If you are thinking about putting your property on the tourist rental market, you have probably already seen figures that sound very appealing:
- A flat in Malaga generating EUR 3,000 per month.
- A studio in Madrid rented all year round.
But the question that matters is: what is left after you have paid all the costs?
You should not calculate holiday rental profitability only from the average nightly rate you can achieve on Airbnb. You also need to look at community fees, repairs, maintenance, cleaning and management costs, if you delegate them.
That is why, in this article, we wanted to answer the questions owners ask when calculating the return on their investment:
- How to calculate the real profitability of a tourist home
- Which metrics are used
- Which costs almost every owner underestimates
- And how to build three scenarios before making any decision
So, without further ado, let us get into the numbers that show whether holiday letting in Spain is profitable or not.
Is holiday letting profitable in Spain?
Let the data speak:
In 2024, tourist apartments accounted for 50.3% of all non-hotel overnight stays in Spain, and the Tourist Apartment Price Index recorded an average increase of 7.1%, according to INE.
In other words, demand exists and prices increased.
That said, the profitability of a holiday home depends on whether the cost structure is calculated properly from the start. As we said earlier, you can have high occupancy and still earn less than with a long-term rental if you have not planned for certain costs.
Seasonality also changes everything. Look at these INE figures too:
- In March 2026, 34.7% of available places in tourist apartments in Spain were occupied.
- That same month, the Canary Islands reached 83.9% occupancy of available tourist apartments and Lanzarote reached 91.4%.
- In August 2025, the Balearic Islands reached 84.9%.
So treating a flat in Bilbao, for example, in the same way as an apartment in Tenerife makes no sense. They are two different realities.
How to calculate holiday rental profitability
Before talking about percentages, you need to look at four metrics:
- Gross profitability: annual gross income divided by the total project cost.
- NOI (Net Operating Income): gross income minus all operating expenses.
- Net operating profitability: NOI divided by the total project cost.
- Cash-on-cash: if you have a mortgage, this is your real indicator. It measures cash flow after debt divided by the deposit you contributed.
It may sound a little technical, but it will become clearer shortly with examples.
The important point for now is that holiday home ROI is the result of doing these four calculations properly and always using real figures.
Holiday rental income
The most common mistake when calculating holiday rental income is using only the nightly rate, known as ADR. Every month is different, and demand, occupancy and price change a great deal depending on the season.
The recommended approach is therefore to calculate income month by month, taking into account:
- High season
- Shoulder season
- Low season
- Expected occupancy
- And average nightly rate in each period
If you want a more accurate idea of how much a well-managed property can generate by autonomous community, you can read this guide: How much does a holiday rental licence cost?
Real costs of a tourist home
In general, you should consider these costs:
- Cleaning per turnover, usually between EUR 40 and EUR 120 per service
- Laundry
- Amenities
- Utilities
- Community fees
- IBI property tax
- Insurance
- Maintenance
- Replacement of kitchenware and household items
In addition to the commissions charged by the platforms where you advertise:
- On Airbnb, the host fee is usually 3% under the shared-fee model
- On Vrbo, it is 5% plus 3% processing
- On Booking.com, the percentage varies by agreement and location, but is usually between 10% and 25%
- And if you delegate management, add between 15% and 20% of income
Taking all this into account is how you really calculate holiday rental profit: not from the nightly rate, but from what remains in your account after paying this whole value chain, which is also essential.
And do not forget one very important point: taxation. The tax authority also wants its share.
Here you need to consider two scenarios:
- Tourist rental without hospitality services, taxed as income from real estate capital and exempt from VAT/IGIC
- Accommodation with hospitality services, which becomes an economic activity and is subject to 10% VAT or 7% IGIC.
If you want to understand how to declare holiday rental income properly, this article explains it in more detail.
Holiday rental profitability calculator
The most useful holiday rental profitability calculator is not a spreadsheet with a formula, but one that works with real data.
Our recommendation is therefore to follow these steps rigorously:
- Define the real market: verify that the property can operate legally in your municipality, how many properties of your category exist and what prices they achieve.
- Estimate the average price by season: high, shoulder and low.
- Calculate occupancy based on available nights: deduct blocked dates, personal use and maintenance days.
- List all costs, variable and fixed:
- Costs per stay, such as cleaning, laundry, amenities and so on
- Annual fixed costs, such as IBI, insurance, community fees, management, platforms and so on
With this information, create three scenarios: conservative, base and optimistic.
But be careful: a profitable holiday home investment must work even in a prudent scenario. If the numbers only work in the optimistic scenario, the risk is too high.
As a reference, here are the examples we promised earlier. They correspond to two different property types, before deducting personal income tax:
Urban studio with a total cost of EUR 216,000, an average rate of EUR 98 and 72% occupancy.
- Base: net profitability of 6.2%
- Conservative: drops to 4.5%
- Optimistic: reaches 7.9%
Two-bedroom coastal property costing EUR 343,000, with an average rate of EUR 165 and 64% occupancy:
- Base: 5.1%
- Conservative: 3.3%
- Optimistic: 6.7%
What if you need a mortgage? Then the calculation changes.
With 70% financing over 25 years and an average rate of 2.88%, based on February 2026 data, the approximate cash-on-cash is:
- 7.2% for the urban studio
- 4.2% for the coastal property
Beyond this, holiday rental profitability varies a great deal by season. If you want to understand how this affects your income estimate, here is how high season works in Spain.
Tourist apartment profitability vs long-term rental
At this point, given the complexity, a logical question appears:
Is holiday letting better than long-term rental?
The answer, naturally, depends on the property, the area, demand and, of course, the real management costs.
In general terms, when we talk about tourist apartment profitability, holiday letting usually has higher income potential. But it also requires more work, more maintenance, more replacement, more day-to-day management and more attention to regulation.
Residential rental, by contrast, usually offers less growth potential, but also more stability and a lower daily management burden.
As a reference, the average gross return on residential rental in Spain was 6.7% at the end of the first quarter of 2026, according to Idealista.
And yes, holiday letting can exceed that figure, and we recommend that model in many cases. But it always needs to be supported by real net profitability.
If you analyse Airbnb profitability in Spain, you will also see huge differences between destinations.
- Madrid records an ADR of USD 147.7 and 66% occupancy
- Barcelona USD 186.2 and 68%
- And Adeje, in Tenerife, USD 244.7 and 65%
So holiday rental profitability cannot be calculated with a national average either. An established destination with international demand and good occupancy for much of the year plays in a different league from a mid-sized city with more irregular demand.
The useful question, then, is not which of the two models is better. The useful question is this: which model best fits my property, in this location and with these costs?
Risks that can reduce your ROI
There are three risks that weigh more heavily today than a few years ago, and it is worth knowing them before doing any calculation.
The first is regulation: since 1 July 2025, the Unique Rental Register requires a registration number to advertise legally on online platforms. Without that number, you cannot go to market.
Regional regulations are not far behind: Andalusia, the Valencian Community and the Canary Islands have all seen recent changes with a direct impact on operations, as we have covered in other articles.
The second is the owners’ community: since 2025 it can limit or condition tourist activity in the building with a three-fifths majority, and can pass on special charges of up to 20%. This is a financial variable you need to verify before buying.
The third is enforcement: the Ministry of Consumer Affairs ordered the blocking of more than 65,000 illegal Airbnb adverts and got Booking.com to remove more than 4,000 adverts. Owners who do not have their paperwork in order face an increasing risk of a sudden drop in income without warning.
Other questions that concern owners
Which costs do owners underestimate most?
The real platform commission, not just the advertised percentage, the cost of operational management, replacement of kitchenware and household items, corrective maintenance and the opportunity cost of blocked dates. Regulatory compliance also carries a cost in time and money.
Does tourist rental profitability always beat residential rental?
No. In gross terms it usually has more volume, but net profitability depends on the cost structure. The gross residential reference in Spain is 6.7%. Holiday letting can exceed it, but not in every market and not for every owner profile.
When does professional management make sense?
When you prioritise having more free time, scaling and investing in another property, or simply achieving greater operational consistency and offering a better customer experience. The value of professional management is that it should recover its commission through better pricing, higher occupancy and fewer incidents.
Which taxes should I consider?
As a minimum, you should consider the following: IBI, tax on profit, whether personal income tax or corporation tax depending on your structure, and the difference between tourist rental without hotel services and accommodation with hospitality services.
Would you like more personalised advice?
If you do not know where to start and want to understand what profitability your property could achieve without making random calculations, at Home2Book we manage more than 600 properties in Spain and can give you concrete figures based on real destinations.
If you want to see those figures and understand the benefits of professional holiday rental management, we are here whenever you need us.
