Introduction
So what can the future hold? Even though we still lag 2019 in many respects, the data is trending up and before long we will break through to those levels across all measurements and keep going. People are not going to stop travelling.
One thing is clear, we cannot go on like this. The protests are not simply going to disappear and cities are not magically going to become easier to live in without some clear thought and action.
We have good examples already of what legislation looks like and what impact they have on cities. It’s not simply a case of regulation, laws are not magic bullets and many markets already have laws, they are just not enforced.
Everyone needs to be involved. Elected officials at all levels need to build a consensus. We believe that a country wide top down approach to strategy needs to be taken, with city officials responsible for implementation. Destination management organisations, together with airlines and hotel associations are not exempt either. One of the benefits of a system like AllTheRooms is it provides the final link that enables the whole lodging market to be seen for the first time.
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Short-Term Rental Analytics & Data
This is what a dilemma looks like
On the one hand, we have an unbelievable success story. It’s not that the short-term rental market didn’t exist before Airbnb, let’s just say it was pretty hard to find. The twin effects of a consolidation platform that was easy to use, that opened the eyes of an entire generation to that revenue opportunity currently filled with boxes, has been incredibly significant.
a price worth paying?
On the other hand, you have locals with pitchforks and placards, justifiably angry that they can’t walk down their own street anymore without tripping over people taking pictures of themselves. Down with that kind of thing, this isn’t what I signed up for, etc. This hides the real damage of course, the knock on effect of overtourism is far more damaging on local communities, than your favourite espresso café being overrun with TikTokers. The strain on local infrastructure is real and significant. If your teachers and nurses can’t afford to live within a sensible commuting time, everybody suffers.
The data calls for a critical reassessment of how these markets are managed
So what is the happy medium? Is there a happy medium? And how can these seemingly opposing interests be reconciled?
The perfect storm
With hindsight, this all seems so inevitable, the logical conclusion to a unique set of circumstances. The 2019 Covid pandemic, remember that? Had a devastating effect on many of these markets. Gone were the tourists and with it the revenue that sustains these markets.
No revenue led to bailouts, and whereas the bailouts were incredibly effective in supporting a generation of workers, there was no money left over for infrastructure investment. Once the pandemic was over, and the era of rebound tourism was upon us, these destinations felt the full force of a frustrated public with money to burn and holidays to use.
The inevitable consequence of this has been to turn many of these beautiful destinations into theme parks
Ancient cities, which let’s face it, weren’t exactly good at dealing with numbers before 2019, have been overrun. The inevitable consequence of this, has been to turn many of these beautiful destinations into theme parks.
Barcelona increase in Visitors 2019-2022
Amsterdam increase in Visitors 2019-2022
Lisbon increase in Visitors 2019-2022
We are beginning to see what happened here
There were two innovations in the last 20 years that really made modern travel what it is. The short-term rental market is a relative newcomer compared to the real game changer. The low-cost airline.
As the growth happened over a 25 year period, volumes increased sustainably. These numbers didn’t happen overnight and markets were able to adjust in real time to the increase in numbers, so when they reached the peak of 2019, it didn’t feel as overwhelming as it does currently.
The great Covid reset of 2020/21 created a very different environment. When you look at the numbers of air travel in these key markets, you can see what has happened. Let’s take Spain as an example. In 2020 international air arrivals into Spain was just over 13.5 million. In 2021, that number rose to 24 million. When Covid started to ease in 2022 that number went to over 59 million and in 2023 that number had gone to 69 million. It’s no wonder people are complaining, frankly it’s a surprise they’re not complaining more.
Add to that the inability to find hospitality staff in restaurants, hotels, cafés and airports you begin to see the scale of the problem. We are not saying that this is the reason for the protests, but I’m sure it’s not helping. In all of the conversation about sustainability, this predicament has flown under the radar, pun absolutely intended.
Bold steps forward
The incredible acceleration of travel post covid made this inevitable, so investment in destination management and organisation are essential.
Overcrowding and over-tourism are not the same thing. Many issues destinations are having are failures of organisation that can be addressed with the right tools and structure.
Finding the right incentives is key. What are the incentives that will make a tourist head off the usual path? How can you direct people to off seasons?
DMO’s hold the keys to the kingdom, they need to be at the centre of co-ordinated efforts to bring all the interests together.
Legislation is not a magic bullet. It’s the enforcement of the legislation that makes the difference
London and other cities already have legislation to deal with short term rentals, many of which are technically illegal.
Underfunded local governments mean enforcement is extremely rare. Enforcement rules must be enforced to stop overtourism.
Regulation
Urgent questions about regulation, and the future of European tourism
This includes implementing regulatory frameworks that address the specific needs of different markets, ensuring that the benefits of STRs are more evenly distributed, and preventing the kind of over-saturation that could lead to market collapse in vulnerable regions.
As the STR market continues to expand, the challenge will be to manage this growth in a way that supports long-term stability and benefits for all.
Overzealous or draconian laws can have a devastating impact. At the end of the day, these destinations want tourism and enjoy the benefits within reason. Overlegislating will deter institutional players, who bring many of the benefits of standards and transparency.
Critical thinking
Strategies to balance growth and sustainability
The data calls for a critical reassessment of how European countries are managing their STR markets. The rapid revenue growth is promising, but it masks deep inequalities and potential sustainability issues, particularly in smaller and emerging markets.
For the STR market to continue thriving, European countries must develop tailored strategies that balance growth with sustainability.
When it comes to specific countries, the case of France should be noted. Its market offers the most bed places in STRs among the analysed countries, while at the same time, it's experiencing high growth rates. Such cases underscore the need for regulation to manage further development and address potential challenges arising from such rapid expansions of STRs.
In density terms, Croatia is Europe’s “champion”, both measured by density of STR per inhabitant and per square metre, while Malta and Cyprus, also relatively small but attractive destinations, face increased need for effective yet balanced solutions to ensure sustainability even in short- to mid-term.
Overcrowding vs Overtourism
Getting to grips
There is a tendency to mix up overcrowding with overtourism.
Overtourism is by definition a destructive force, leading to the erosion of the asset itself.
Overcrowding, which is what many of these markets suffer from, is a factor of management, as much as anything else. There are destinations, with strong management organisations that understand this and are able to regulate the flow of visitors.
The trick is finding the right levers for each destination, because whereas the leaves themselves are the same, the four supply to each is entirely specific. What is absolutely clear, is that this process does not manage itself.
The solutions are complicated and there are lots of moving parts, but that doesn’t mean it can’t be done
Next steps
Balancing business and social interests
Due to the robustness of the STR service sector in the European context, it is unquestionable that serious efforts on national, regional and local levels should be invested to balance the interests of businesses and local communities. In the end, tourists visit destinations wanting to experience the local lifestyle and enjoy space that was created by local communities.
If you are involved in the short-term rental market as an investor, operator or regulator, we'd love to talk. Please get in touch with the report authors, or your local Horwath HTL office.
All of the data in the report was provided by AllTheRooms, with the exception of visitor numbers which were provided by GlobalData. All of the copy and analysis was done by Horwath HTL. Whereas all efforts have been made to verify the accuracy and validity of the data, and the data is believed to be accurate at time of publishing, this cannot be guaranteed. AllTheRooms and Horwath HTL reserve all rights.