What are the 25 best European cities to invest in short-term rentals in 2023?
We will shed light on some of the best European cities to invest in short-term rentals that promise a remarkable return on investment.
The pursuit of lucrative investment opportunities is an endeavour that transcends borders and continents. Namely, in the era of global travel and post-pandemic exploration, Europe stands as a prime destination for investors seeking to profit from its thriving short-term rental sectors. In fact, our supply data ranks Europe with the highest listing count at 7.1M, nearly double that of North America.
These locations have been measured by the metric of Revenue per Available Rental (RevPAR). As a result, investors will be able to gauge the financial performance and potential of short-term rentals across the main European cities this year. This analysis will also be interesting to DMOs looking to comprehend the revenues and growth potential of their destinations.
It is worth noting that we do not aim to provide a list of all the potential European investment cities. Rather, we highlight a selection of candidates that have demonstrated strong RevPAR performance this year. We focused on major markets with a robust supply, each having over 10,000 listings. We also filtered to assess only 2-bedroom listings, thereby eliminating bias towards cities with larger properties. Now, let’s check out the top markets awaiting savvy investors in Europe.
What is RevPAR & why is it important for property investors
Revenue per available rental (RevPAR) represents the revenue generated by a property, averaged across all availability in a given period. In other words, if a property is 50% occupied for an available month with a booked ADR of 100€, the RevPAR would be 50€. The magic of this metric is as a combined barometer of rate and occupancy to help to measure and project revenue performance, also allowing hosts to factor this into pricing accordingly. The metric also aids in benchmarking against other properties or brands.
On another hand, DMOs and tourism bodies can use RevPAR metrics for a myriad of business tasks. This knowledge enables them to assess economic impact, evaluate destination competitiveness, monitor performance, forecast and attract investments and foster collaboration opportunities, all of which contribute to the sustainable growth and success of the tourism sector.
Ultimately, RevPAR is arguably the most pivotal metric in understanding the ROI potential of any given property or market.
Best European cities to invest in short-term rentals by RevPAR
So, considering the importance of this metric in decision making across industry stakeholders, what are the top European cities by RevPAR?
Amsterdam and Paris are the top European cities with the highest RevPAR this year, both surpassing €150. Amsterdam RevPAR reaches nearly €200, standing out at €194 on average. Paris follows with €160.
Italy and Great Britain garner the highest distribution of European cities with the top RevPAR. That includes Rome, Venice, Sorrento, Florence, Bologna, Milano, and Whitby, London, Edinburgh, Norwich, Cambridge and Oxford respectively.
What do the top 25 European RevPARs mean for DMOs & investors?
DMOs can leverage this information to further enhance their marketing and management strategies and initiatives. By capitalizing on the popularity and profitability of these areas, DMOs can further elevate their destinations’ reputation and continue to attract a larger share of the tourism market. This could mean collaborating with private sectors like hotel chains or tour operators, and developing offers catering to tourist segments. You can understand accommodations in your market with key data insights for DMOs and tourism bodies here.
For investors, this means that there has been a steady flow of visitors seeking accommodation in these locations. Despite the boom in supply across the continent, these locations are drawing demand that is commanding impressive RevPAR and ROI in return. Consequently, this presents opportunities for expansion, renovation projects, and hotel and STR developments. For those seeking these opportunities, understanding relative performance is crucial.
For instance, if you were to have a 2 bed property in mind in Whitby and would make it available for 100 days next year, you would be looking at a potential return of €13,100. If you were to compare this value with another market, let’s say Oxford, your return is expected to be €8,800. In other words, between those markets you could be losing out on €4,300 or 33% in RevPAR. Whilst purchase prices must be taken into account and it is important to drill down further for data specific to your opportunities, this information can quickly indicate to you where best to focus your strategy.
2023 European RevPAR growth outlook
In 2023, things are looking bright for Europe as the continually rising ADRs are persisting through the supply growth. Performance is strong especially in countries hosting some of the globe’s most popular and rehabilitated sporting and music festival events.
The continent continues to be a promising destination for guests and astute investors in the short-term rental industry. Driven by robust tourism, strong economic fundamentals, and a commitment to providing exceptional guest experiences, these top ranked European cities are showcasing their potential.
As we look to the horizon of 2023 and beyond, the European RevPAR outlook remains optimistic particularly in the aforementioned cities and countries for those who navigate wisely. So, seize the opportunity to be part of Europe’s thriving short-term rental landscape. Evaluate profitable investments in some of the world’s most remarkable cities by monitoring occupancy & ADR, revenue, similar properties, and more: