How US, Canada, Mexico, Spain, Italy, and Greece Are Teaming Up to Boost Holiday Rental Market, Supercharging Travel Industry, But Overtourism Remains a Serious Concern, New Update

Published on July 21, 2025

By: Tuhin Sarkar

The holiday rental market has seen exponential growth over the past decade, with short-term vacation rentals becoming the preferred choice for travelers seeking unique, flexible, and immersive experiences. From the sun-kissed beaches of Spain to the bustling cities of the USA, the global demand for holiday rentals continues to rise. Countries like Spain, Italy, the USA, Canada, Mexico, and Greece have become major players in this booming market, attracting both tourists and investors looking to capitalize on the demand for vacation homes, apartments, and unique properties. However, the market also faces challenges such as rising prices, regulatory measures, and concerns over overtourism. In this article, we take an in-depth look at the holiday rental bed market in these six countries, analyzing trends, growth, opportunities, and challenges.

USA: Stabilizing Growth with Regional Variations

The holiday rental market in the USA has stabilized after several years of rapid growth. As of 2024, the U.S. vacation rental market is projected to grow at an annual rate of 4.12%, reaching USD 24.78 billion by 2029. This steady growth reflects the ongoing demand for vacation rentals, especially in popular tourist destinations like Florida, California, and New York.

While the market remains strong, it is marked by regional variations. Some areas, such as the Florida Keys and coastal California, continue to see high demand for vacation homes, while other regions, like the Midwest, have experienced slower growth. In addition, consumer behavior is shifting. High inflation and an abundance of rental options have made consumers more price-sensitive, leading to lower occupancy rates and more moderate pricing strategies. Despite these challenges, the U.S. holiday rental market remains one of the largest and most competitive in the world.

Canada: A Growing Market with Increasing Listings

Canada’s vacation rental market has grown steadily, generating USD 1,990.7 million in 2023. By 2030, the market is expected to reach USD 2,754.4 million, growing at a CAGR of 4.7%. The rise in short-term rentals has been driven by the popularity of destinations like Toronto, Vancouver, and Montreal, which are major hubs for both domestic and international tourists.

The growth of short-term rentals in Canada is particularly notable in smaller towns and rural areas, which were previously underserved by traditional hotels. However, large cities like Toronto and Vancouver have implemented regulatory measures to curb the rapid rise of vacation rentals in residential areas, aiming to prevent housing shortages and rising rents for locals. Despite these regulations, Canada remains a prime destination for vacation rental investments, especially in tourist-friendly regions like British Columbia and Quebec.

Mexico: Rapid Expansion and Strong Revenue Potential

Mexico’s holiday rental market is experiencing a meteoric rise. In 2022, the market was valued at USD 3,079.3 million and is projected to reach USD 6,400.3 million by 2032, growing at a CAGR of 7.64%. The market’s growth has been fueled by popular tourist destinations such as Cancun, Playa del Carmen, and Tulum, where demand for vacation homes and luxury rentals continues to increase.

Mexico’s vacation rental market is particularly attractive to international investors due to its high revenue-generating potential. For instance, Tulum alone boasts over 5,000 active rentals, with an average daily rate exceeding $250 and a median occupancy rate of over 67%. The country’s proximity to the U.S. also contributes to the demand for short-term rentals, as Americans frequently travel to Mexico for both leisure and business purposes. However, like other countries, Mexico faces challenges related to the regulation of short-term rentals, with some regions implementing restrictions to protect local housing markets.

Spain: Rapid Growth Amid Regulatory Challenges

Spain has been one of the most popular destinations for holiday rentals in recent years, and the market continues to experience substantial growth. Valued at approximately USD 35.61 billion in 2022, the Spanish vacation rental market is projected to reach USD 78.32 billion by 2030, growing at a CAGR of 10.7%. However, this rapid growth is accompanied by regulatory challenges.

The surge in short-term rentals has led to overtourism in popular destinations like Barcelona, Mallorca, and Madrid. While international arrivals have increased significantly, local tourism has declined, causing an imbalance in the local economy. To combat this, several Spanish cities, including Barcelona and Malaga, have implemented restrictions on new short-term rental permits and are focusing on regulating the sector to maintain housing affordability for locals. Local governments are pushing for a shift toward long-term rentals, which could impact the number of available holiday rental beds in the market. Despite these hurdles, Spain remains one of the most lucrative markets for holiday rental investments, particularly in coastal and urban areas.

Spain’s Short-Term Rental Market Faces Major Shake-up Amid New Regulations

Spain’s short-term rental market is about to experience a significant disruption. Starting on August 1, 2025, platforms like Airbnb will be required to remove nearly 1.1 million tourist rental beds unless hosts comply with the new National Registry for Tourist and Seasonal Rentals. This move, spearheaded by the Ministry of Housing and Urban Agenda, is aimed at ensuring that short-term rentals operate within a formalized and regulated framework. As of mid-July 2025, only 13% of short-term rental units in Spain had completed the registration process, and unless more hosts act quickly, nearly 90% of listings could be wiped off the market.

The National Registry and Its Impact on the Spanish Rental Market

The National Registry for Tourist and Seasonal Rentals, which came into effect on July 1, 2025, requires all properties listed as tourist accommodations to obtain a unique identification number, known as the Rental Registration Number (NRA). This national registry supersedes regional and municipal laws, meaning that even properties with local or regional licenses cannot operate unless they have registered in the national system. The new regulations have left many hosts scrambling to meet the deadline, resulting in only a small fraction of the market complying with the registration process by mid-July.

According to an analysis by Mabrian, as of July 15, 2025, only 13% of Spain’s short-term rental listings, including those on platforms like Airbnb, had updated their properties to include the required NRA. This leaves a staggering 87% of available rental beds at risk of removal, including popular tourist destinations like Barcelona, Madrid, and the Canary Islands. The new rules could significantly reduce the number of rental options available during the peak summer season, which could have far-reaching consequences for the travel industry in Spain.

Regional Disparities and Compliance Challenges

The impact of the new registry system is not uniform across Spain. In Andalusia, the region with the largest number of short-term rentals, only 10.2% of Airbnb listings have obtained the NRA, even though 83% of properties hold regional licenses. Similarly, in Catalonia, just 8% of listings have registered with the national system, despite 75.6% having regional permits. These discrepancies highlight the challenges hosts face in completing the registration process, especially in regions with a high concentration of short-term rentals.

In other areas like the Valencian Community and the Balearic Islands, the percentage of listings that have complied with the new regulations is similarly low, ranging from 12% to 16%. These regions, which are some of the most popular in Spain for vacation rentals, could see a large portion of their rental inventory disappear if the registration process isn’t completed in time.

The Broader Impact on Spain’s Tourism Industry

The potential removal of over 1.1 million rental beds could have a significant impact on the tourism industry, particularly in popular summer destinations. Spain has long been a top destination for travelers seeking a mix of cultural experiences, beach resorts, and vibrant cities. With fewer rental options available, travelers may face higher prices for the limited accommodations that remain. This could also lead to overcrowding in traditional hotels, which may not have the same capacity or flexibility as vacation rentals to accommodate large groups or families.

The short-term rental market has become an essential component of Spain’s tourism infrastructure, and the removal of a significant portion of rental units could disrupt the balance between supply and demand, affecting local economies that heavily rely on tourism. Cities like Barcelona, where tourism contributes billions of euros annually, are particularly vulnerable to such disruptions. With fewer rental options, travelers may seek alternative destinations, and those who do book accommodations could face limited choices, leading to frustration and potentially a decline in the overall traveler experience.

An Opportunity for STR Regularization

While the regulatory changes present immediate challenges, they also offer an opportunity to formalize the short-term rental sector in Spain. The ongoing registration process is expected to bring more transparency and accountability to the industry. Areas with a high number of unlicensed rentals, such as Madrid, are showing some signs of improvement, with 57.7% of listings already obtaining the NRA. In other regions like Galicia, Asturias, and Navarra, more than 30% of properties that previously held local licenses have registered for the national system. These regions are leading the way in formalizing the sector, and their progress could serve as a model for other parts of Spain.

The national registry system aims to reduce the number of illegal or unregistered short-term rentals, helping to control the growth of the market and address concerns about overtourism and housing affordability. However, the slow pace of registration suggests that hosts may need more time and assistance to comply with the new rules. If Spain can successfully navigate this regulatory transition, the result could be a more sustainable and organized short-term rental market in the long term.

The new regulations around Spain’s short-term rental market, set to take effect on August 1, 2025, are poised to disrupt the industry on a large scale. With over 1.1 million beds at risk of removal due to non-compliance with the National Registry for Tourist and Seasonal Rentals, both travelers and property owners must brace for the potential consequences. While the regulatory measures are aimed at curbing overtourism and promoting long-term sustainability, they also highlight the need for better industry coordination and support for hosts in completing the registration process. For Spain to maintain its status as one of Europe’s top tourist destinations, a balanced approach is necessary—one that promotes regulatory compliance without undermining the viability of its holiday rental market.

Italy: Investment Opportunities and Market Maturity

Italy is another European country that has seen significant growth in the short-term rental market. In 2024, Italy hosted around 640,000 short-term rental properties through online platforms, and there is potential to increase this supply by 2.5 million units. This offers a wealth of investment opportunities for property owners and investors looking to enter the market.

With over 9.6 million unused residential properties across the country, Italy presents a significant opportunity for investors to convert properties into short-term rental units. The country’s historical cities, scenic countryside, and coastal regions continue to attract millions of visitors annually, driving demand for vacation rentals. The rise of platforms like Airbnb and Booking.com has allowed both small and large property owners to tap into this lucrative market. However, Italy also faces regulatory challenges. While local authorities have yet to impose strict restrictions on short-term rentals, there is growing pressure to introduce measures that balance the needs of tourists with those of the local population.

Greece: Robust Growth and Increasing Popularity

Greece’s short-term rental market has seen remarkable growth, with the number of available rental beds exceeding 1 million in April 2025. The market has gained significant traction, particularly in tourist-heavy destinations like Athens, Santorini, and Mykonos. Greece is now ranked fifth in Europe for short-term rental activity, with vacation rentals accounting for over 50% of the country’s total accommodation options.

The rapid growth of Greece’s short-term rental market has led to a surge in overnight stays, which increased by over 31% in the first quarter of 2024. The increasing popularity of platforms like Airbnb has contributed to the market’s expansion, offering visitors more affordable and diverse lodging options. Despite its success, the Greek government has recently implemented new regulations to ensure that the growing short-term rental market does not undermine the availability of long-term housing for locals.

Global Trends and Market Insights

The global vacation rental market is expected to exceed USD 134.26 billion by 2034, growing at a CAGR of 3.57%. This growth is fueled by the increasing preference for alternative accommodations, the rise of digital platforms, and the expanding middle class in emerging markets. North America and Europe remain the largest markets, but Asia-Pacific is expected to see the highest growth due to rising disposable incomes and expanding tourism industries.

The key drivers of this growth include the increasing desire for personalized travel experiences, the convenience of booking platforms, and the flexibility offered by vacation rentals. Consumers are also drawn to the affordability of vacation rentals compared to traditional hotel accommodations. As the market matures, travelers are seeking more unique and sustainable experiences, driving the demand for eco-friendly rentals and innovative properties like tiny homes, treehouses, and beachfront villas.

A Promising Yet Challenging Market

The holiday rental market across Spain, Italy, the USA, Canada, Mexico, and Greece continues to experience significant growth. However, it is not without its challenges. Overtourism, rising housing costs, and regulatory measures pose significant risks to the continued expansion of the market. Investors and property owners will need to adapt to these changes, balancing profitability with sustainability and local community needs. As long as the demand for unique, flexible, and personalized travel experiences remains strong, the holiday rental market will continue to thrive across these key destinations.

This analysis highlights the opportunities and challenges in each country, providing a comprehensive view of the global holiday rental bed market and offering valuable insights for investors, property managers, and travelers alike.