Real Estate Trends: Short-stay Apartments
A short-term rental apartment, also known as a short stay apartment, refers to a fully furnished apartment unit leased out for brief periods, typically spanning days or weeks. These apartments have gained popularity among traveling business professionals due to their capacity to offer a home-like environment while being away from their primary residences. Additionally, they have become a preferred choice for tourists seeking a more cost-effective and self-catering vacation experience, as the cost of short stay apartments is often significantly lower (between 25 – 50% lower) than hotels.
Sometimes referred to as serviced apartments or aparthotels, short stay apartments come in various styles, catering to diverse preferences. Some offer compact and efficient units that fulfill the basic needs of travelers, while others boast extensive amenities, including full kitchens, living and dining areas, and bedrooms. For those seeking a touch of luxury, there are options with added perks such as penthouse units, in-building pools or gyms, as well as balconies or patios. While relatively new in the vacation accommodation industry, these apartments are steadily gaining popularity among tourists.
The growth experienced by this type of accommodation in areas like Spain is remarkable. To illustrate, in Q1 2023, short-stay apartments in Madrid witnessed a y-o-y growth of approximately 30.2%. Barcelona comes in second place, 11.8% increase y-o-y in Q1 2023, followed by Valencia, Malaga, Seville, and Alicante. These numbers demonstrate that short stay apartments are being increasingly considered as an alternative to traditional hotels by the tourists visiting Spain. The total data for this type of apartments can be found in the ‘Instituto Nacional de Estadística’ (INE). As of Q2 2023, the total number of short-stay apartments in Spain was 305,136, marking a year-on-year increase of more than 22.9%.
Occupancy rates for the summer of 2023 are still experiencing significant growth at the national level. If we compare the current occupancy rate with that of the previous year on the same dates, the data appears optimistic. On average, the occupancy growth in the summer months is 17%, with August being the period of the greatest increase, showing a 24% rise compared to FY 2022. In August, the increase in profit per available night is almost 20%. While RevPAR (Revenue Per Available Room) levels are higher than last year, it is important to note that the industry is still in the process of recovering from the effects of the pandemic. RevPAR is currently outperforming 2019 rates, with an average year-to-date increase of 4.8% (including April 2023).
The prospects for the short-stay apartment rental sector in the future are highly promising and positive. With growing popularity among business travelers and cost-conscious tourists, the industry is witnessing continuous expansion and evolution. The sustained recovery of occupancy rates and RevPAR after the pandemic indicates a strong potential for future growth. As confidence in travel returns and tourism activities resume, the demand for flexible and comfortable accommodations is expected to increase further, providing ample opportunities for the short-stay apartment sector to thrive in the real estate investment market.