Spain boasts the third largest vacation rental market in Europe. Exceeded only by France and Italy, at the end of 2019, we recorded over 450,000 short term rentals in the country. We have done some analysis to understand the growth in different areas, comparing this data like for like with hotels for reference. So, how does vacation rental capacity compare from region to region? To what extent is the industry growing in Spain? And who is winning the short term rental vs. hotel race?
Hotel & short term rental capacity in Spain
Our first analysis has allowed us to construct a picture of the share of capacity in regions throughout Spain. The first graph contains all 19 autonomous communities; you can hover over the data points for more information.
Communities that fall above the dashed line on the graph have a higher capacity in short term rentals than hotels, and those below the dashed line contain a greater hotel capacity. For example if we take a look at Cataluña, we can see that its VR capacity (y axis) is around 370k, while hotels are indicated on the x axis to be around 185k in capacity.
Ultimately, we discovered that 12 of the 19 communities have a vacation rental capacity exceeding that of hotels, with the sum total capacities being ~2 million for VR to 1.1 million spaces in hotels. Indeed, those communities with greater hotel capacity, only exceeded VR capacity by 10,000 on average, compared with an average VR excess of 79,000. The Canary Islands were by far and away the strongest for hotel capacity, both relatively and absolutely, with 254,000 hotel spaces (208,000 VR spots).
Of those communities with more short term rental spaces, Andalucía was strongest with approaching half a million in capacity, while Cataluña, Valenciana and the Balearic Islands all in excess of 200,000 VR spaces. In the Balearics the deficit is particularly pronounced, with almost nine times the space in vacation rentals than hotels.
Overall there is a significant difference in capacity, with 77% more capacity in short term rentals rentals than hotels throughout Spain. Let’s look next at how that has come to be; what have the trends been for both sectors over the past 2 years?
Vacation rental and hotel capacity through time
In addition to the general capacity trends shown in the chart below, another striking difference is the difference we observe in seasonality. The lesser seasonal impact we observe in vacation rental capacity is likely partly because individuals can block dates rather than making their properties inactive (rendering them still ‘existing’ capacity) and individuals having much less cost to bear. Relatively, hotel capacity exhibits much more pronounced seasonal impact, logically due to whole hotel buildings closing over the winter months and being completely unavailable. Interestingly, we see this trend is significantly dampened if we remove data for the Balearic islands from our analysis. This makes sense as these destinations likely experience the most severe seasonal demand.
The graph below expands on the overall trends we see above for short term rental and hotel capacity growth through 2018 and 2019. It illustrates a 22% increase in short term rental capacity from January 2018, to December 2019. In contrast, hotels have experienced only a 6% rise in reported capacity over the same time period.
Interestingly, the month of January recorded the strongest year on year increase for hotels, with 2.4% growth in capacity between January 2018 and 2019. January also returned the second greatest amplification (15%) for vacation rentals behind June (16%).
What this means for the vacation rental industry in Spain
Overall we can conclude that vacation rentals have a strong grip on the short term accommodation sector, and analysis of the trends suggest that this advantage is set to escalate.
This indicates positive things for the VR industry and property managers looking to capitalise on this growth. Insights into supply and demand, as well as competitor rates, can afford these PMs the opportunity to optimise their strategies and exploit the market to its maximum revenue potential. For more information on the data available in Transparent’s market intelligence dashboard and how it can facilitate performance, visit us at the button below for more information & to book a demo slot.