Market Insight: Holiday Home Rentals Europe 2025
by azulomo | 9 min read
A New Era of European Travel
Market Insight: European Travel & Tourism – Holiday Home Rentals
The European vacation rental market is undergoing a quiet revolution. No longer the preserve of summer getaways or budget escapes, private holiday homes are now at the heart of how travellers experience Europe. Flexible, soulful, and steeped in local charm, they cater to a growing appetite for authenticity, comfort, and emotional connection. In 2025, this market is projected to generate approximately €32 billion in revenue — a figure that speaks to both its resilience and rising relevance (Statista, 2025).
From rural retreats in Romania to high-performing hideaways in the Cyclades, the continent's rental landscape is expanding rapidly, shaped by shifting guest expectations, smart technology, and strategic investment. Here, we explore the trends, regions, guest profiles, and future outlooks that are redefining the business of European hosting.
What makes this moment especially exciting is how accessible it’s becoming—not just for large investors, but for individual hosts, lifestyle-led homeowners, and newcomers with vision. Whether you own a seaside cottage, a mountain cabin, or an inner-city flat, the demand for thoughtfully designed, well-managed short-term rentals is stronger than ever. The European market is no longer just growing—it’s evolving, and with the right insights, anyone can be part of its success story.
Travel isn’t about escaping life anymore ~ it’s about consciously redesigning it. The rentals that resonate are the ones that reflect how people want to live now.
Market Overview: Numbers with Heart
Understanding the European market starts with the numbers—because behind every figure is a deeper story of change. These aren’t just statistics; they signal a fundamental shift in how people travel, invest, and stay across the continent.
2025 Market Size: €32 billion ~ That’s the estimated total revenue from vacation rentals across Europe this year. It shows just how mainstream private holiday homes have become—no longer a niche alternative, but a major player in the tourism economy. (Statista, converted from $35.29bn)
Projected CAGR (2024–2029): 3.2% ~ This means the market is expected to grow steadily each year by 3.2%. It’s not explosive, but it’s stable, sustainable growth—attractive for long-term investors and hosts alike. (Statista)
Total Market Expansion by 2029: €239.8 billion ~ When we zoom out across five years, we’re looking at nearly a quarter-trillion euro industry. This forecast includes everything from platforms to property services—proof that the ecosystem around vacation rentals is expanding fast. (Technavio)
Short-Term Rentals (STRs) now make up 25% of all tourist accommodation in the EU ~ One in four travellers are now choosing homes over hotels. That’s a huge behavioural shift—and a clear signal that guests want something more personal, flexible, and immersive. (AirDNA, 2025)
Annual Nights Booked: 153 million ~ This figure reflects the sheer scale of activity happening in holiday homes across Europe. It’s not just a handful of properties being booked occasionally—this is now a high-volume, high-impact segment. (AirDNA, 2025)
→ What this means: Holiday rentals aren’t just a backup plan anymore—they’re now a big part of how people travel in Europe. More and more guests are choosing to stay in homes instead of hotels, and investors are paying attention. Whether you're running a cosy beach cottage, building new properties, or promoting a region, the message is the same: short-term rentals are growing fast, and they’re not going anywhere. The people who get in now—and get it right—are set to benefit most.
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The Shifting Guest: Who’s Booking, and Why?
Today’s travellers aren’t just tourists ticking boxes—they’re storytellers looking for meaning, connection, and belonging. Whether they’re families escaping routine, digital nomads rebalancing work and life, or couples seeking a slow moment in a fast world, one thing is clear: expectations have changed.
72% of travellers now prioritise unique and authentic stays over hotels (Holidu, 2024): The hotel formula no longer cuts it. Guests want real character, not corporate consistency. A home with a story, local materials, or a view they can’t get anywhere else has more value than any minibar or turn-down service.
Families and groups are actively choosing rentals with space to cook, unwind, and connect (Booking.com): Practicality meets presence. A kitchen for shared meals, a sofa for movie nights, a garden for kids to run barefoot—these simple details turn a trip into a memory.
Remote workers are reshaping the calendar by booking longer off-season stays (LinkedIn Travel Trends): Work-from-anywhere culture means holidays can stretch into weeks or months. These guests seek quiet, reliable Wi-Fi, good coffee, and the feeling of being settled—even temporarily.
65% of guests now look for sustainable, energy-efficient homes (Statista, 2025): Conscious consumption has reached travel. Properties that respect the planet—whether through solar panels, local furnishings, or low-impact design—are no longer a niche preference; they’re part of mainstream decision-making.
Urban explorers—mostly solo travellers and couples—account for 60% of city bookings (AirDNA, 2025): In city spaces, efficiency, aesthetic, and vibe matter. These guests want well-located, stylish flats with thoughtful design, a great bed, and a sense of independence.
→ What this means: Today’s guests want more than a place to stay—they want a place to feel. Space, sustainability, story, and sensory experience now sit alongside location and price as booking drivers. Hosts who can understand the emotional layer behind guest decisions—who design with empathy, not just efficiency—are seeing stronger reviews, longer stays, and better returns. In this new era, guest satisfaction isn’t just about meeting expectations. It’s about reflecting their lives, values, and aspirations—beautifully and intentionally.
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Trends Redefining the Market
Beneath the surface of every booking lies a deeper shift in how and why people travel. These trends are shaping the future of hosting.
68% of guests prioritise flexible cancellation (Vrbo Trends Report, 2025)
78% of platforms now use AI for personalised recommendations—boosting conversions by 12% (Technavio)
41% of travellers want verified eco-friendly stays (Statista, 2025)
Luxury villa bookings (€500+/night) are up 29% (Holidu, 2025)
Pet-friendly searches rose 33% in the past year (Airbnb Trends)
Urban bookings are up 18% year-on-year, even as rural retreats remain strong (AirDNA, 2025)
→ What this means: Travel isn’t just about the destination—it’s about ease, emotion, and ethics. Hosts who embrace smarter tools and slower values are positioned to thrive.
Established Leaders: Europe’s Top Vacation Rental Markets
While new destinations draw headlines, Europe's veteran markets remain the backbone of the industry—reliable, mature, and consistently profitable.
France continues to lead with a 21.9% share of the European market (Statista, 2024). Paris, Provence, and the Côte d’Azur offer a blend of urban elegance and rural retreat, supported by excellent infrastructure and strong domestic travel.
Spain remains a family favourite. The Costa del Sol, Barcelona, and Balearics offer sunny escapes and long-stay appeal. Coastal occupancy remains high, particularly for larger holiday homes (Holidu, 2025).
Italy is synonymous with cultural immersion. In 2023, it recorded a 20% rise in bookings, particularly in regions like Tuscany and the Amalfi Coast (AirDNA).
Portugal stands out for strong yields—5–7% in Lisbon and Porto, up to 7.6% in the Algarve (Global Property Guide). Ecotourism is booming, and its appeal to digital nomads and international buyers continues to grow (Engel & Völkers).
Croatia has climbed to the #3 position in Europe for bookings (AirDNA, 2025), with affordable coastal cities like Dubrovnik and Split becoming favourites for guests and investors alike.
The UK offers diversity, with London, Edinburgh, and countryside gems like the Lake District maintaining stable, all-season demand (Statista, 2025).
→ What this means: These markets continue to deliver. They benefit from name recognition, cultural cachet, robust infrastructure, and seasoned tourism economies. For hosts and investors, they remain strongholds of opportunity.
The Nordics, Iceland, Germany, and the UK
Northern Europe is quietly leading in guest experience, design quality, and smart sustainability—offering both opportunity and insight for hosts across the continent.
Denmark, Sweden, and Norway continue to be models of minimalism, function, and eco-led tourism. The Nordics show a consistent preference for design-forward properties, with 74% of travellers valuing sustainable certification when booking stays in the region (Statista, 2025). Sweden’s west coast and Norway’s fjord regions are increasingly popular for domestic and German travellers, with year-round appeal supported by strong infrastructure and nature-focused travel trends. Guests are drawn to homes that blend comfort with ethical design—timber-clad cabins, geothermal saunas, and neutral-toned interiors styled with simplicity and soul.
Iceland remains a standout despite its smaller scale. With some of the highest occupancy rates in Europe for eco-rentals and photo-driven travel (Booking.com, 2024), it has become a hotspot for premium adventure stays—particularly among US and European millennials seeking once-in-a-lifetime experiences. In a land shaped by volcanoes and silence, guests come for epic nature—and stay for meaningful disconnection. Property owners here are leaning into off-grid aesthetics, remote digital detox stays, and sustainable luxury.
Germany is a stable performer, particularly in Bavaria, the Black Forest, and Berlin. The country has seen a 19% rise in domestic holiday bookings since 2023 (AirDNA, 2025), with guests valuing cleanliness, regulation, and access to green spaces. Germany’s market is also bolstered by strong rail networks and local tourism incentives. Holiday rentals are typically run with high operational efficiency, often certified and inspected, appealing to travellers who seek order, safety, and a well-run guest experience.
The UK continues to deliver dependable demand, from Scottish Highlands to Cornwall coastlines. London remains strong for city breaks, while countryside and coastal escapes show robust all-season occupancy. UK guests are increasingly focused on heritage, walking holidays, and properties with standout styling or story (Statista, 2025). Historic conversions, design-led interiors, and dog-friendly country homes remain some of the most searched features. Booking behaviour here is shaped by tradition, but revitalised by Instagram-worthy aesthetics and wellness-led amenities.
→ What this means: These countries may not always offer the highest yields—but they offer some of the most stable, conscious, and style-forward guest demand in Europe. For hosts who value quality over quantity and want to create deeply thoughtful spaces, this is a region to watch. The focus isn’t just profit—it’s presence, purpose, and staying power.
The Newcomers: Emerging European Hotspots
Across Europe, a wave of lesser-known, seriously charming destinations is turning heads—and not just because of the views. These are places where property is still affordable, guests are curious, and the potential? Huge.
Let’s take a little tour.
Greece’s Island Gems: Places like Crete, Kos, and the Cyclades aren’t just sun-kissed—they’re solid earners. With cap rates between 25–33%, they offer one of the best returns in Europe (Engel & Völkers). Property prices still hover around €1,600–€2,600/m², and occupancy is strong, especially in summer. Think whitewashed walls, turquoise water, and rental calendars that fill themselves.
Azores, Portugal: If you crossed Iceland with Hawaii and added a dash of slow living, you’d land in the Azores. These Atlantic islands boast 63% occupancy, lots of ecotourism buzz, and homes around €1,500/m² (Hostify). Guests love the unspoilt landscapes, and let’s be honest—it doesn’t hurt that Instagram loves them too.
Vlorë, Albania: Looking for coastal charm on a budget? Vlorë is your under-the-radar hero. With property prices at just €700/m² and 23.2% cap rates (Global Property Guide), it’s one of the cheapest beachside bets in Europe. Think crystal-clear Adriatic waters and hardly any crowds.
Granada, Spain: It’s not just about flamenco and the Alhambra—Granada is having a moment. With year-round demand, 22.3% yields, and all the tapas you could want, this cultural hub is a host’s dream (Engel & Völkers).
Eastern Europe’s Quiet Boom: These cities may not have the same name recognition (yet), but savvy hosts are already getting in early: Riga (Latvia) and Warsaw (Poland) offer rental yields up to 8.5%—strong performance with vibrant city vibes. Podgorica (Montenegro) and Bucharest (Romania) are drawing in digital nomads and adventurous travellers looking for something different (Technavio, Global Property Guide). Bulgaria’s Black Sea Coast is getting love (and funding) from the EU, making it a hotspot for budget-conscious guests and tech-savvy hosts (EU Cohesion Fund).
Slovenia: Bled & Ljubljana: Alpine lakes, slow tourism, and a rising reputation for sustainability make Slovenia a year-round win (Holidu). These destinations are perfect for hosts who love calm, conscious design and want to attract nature-loving travellers.
Serbia (Belgrade): A bit edgy, very cool, and rapidly evolving. Belgrade is in the midst of a cultural revival. With high yields and low entry costs, it’s a hidden gem for those who like to be ahead of the curve (Global Property Guide).
Estonia (Tallinn): One for the remote-work crowd. Tallinn has excellent digital infrastructure, a buzzing creative scene, and growing appeal for long-stay guests (Nomad List). It’s tech-forward and quietly beautiful.
→ What this means: For those willing to look past the usual suspects, there’s a world of untapped potential waiting. These emerging destinations offer that sweet spot: authentic charm, growing demand, and attractive returns—all without the sky-high entry costs of more saturated markets. The next era of hosting is all about thinking differently. It’s adventurous, value-driven, and quietly drifting toward scenic coastlines, cultural corners, and lesser-known gems across Europe.
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Spotlight Santorini:
In early 2025, Santorini experienced a series of over 200 small-to-moderate earthquakes, with some reaching magnitude 5.2. Local authorities issued a short-term evacuation in select areas, and a state of emergency was briefly declared. This led to a noticeable 25–30% drop in tourist arrivals compared to previous years, as safety concerns prompted many guests to change their summer travel plans (The Guardian, 2025; AP News, 2025; Euronews, 2025).
However, recovery began quickly once seismic activity eased in March. The return of cruise ships, with the first docking in late March bringing thousands of visitors back to the island (Travel & Tour World, 2025). Schools and local businesses reopened, restoring confidence in daily life and tourism operations (Santorini-View, 2025; Tovima, 2025). In response to the slowdown, Greek authorities and local tourism boards launched a €1 million destination marketing campaign to promote safety and attract tourists back. This included inviting media and influencers to visit, upgrading key infrastructure, and encouraging hosts to offer flexible booking policies and visible safety reassurance (Tovima, 2025; AP News, 2025; Santorini-View, 2025). Santorini’s rebound shows how swiftly a well-loved destination can recover when clear communication and guest safety are prioritised. While bookings took a temporary dip, hosts who acted quickly—by highlighting their safety measures, updating guests with real-time information, and staying empathetic—saw trust return faster.
In an era of more climate-aware and cautious travellers, being ready with a calm, flexible, and professional response matters just as much as having a beautiful property. Santorini is proof that with the right strategy, even disruption can become an opportunity to strengthen guest loyalty and local reputation.
Challenges & Opportunities: The Balancing Act
Yes, the vacation rental market in Europe is full of potential—but it’s not without its hurdles. As the industry grows up, so do the pressures. The good news? The hosts who stay flexible, thoughtful, and informed are the ones who will come out ahead.
Here’s what’s happening on the ground:
Urban Oversupply: In hot spots like Lisbon, Paris, and Barcelona, there are simply too many short-term rentals—and not enough permits to go around. Cities are clamping down, which means if you’re hosting in these places, you can’t just rely on location. You have to compete with exceptional quality, experience, and emotional appeal.
Seasonality Gaps: While coastal and ski regions shine in peak months, they can go eerily quiet off-season. Some towns lose 40% or more of their bookings in winter or shoulder months (AirDNA). That’s why smart hosts diversify—by adjusting pricing, attracting digital nomads, or styling for year-round comfort.
Rising Costs & Inflation: Groceries, cleaning, energy bills—it’s all going up. Profit margins are being squeezed across the board (Eurostat). This means it’s more important than ever to track costs, price strategically, and add value in meaningful, cost-effective ways.
Regulation is a Moving Target: Local governments are constantly updating the rules—on licensing, taxes, even what “short-term” means. Hosts need to stay sharp, informed, and proactive. What worked last year might not be legal next summer.
Sustainability Is No Longer a Bonus: Guests expect eco-conscious homes. Water-saving showers, energy-efficient lighting, recycled materials—these aren’t “nice extras” anymore, they’re what get you booked and remembered (Statista, 2025).
Tech Is the New Luxury: From dynamic pricing tools to AI-powered guest messaging, automation isn’t cold—it’s clever. The most efficient, responsive hosts are the ones using tech to save time, personalise stays, and avoid burnout (Technavio).
→ What this means: The European rental market is becoming more professional, more ethical, and more experience-led. The hosts who will succeed are the ones who think like designers and operators—balancing beauty with business sense. In short: those who plan long-term, embrace smart tools, and design not just for comfort, but for conscience.
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Final Thoughts: Europe’s Rental Renaissance
What was once a DIY alternative to hotels has now become a key pillar of European tourism. The future isn’t about scaling for speed ~ it’s about hosting with heart.
From the islands of Greece to the vineyards of Portugal, from Alpine lodges to Black Sea shores, the opportunity isn’t just in more bookings ~ but in better ones.
Build something soulful, and the revenue will follow.
At azulomo, we believe that profitable hosting starts with purpose. Our guides are here to help you navigate this evolving landscape ~ whether you're styling your first stay, designing for digital nomads, pricing with confidence, or creating calm, sensory-rich guest experiences that stand out in saturated markets. Because in this new era of travel, thoughtful design and meaningful strategy aren’t just nice to have ~ they’re how you thrive.
(Sources: Statista, AirDNA, Technavio, LinkedIn Travel Insights, Engel & Völkers, Holidu, Hostify, Booking.com, Vrbo Trends, Global Property Guide, Eurostat, INE Portugal, EU Cohesion Policy, Nomad List.)
“The European vacation rental landscape is no longer about location alone—it’s about lifestyle, longevity, and values. As guest behaviours shift and new markets rise, hosts who blend emotional insight with smart strategy are redefining what success looks like. From AI-powered bookings to eco-conscious design, the next wave of holiday homes isn’t just profitable—it’s purposeful. This report unpacks where the industry is headed, who’s driving demand, and why soulful, intentional stays are becoming the new gold standard.”
