Long-term vs holiday rental: which is better for your property?

One of the most common dilemmas for property owners on the Costa del Sol is choosing between holiday rental and long-term letting. Both models have genuine advantages, but the right decision depends on the type of property, its location and the owner's profile.

What are the differences?

Holiday rental means letting your property for days or weeks through platforms such as Airbnb or Booking.com. It requires a tourist licence (VUT), active management of bookings, frequent cleaning and guest support. In return, it allows dynamic pricing based on demand and significantly higher gross returns.

Long-term letting, governed by Spain's Urban Leasing Law (LAU), involves contracts of one to five years with a stable tenant. It offers predictable income, a lower operational burden and no tourist licence requirement, but monthly profitability is typically lower.

Profitability comparison

In prime areas of the Costa del Sol such as Marbella or Estepona, a well-positioned two-bedroom property can generate between €18,000 and €28,000 gross per year through holiday rental, compared to €9,600–€14,400 on a long-term basis. The difference can exceed 80% during peak-demand months.

However, that holiday figure does not account for additional costs: platform commissions (15–20%), cleaning between stays, more intensive maintenance and potential low-occupancy periods in the off-season. With efficient professional management, the net holiday margin remains superior, but the gap narrows.

"Holiday rental profitability can exceed long-term letting by more than 60% in tourist areas, provided the property is professionally managed."

Factors that tip the balance

The optimal choice depends on a combination of factors:

• Location: High tourist-demand areas (beachfront, town centres, luxury developments) clearly favour the holiday model. More residential or inland locations are better suited to long-term letting.
• Condition and furnishing: Holiday rental demands a high presentation standard. A property with dated furniture or ageing installations will perform far better as a long-term let.
• Owner availability: If you wish to use the property during certain periods of the year, holiday rental allows this. Long-term letting locks the property for the entire contract duration.
• Tourist licence: In Andalusia, operating legally as a holiday rental requires registration as a VUT with RETA. Without a licence, long-term letting is the only compliant option.

The role of professional management

The main argument against holiday rental is usually the operational burden: handling bookings, coordinating cleaning, dealing with incidents at any hour. With a professional property management service, that burden disappears entirely for the owner. The result is the superior profitability of holiday rental without any of its complications — turning what seemed like a complex decision into an obvious one.