Market Demand Index for summer 2026, yet its hotels cut prices year over year. In this Lighthouse Quick Take, Blake Reiter unpacks the disconnect: short term rental supply in Ocean City grew more than 21%, while occupancy and gross ADR for those properties both climbed, absorbing demand that hotels expected to capture. The same pattern shows up in Rapid City, Myrtle Beach, Virginia Beach, and Destin.

For commercial and revenue leaders, the lesson is that flat or falling hotel rates in a high demand market don't always signal weak demand. They may signal that guests are booking short term rentals instead.