Spain’s Short‑Term Rentals Under Siege: What Data from Madrid and Barcelona Reveal

Growing Regulatory Pressure on Short-Term Rentals in Spain

Spanish authorities have dramatically tightened the reins on alternative short-term rentals (STRs) like Airbnb and Vrbo. In May 2025, Spain’s Consumer Rights Ministry ordered the removal of over 65,000 holiday rental listings that violated registration rules. This aggressive purge – targeting listings without licenses or clear owner details – is part of a broad crackdown blaming STR platforms for “contributing to the housing crisis”. Policymakers argue that a proliferation of tourist apartments has reduced long-term housing supply and driven up rents, prompting the government to declare “no more excuses” in reining in the “illegality” of unregulated rentals. Municipalities across Spain are likewise imposing stricter controls. Barcelona, in particular, has taken the country’s toughest stance – its mayor announced a total ban on short-term tourist rentals by 2028. Barcelona’s goal is to phase out dedicated holiday flats entirely, reflecting mounting public pressure to protect local housing. Madrid has also explored drastic restrictions on STR accommodations, including tighter licensing and zoning rules to curb their spread in residential areas. In sum, Spain’s regulatory climate is rapidly becoming more hostile toward STRs, posing a serious threat to the alternative accommodation sector.

This regulatory squeeze sets the stage for a potential inflection point in Spain’s lodging market. STR operators face shrinking legal space to operate, especially in major cities. Below, we delve into detailed market data from MMCG’s proprietary hospitality database – focusing on Madrid and Barcelona – to assess how short-term rentals are performing under these pressures, and how the traditional hotel sector compares. The data reveal how demand, revenues, and supply are shifting in each city, and what the implications are if STR supply continues to be constrained.

STR Market Performance in Madrid and Barcelona

Despite the political headwinds, short-term rentals in Madrid and Barcelona remain in high demand, as indicated by robust market scores from MMCG’s analytics. Each city’s STR market is evaluated on multiple factors – including rental demand, revenue growth, seasonality, and regulatory risk – to produce an overall “market health” score.

Madrid’s STR market currently scores 99 (on a 0–100 scale), one of the highest in Spain. This reflects exceptionally strong rental demand (score 91) and year-round stability (seasonality score 91), buoyed by the capital’s blend of business and leisure travel. Barcelona’s STR market score is 92, also indicating a very attractive market, with demand fundamentals rated even slightly higher (rental demand 92). Barcelona’s appeal to global tourists yields strong booking interest, though its seasonality score of 75 is lower – unsurprisingly, as Barcelona experiences pronounced peaks in summer and dips in winter.

However, one sub-index where both markets lag is “Revenue Growth.” Madrid’s revenue growth score stands at 64 and Barcelona’s at 59, reflecting recent slowdowns in STR income growth. In fact, key revenue metrics have softened compared to last year. In Madrid, the average annual revenue per STR listing is about €13.5k, which is 7% lower than a year ago. Barcelona’s average per-listing revenue is higher, roughly €22.6k per year, but has dipped about 3% year-on-year. These declines in host revenue mirror the negative “Revenue Growth” scores, and hint at market saturation or demand normalization after the post-pandemic surge. In other words, even though traveler demand is solid, the ability for each STR to grow its income has recently stalled or reversed.

Occupancy trends underscore this dynamic. In Madrid, short-term rentals are averaging around 50% occupancy over the past 12 months. That represents a notable drop (approximately –8%) vs. the prior year. Such a decline in occupancy suggests that supply has outpaced demand – indeed, Madrid likely saw an influx of new STR listings or return of idle listings, dispersing bookings more thinly. By contrast, Barcelona’s STR occupancy is about 59%, and has climbed by roughly +7% year-on-year. Barcelona hosts have managed to fill more nights on average than last year, which could indicate either a pullback in supply or a rebound in travel that outstripped the addition of new rentals. This divergence is telling: Barcelona’s crackdown may have begun to shrink the pool of available STRs, pushing occupancy up for the remaining licensed units, whereas Madrid’s looser environment until recently allowed more listings to compete for guests, pushing occupancy down.

MMCG STR market dashboard for Barcelona (city-wide). Barcelona earns a high overall STR market score of 92, driven by strong rental demand but weighed down by moderate regulatory risk and seasonality. Key performance indicators show ~59% occupancy (up 7% YoY), average daily rate €118 (down 13% YoY), and RevPAR €74.7 (down 10% YoY). Annual revenue per listing is about €22.6k, slightly lower than last year.

The pricing trends in the STR sector also reflect shifting supply-demand balance. Average Daily Rates (ADR) for short-term rentals have seen mixed movements in the two cities. Madrid’s STR ADR is approximately €79 per night, a modest +3% increase year-on-year. This suggests hosts in Madrid managed to edge prices up despite falling occupancy – possibly an attempt to cushion revenue per unit, albeit at the expense of some bookings. In Barcelona, the opposite occurred: the average STR ADR is around €118, which is about –13% lower than a year ago. Barcelona’s hosts appear to have lowered prices from last year’s highs, likely because occupancy improved and/or to remain competitive amid regulatory constraints (for example, hosts may be targeting longer stays at discounted rates to comply with rules). The net effect is seen in RevPAR (Revenue per Available Rental): Madrid’s STR RevPAR is roughly €43–44, down about 7% YoY, while Barcelona’s STR RevPAR is about €75, down ~10% YoY. Both markets thus experienced a mid-single-digit percentage drop in overall STR revenue performance in the latest year.

Underlying these trends is the crucial factor of supply. In Barcelona, the STR listing count has started to contract. MMCG data shows the number of active short-term rental listings in Barcelona is down roughly 2% year-on-year. This is not surprising given the city’s strict enforcement – officials have reportedly shut down thousands of illegal rentals in recent years. (In fact, between 2018 and 2024, Airbnb’s active listing count in Barcelona fell by over 20%.) Madrid, on the other hand, still saw growth in STR supply until recently, which diluted average occupancy. While exact figures are proprietary, the decline in Madrid’s occupancy and host revenue implies more listings chasing the same demand. It was only in mid-2024 and 2025 that Madrid moved toward stricter controls, so the full impact on supply may be lagging. In summary, Barcelona’s STR market is already supply-constrained and showing some resilience in occupancy (at lower ADR), whereas Madrid’s market expanded in supply and is now experiencing a revenue plateau. These contrasting profiles set the context for how each city’s traditional hospitality sector is positioned to absorb (or struggle with) any displaced demand from the short-term rental sector.

Hotels vs. STRs: Performance and Capacity in Madrid and Barcelona

The conventional hotel sector in Madrid and Barcelona has been performing robustly – and notably, it operates with far higher utilization and pricing power than the STR segment. According to MMCG’s hotel market data, citywide hotel occupancy over the past year stands around 76.0% in Madrid and 77.7% in Barcelona. These levels are substantially higher than STR occupancies (50–60%), underscoring that hotels, as professionally managed assets, are able to achieve a much greater share of nights filled. In practical terms, a typical hotel in these cities is nearly three-quarters full year-round, whereas the typical STR is booked barely over half the time.

Average daily rates in hotels also dwarf those in short-term rentals. In Madrid, the 12-month average hotel ADR is about $206 (≈€175), and in Barcelona it is about $223 (≈€190). These averages (which span all hotel classes) are roughly double the effective ADRs earned by STR hosts (which we noted at ~€78 in Madrid and ~€118 in Barcelona). Even accounting for differences in product (hotels offer services and often prime locations), this gap is striking. It translates to hotels earning a much higher RevPAR: roughly €140–150 for hotels vs. €44 (Madrid) to €75 (Barcelona) for STRs in recent data. In essence, hotels are capturing significantly more revenue per room than alternative rentals, thanks to both higher pricing and higher occupancy. This revenue gap highlights why, from a pure financial performance perspective, hotels have a strong incumbency advantage in these markets.

Crucially, the hotel sector’s capacity is already near its ceiling during peak periods. Recent quarterly data show that in Q2 2025 (spring into early summer, a high season), hotel occupancy in Barcelona averaged about 84–85%, and Madrid’s was similarly in the mid-80s. Sustained occupancies above 80% indicate that many hotels are effectively full on most nights, with peak dates selling out entirely. Industry convention considers ~85% occupancy as effectively full capacity – beyond this, any additional demand can’t be accommodated without turning away guests or compromising service. Both cities hit these levels in high season. Even on a 12-month basis, ~77% occupancy means that on an average night a large majority of rooms are occupied, and during busy stretches that percentage is much higher. In short, hotels in Madrid and Barcelona are operating with very little slack. Travelers are already finding it difficult to get a last-minute room in peak season, and hoteliers have been able to push rates aggressively as a result.

Figure: Key Hospitality Metrics, Hotels vs. Short-Term Rentals (Madrid & Barcelona)

• Hotel Occupancy: ~75–78% (Madrid & Barcelona average) vs. STR Occupancy: ~50–60%. Hotels consistently fill a greater share of available nights than STRs.

• Average Daily Rate (ADR): €175–€190 (hotels, citywide average) vs. €80–€120 (STRs). Hotels command much higher nightly prices on average.

• Revenue per Available Unit (RevPAR): ~€140–€155 for hotels (implied from occupancy × ADR) vs. €44 (Madrid STRs) to €75 (Barcelona STRs). Hotels generate roughly double to triple the revenue per room compared to short-term rentals in these cities.

Insight: The traditional hotel sector enjoys significantly higher yield, suggesting it is already the accommodation of choice for many travelers and is limited more by capacity than by demand. STRs, while numerous, operate at lower utilization and rates – they fill a niche (often larger groups or budget options) but cannot match hotel performance metrics.

From a supply perspective, hotels also have finite room inventory and are expanding only gradually. Total hotel room inventory (keys in operation) in mid-2025 was about 60,500 in Madrid and 80,000 in Barcelona. These figures grew by barely 1% in the past year for each city, as only a few hundred new rooms opened. Looking forward, the development pipeline is modest. Madrid has roughly 2,066 hotel rooms under construction (projects in progress), equivalent to only ~3.4% of existing supply. Barcelona’s pipeline is even smaller in relative terms: about 1,227 rooms underway, or ~1.5% of current inventory. Such low construction pipelines mean that over the next 1–3 years, hotel capacity will expand very little in either city. Even as demand for accommodations grows, there will be minimal new hotel supply to absorb it. This is a critical point: with hotels already at high occupancy, any sudden surge of displaced demand (for example, tourists who can no longer find legal Airbnbs) cannot be easily absorbed by hotels in the short run.

Indeed, recent demand growth trends demonstrate how tight the market is. In 2023, as travel roared back, hotel room-night demand in Madrid jumped ~12% year-on-year while supply grew only ~3%. Similarly, Barcelona’s hotel demand in 2023 leapt ~11% against less than 1% supply growth. This imbalance pushed occupancy and rates upward rapidly. By 2024, Madrid still saw a healthy ~5.3% rise in demand (on top of the prior year’s gains), outpacing its <1% supply growth, which further boosted occupancy to roughly 76% citywide. Barcelona’s 2024 demand growth was more muted (+0.7%) as the post-reopening surge leveled off, but with similar supply growth (~1.3%), its occupancy held in the high 70s. The key takeaway is that hotels are at or near capacity during normal operations, and their ability to accommodate additional guests – especially those who might be displaced from STRs – is very limited. In effect, the lodging market in these cities is supply-constrained, not demand-constrained.

If STR Supply Shrinks Further: Pricing Power and Unmet Demand

Given the above, it’s clear that a forced reduction in short-term rental supply would create a significant supply-demand gap in accommodations. Tourists who might have booked an Airbnb or similar will not simply vanish; a large portion of that demand will seek rooms elsewhere. With hotels and other traditional hospitality already near full occupancy in peak periods, the immediate consequence of suddenly fewer STR units is excess demand that cannot be fully absorbed by existing hotels. In economic terms, when demand stays strong and supply is artificially curtailed, prices will rise until equilibrium is restored – in this case, primarily through higher accommodation rates.

We can reasonably predict that average daily rates across the lodging sector would climb in such a scenario. Hotels, seeing an influx of would-be STR guests, would have the latitude to push rates even higher on busy dates, and remaining licensed STR operators could likewise charge premiums thanks to reduced competition. Historical trends support this. Whenever Madrid and Barcelona have experienced demand surges with constrained supply, ADR and RevPAR spiked sharply. For instance, as the travel market recovered from COVID disruptions, Madrid’s hotels saw ADR jump ~12.5% in 2023, followed by another 14% increase in 2024 – double-digit rate growth two years in a row – while occupancy climbed back into the mid-70s. This was a period when few new hotels opened, so pent-up demand translated directly into pricing power. The combined effect was nearly 19% RevPAR growth for Madrid hotels in 2024 on top of a staggering 22.8% RevPAR growth in 2023. Barcelona’s hotel sector showed a similar pattern: even with slight occupancy dips in 2024, ADR rose ~5–6%, sustaining RevPAR growth. It’s notable that in 2022, coming out of lockdowns, Madrid’s hotel ADR leapt 33% in one year – an extraordinary surge – as supply could not rebound as fast as demand. This demonstrates the price elasticity in a high-demand, supply-constrained environment. Short-term rentals experienced their own post-pandemic rate surges; anecdotal data indicated STR prices in coastal Spain hit record highs in summer 2022 when many international tourists returned but some STRs were offline. Now, with regulators clamping down on STRs, we have a parallel situation of constricting supply.

If, for example, Barcelona follows through on eliminating most tourist apartments, the likely outcome is even higher hotel ADRs and occupancy on peak nights approaching 90–100% (effectively sold-out city). Remaining licensed STRs (such as those in owner-occupied homes or otherwise compliant) could also enjoy higher occupancy and can charge more. In effect, constrained supply creates a seller’s market for accommodation. Travelers may end up paying substantially more, and some price-sensitive visitors might be squeezed out, but many will accept higher rates – especially for must-visit destinations or peak events.

One consequence to note is demand overflow to surrounding areas. Tourists priced out of city-center lodgings or unable to find an Airbnb in Barcelona might opt for hotels in peripheral areas or neighboring cities, or shift trips to less regulated locales. This could spread tourism revenue to secondary markets (which might be an intended effect by some policymakers), but it also means the primary cities could forego some potential visitor nights if capacity truly maxes out. Still, the pricing effect will dominate in the short term: we expect significant ADR inflation in the primary markets as long as global travel demand remains strong.

From an STR operator’s perspective, fewer competitors could mean higher revenues for the surviving listings. A host with a fully legal, licensed apartment in Barcelona’s future scenario (where unlicensed ones are gone) would likely see a surge in bookings and could raise nightly rates with far less competition in the neighborhood. However, it’s a double-edged sword – obtaining and keeping that license is the challenge, and many current operators will simply be forced out.

Conclusion: Constrained Supply and High Demand – An Opportunity and a Caution

The data and trends from Madrid and Barcelona’s hospitality markets illustrate a classic outcome of constrained supply amid growing demand: prices and yields tend to rise, benefiting existing operators and investors. For hotel owners and investors, the increasing regulatory curbs on STRs are, in effect, removing a source of “shadow supply” from the market. Travelers who might have chosen a rental flat may now book a hotel room by necessity. With hotels already running at high occupancy, this presents an opportunity to capture displaced demand at premium rates. Simply put, constrained accommodation supply + sustained travel demand = pricing power. Higher ADRs flow through to improved RevPAR and ultimately higher profitability for hotels. We are likely to see RevPAR growth outpace inflation in these markets as STR supply is pulled back – an attractive scenario for hotel investors and operators focused on Spain.

There are, however, several strategic considerations to watch going forward:

• Policy Trajectory and Enforcement: Investors should monitor how strictly cities enforce the new rules and whether additional measures (or reversals) emerge. For example, will Madrid fully implement its restrictions, and will Barcelona stick to its 2028 ban timeline? Policy risk remains – a change in local government could soften the stance, or conversely new tourist taxes and rules could come into play. Regulatory clarity will influence whether STR demand truly shifts to hotels or finds grey channels.

• Hotel Capacity and Development Pipeline: With hotels near capacity, there is a case for new development – but planning and constructing new hotels takes time and is often constrained by zoning and community pushback (especially in dense urban cores). The current pipeline (3% or less of inventory) indicates limited new supply through 2025–2026. If STR stays constrained, we may see higher interest in hotel development or alternative lodging concepts (e.g. serviced apartments) to fill the gap. Investors should watch for any uptick in planning applications or conversions of buildings to hotel use, as a response to these market signals. In the interim, existing hotels hold a competitive moat – high occupancy and rising ADR will likely continue until new supply catches up.

• Demand Elasticity and Guest Experience: There is a threshold beyond which higher room rates can dampen demand or alter travel patterns. If Madrid and Barcelona get significantly more expensive for accommodations, some travelers (especially cost-sensitive segments like students or budget tourists) might shorten their stays, travel in off-peak seasons, or choose alternate destinations. Thus far, demand has been very robust (2023’s double-digit growth in hotel room nights attests to that), but continued price surges could introduce some elasticity. Additionally, part of STRs’ appeal is the unique experience (living in local neighborhoods, having an apartment setup). If that option is curtailed, a segment of visitors may be less satisfied with hotel-only choices, potentially affecting repeat tourism or overall visitor sentiment. Operators should monitor guest feedback and demand shifts – e.g., an increase in demand for extended-stay hotels or apart-hotels might occur as a partial substitute for lost Airbnb capacity.

• Competitive Responses: Hotel operators can capitalize on the moment by refining revenue management – expect even more aggressive yield strategies on high-demand dates. We may also see hotels create or market apartment-style units to attract former Airbnb users (for instance, offering kitchenettes or family suites). Meanwhile, the STR industry might not go quietly: larger professional rental operators could lobby for exceptions or adapt by offering 30+ day stays (to skirt short-term rules) if daily rentals are banned. Investors should be cautious about assuming all STR demand cleanly converts to hotel demand; some might shift to alternative channels (home-swapping, unregulated platforms, etc.). But in the near term, the scales are tipped in favor of regulated hospitality businesses.

  
  

Investment implications: For hospitality investors with holdings in Spain (or similar markets), the current trend suggests a period of elevated pricing power and potentially record-high RevPAR. Especially in Barcelona and Madrid, where tourism demand is secularly strong, limiting STR supply bolsters the investment case for hotels, hostels, and serviced apartments that can operate legally. These assets could see outsized revenue growth and improved returns on capital as ADRs rise. It may also be a good time to invest in upgrading existing hotel stock – since any added capacity (through higher quality or ancillary services) can be absorbed at top rates. However, one should also factor in the political risk: the crackdown on STRs is a response to housing affordability issues, and if hotel rates soar too much, there could be public outcry or government pressure to counter price gouging (for example, through higher tourist taxes or rate caps). While such measures are not currently on the table, the hospitality industry must navigate carefully to avoid negative perceptions in the community.

In conclusion, Spain’s alternative accommodation sector is under significant threat from regulation, and the data from Madrid and Barcelona’s STR markets already show stress in revenue growth and supply. Hotels are stepping into an even stronger position – essentially nearing full capacity and enjoying rising rates. If STR options continue to dwindle, we anticipate a supplier’s market for rooms, where lodging providers can command premium prices. This environment favors those invested in traditional hospitality real estate, at least in the medium term. The situation in Spain could become a case study in how regulatory constraints in one part of a market (STRs) can create windfalls for another (hotels) – and how investors who understand these dynamics can position themselves advantageously. As always, the balance can be delicate: a well-functioning travel ecosystem typically offers diverse accommodation types. The coming years will reveal whether Spain finds a new equilibrium that supports both residents’ needs and a healthy tourism sector. For now, all signs point to constrained supply and robust demand translating into opportunity – and higher revenues – for those on the right side of Spain’s STR crackdown.

Sources: 

All data and figures are derived from the MMCG Hospitality Database and market reports for Madrid and Barcelona (2025 edition), along with public information on Spanish STR regulations. The analysis reflects city-level indices and performance metrics covering both short-term rentals and hotel sectors, as discussed above.

Majestic Hotel and Spa in Barcelona