Tourism and short-term rentals are now more than just a service industry, but a powerful source of income in cities around the world. With the growth of online platforms and the convenience of digital services, investors are looking to invest in housing that brings in super-profits in tourist areas. However, behind the quick profits often lie legal restrictions, growing competition and regulatory risks.
One emerging strategy is the development of eco-lodges aimed at conscious travellers. Energy-efficient buildings, the use of local materials and minimising the carbon footprint are increasingly becoming advantages for renters. Such properties are gaining support in some regions where sustainable tourism is becoming part of city policy.
In some regions, short-term rentals are becoming the driving force of the economy, while in others they are causing protests, restrictions, and high fines. Success in this market requires not only calculations, but also a deep understanding of the context: tourist flow, infrastructure, legal framework, and public attitudes. Let’s consider where and why rentals really work, and what can stop them.
Cities Leading in Income
Some cities in the world are consistently among the top destinations with high short-term rental yields. The main factor is the tourist flow. The higher the interest in the city as a cultural, business or natural center, the greater the demand for short-term housing. This is especially true for cities where hotels are expensive or not diverse enough.
Investors choose popular tourist locations due to high occupancy rates and average nightly prices. In some cases, short-term rentals bring in 2-3 times more profit than long-term rentals. At the same time, the payback period for the property is reduced to 5-7 years, which makes such investments especially attractive.
In addition to the tourist flow, other parameters are also important: transport accessibility, the presence of major events, seasonality, and the economic stability of the region. All these factors affect the stability of income and the level of occupancy.
The most profitable cities in the world for short-term rentals:
● Barcelona, Spain
● Cappadocia, Türkiye
● Lisbon, Portugal
● Chiang Mai, Thailand
● Mexico City, Mexico
How the superprofit model works
The mechanics of high profitability are based on high turnover, dynamic pricing and feedback management. Unlike long-term rent, short-term rent allows you to earn more on the space due to frequent changes of tenants and price flexibility. Booking platforms themselves recommend optimal rates depending on demand and season.
It’s not just the location that matters, but also the owner’s ability to work with digital tools. Proper presentation of the property, high-quality photos, a high rating and good reviews are the key to maximum occupancy. Success often depends on little things: response speed, automation of check-in, friendliness.
In addition to direct profit, owners also take into account additional monetization channels: paid services (transfer, cleaning, excursions), partner offers, increasing the average bill. All this makes short-term rentals similar to a miniature hotel business.
What influences the super profitability of an object:
● Digital pricing and booking management
● Professional ad design
● High rating and positive reviews
● Automation of check-in and guest support
Legal traps and prohibitions
Not all countries and cities approve of short-term rentals. They often lead to higher housing prices for local residents and the displacement of long-term tenants. As a result, restrictions are introduced: from licensing to a complete ban on rentals for less than 30 days.
Laws differ radically: in some cases it is enough to notify the administration, in others an official permit is required, and in some cases it is impossible to rent out without registering the business. Moreover, violation can lead to large fines and blocking of the object on platforms.
It is important to remember that the rules are constantly changing. Cities adapt to the growth of the rental sector, under pressure from the public or the hotel lobby. Even a successful property can lose its legal status overnight.
Typical restrictions in different countries:
● Paris: 120 days rental limit per year
● Berlin: Mandatory registration and permit
● New York: Ban on Short-Term Rentals Without Owner Present
● Amsterdam: 30 nights per year limit and neighbours’ permission
Geography of demand and seasonality
Short-term rentals are not only income, but also depend on the rhythm of the tourist flow. Even the best cities have “dead” seasons when occupancy drops to a minimum. This requires adaptation – from lower prices to a flexible rental format.
For example, beach resorts can generate up to 80% of annual income during the summer months. Ski resorts are active in winter. Cities with uniform tourism (Barcelona, Rome, Tbilisi) are more stable, but the competition is also higher.
Demand also changes depending on events – festivals, sports competitions, conferences. During these times, prices can increase several times, and bookings close months in advance. It is important for an investor to take these cycles into account in calculations and strategy.
Factors Affecting Seasonal Returns:
● Climate and weather conditions
● Tourism activities and events
● Academic calendar (for student cities)
● Presence of business tourism
Risk and Reputation Management
Short-term rentals always involve working with people. Management errors, poor service or even random misunderstandings can lead to negative reviews, a drop in ratings and fewer bookings. Therefore, it is important to build a systematic work with guests.
The owner of the property is increasingly becoming a manager: monitoring communications, coordinating cleaning, updating prices. Many resort to the help of management companies or automated services to maintain quality at a stable level.
Risks also include damage to property, noise, and complaints from neighbors. Clear rules of residence, liability insurance, and technical solutions, such as noise sensors or remote video surveillance of the entrance, are important here.
Measures to reduce risks:
● Automatic instructions and notifications
● Property and Liability Insurance
● Guest rating based on previous reviews
● Use of professional managers
Ethical and social context
Not all areas welcome short-term rentals. Locals complain about noise, rising prices, and the loss of neighborhoods. Social movements are demanding restrictions, citing the disruption of social fabric and privacy.
An investor who ignores the local context may face boycotts, complaints, or even denial of permission. Today, it is not only profit that matters, but also the ethical sustainability of a project. Respect for place and people is the new benchmark for sustainable investment.
Some platforms are already implementing codes of conduct, encouraging interaction with local communities, informing neighbors, and creating transparent rules of residence. This reduces conflicts and strengthens reputation.
Ethical principles of sustainable rental:
● Respect for local norms and residents
● Informing about the rules of the area
● Noise reduction and maintaining silence
● Cooperation with local services
Short-term rentals through platforms open up vast financial opportunities — with the right approach, proper preparation, and consideration of all variables. However, the path to stable income is not so simple: it goes through legal labyrinths, seasonal fluctuations, and management challenges.
Understanding the geography of demand, legislation and digital management specifics is becoming the key to success. But we should not forget about the social side: a modern investor must be not only prudent, but also a responsible participant in the urban environment.
Questions and Answers
In tourist cities with high demand and moderate restrictions, such as Lisbon or Chiang Mai.
Violating local regulations can result in fines, listings being blocked, and business being banned.
Monitor the quality of service, respond quickly to requests and maintain a high rating of reviews.