European Review September 2025: Market Holds Steady as Regulations Tighten and Growth Slows

Key Takeaways

• Regulatory pressure led to a second month in which available listings grew only by 1.6% year-over-year, with Spain and Italy among the countries where supply declined.
• The RRI (Repeat Rent Index) grew by 4.6% year-over-year as ADR declined by -2.1%, suggesting higher pricing power among seasoned operators.
• The increase in shoulder season demand is evident in Greek markets, with Athens and Rhodes experiencing a greater portion of their annual demand during this period.

After the record highs seen during the summer, Europe’s short-term rental market continued to show stable growth in September. Available listings increased 1.6% year-over-year, reaching 4 million units. Demand growth declined slightly at -0.9% after a flat August with 0.3% growth, bringing total demand nights to 45.5 million.

As supply growth slows and regulatory pressures increase, barriers to entry across several European markets are pushing occupancy higher. Italy stands out as a key example where supply contraction has led to occupancy gains, with rates increasing by 2.5% YoY.

At a Glance: September 2025 STR Performance in Europe

• Available listings reached 4 million, an increase of 1.6% YOY
• Demand Nights declined by -0.9% YOY to 45.5 million
• Average daily rates (ADR) decreased slightly by -2.1% YOY to 128 €
• Average occupancy rate reached 55%, down -1.3% YOY
• Revenue per Available Rental Night (RevPAR) declined 3.4% at 70.47 €

The State of the European Economy

Inflation is steady at the European Central Bank’s (ECB) medium-term target of 2% and unemployment in the Euro Area at 6.3% over the past year. With that context, the ECB decided to keep interest rates unchanged at its September monetary policy meeting, with the deposit facility rate remaining at 2%.

Following a period of trade-related uncertainty earlier in 2025, stable inflation and employment have supported a modestly improved economic outlook. The ECB raised its 2025 GDP growth projection from 0.9% (in June) to 1.2%, though forecasts for 2026 were revised downward to 1%, while 2027 projections held steady at 1.3%.

According to McKinsey’s latest ConsumerWise data, European consumers remain more willing to spend on travel than those in the United States. In the EU-5, 34–37% of respondents plan to increase travel spending, compared with only 29% in the U.S. 

Spain shows the strongest intention to splurge, followed by Germany, Italy, and France. The UK trails slightly behind. This suggests European households remain relatively optimistic about discretionary leisure spending, even as the broader economy cools.

The data also shows that willingness to spend on travel rises with age. Baby Boomers report the greatest intent to spend more, followed by Gen X, while fewer than one-third of Millennials and Gen Z respondents plan to boost travel budgets. This generational divide reflects the differing economic realities across age groups: older consumers, typically with higher savings and stable incomes, continue to prioritize experiential travel, while younger travelers remain more constrained by cost-of-living pressures.

Listing Growth Decelerates as Regulation Tightens

As summer comes to an end, available short-term rental listings across Europe totalled 4 million units in September. That’s a decrease of 150,000 listings from the previous month, when supply hit a record high. 

This represents a 1.6% year-over-year increase and marks the fourth consecutive month with growth below 3%, a trend not seen since early 2022. The slowdown highlights how rising regulatory pressure continues to weigh on supply expansion across major European markets, but also suggests the maturity of the European market.

Looking at year-over-year listing growth by country, southern European nations are falling furthest behind:

• Spain (-7.1%)
• Croatia (-3.7%)
• Italy (-2%) 

France remained nearly flat at +0.6%. To put this into perspective, Spain’s total listings have grown by just 4% since 2019, Croatia’s have fallen by 19.8%, and Italy’s have remained flat (+0.1%) compared with an average European increase of 21.2% over the same period.

Italy and Spain exemplify the wider market impact of regulation. In Spain, more than 65,000 listings are currently at risk of delisting due to tightening compliance rules. Cities such as Barcelona, Palma, and Lloret de Mar have introduced stricter zoning laws, licence caps, and enforcement measures that have constrained new supply. Despite these pressures, both Barcelona and Lloret de Mar have seen small year-over-year increases, suggesting some stabilization as hosts adapt to new rules.

In Italy, the situation differs slightly. Markets including Cortona in Tuscany, Castellammare del Golfo in Sicily, and San Teodoro in Sardinia continue to operate below 2019 supply levels. Fragmented local policies, higher taxation, and rising operational costs have discouraged new entrants, keeping supply stagnant. Collectively, these patterns illustrate how regulatory frameworks are reshaping Europe’s STR landscape by constraining growth in key Mediterranean destinations.

Demand Growth Slows as Nights Booked Stabilize

With regulatory pressures and slower supply growth, demand across Europe’s short-term rental market declined slightly in September. Year-over-year growth declined slightly from 0.3% in August to -0.9%, with the extension of summer travel and a stronger shoulder season helping September secure its place as the fourth-highest month for nominal demand this year with 45.5 million demand nights in total.

By contrast, nights booked (reservations made during the month for current or future stays) declined for the third consecutive month. August saw a -4% decline with the trend continuing in September with a year-over-year decline in nights booked of -5.3%. 

Several factors may be behind this leveling off: booking windows across Europe continue to shorten as travelers book closer to their stays, while broader economic uncertainty could be prompting more cautious or last-minute decisions.

Regulatory Pressure Leads to Occupancy Gains Among Southern Markets

In September 2025, occupancy trends across Europe showed a mixed picture. Most markets recorded only minor year-over-year changes with Occupancy remaining flat or declining in 16 of Europe’s top 20 Nations. 

Northern and Central European countries (including Germany, Switzerland, and Finland) saw steady increases in  supply with  demand remaining largely flat leading to declining occupancy rates. Similarly, Norway and Poland experienced growth above 5% in both demand and listings, balancing one another and preventing significant occupancy gains.

Southern Europe, however, told a different story. Spain and Italy were the only major markets to have flat or slightly growing occupancy, driven by sharp supply reductions amid intensifying regulatory pressure. 

In Spain, stricter enforcement measures and the removal of tens of thousands of listings created a supply squeeze that lifted occupancy despite modest year-over-year demand declines. Italy followed a similar pattern: fragmented regulations and limited new supply supported higher occupancy levels even as demand grew more slowly than in the north.

Elsewhere, market performance remained largely stable. France, Ireland, and Denmark experienced slight declines in occupancy, while Croatian occupancy dropped significantly as demand decreased. Overall, the data highlight a clear regional divide where regulation-induced supply constraints in southern Europe are pushing occupancy higher, while other markets continue to grow through supply expansion.

RRI Surpasses ADR for the First Time Since January 2025

Average daily rates (ADR) declined further in September, down -2.1% year-over-year compared to a -1.6% decline in August. In contrast, the Repeat Rent Index (RRI), which tracks pricing changes among existing operators, remained resilient with a 4.6% YoY increase, up from 4.2% in August. 

This marks the strongest RRI growth since December 2024 (+4.8%) and is well above the 12-month average of 3.2%. The divergence between ADR and RRI indicates stronger pricing power among established hosts, as limited new supply and high entry barriers continue to shape rate dynamics.

Spain remained one of Europe’s strongest performers. Despite continued regulatory pressures and widespread delistings, the supply squeeze improved occupancy and enabled hosts to raise prices. In September, Spain’s ADR rose 1.3% as occupancy decreases slightly by -0.1%, leading to a 1.1% growth in RevPAR. This demonstrates that tighter inventory can sustain higher revenue even amid softer demand.

Italy followed a similar trend. Occupancy was up 2.5% year-over-year despite a -0.7% drop in ADR, suggesting volume-driven rather than rate-driven growth. Denmark, Ireland, and the Czech Republic also posted solid results, with RevPAR increasing between 3.6% and 8.6%.

By contrast, Switzerland, Belgium, and the Netherlands saw occupancy declines despite rising or flat ADRs, reflecting a more competitive pricing environment and greater supply. Overall, Spain’s September results underscore a broader European pattern. When regulation limits supply, remaining operators benefit from stronger occupancy and pricing resilience, driving RevPAR gains even as demand slows.

Spotlight on Greece and the Impact of Shoulder-Season Travel

As Greece’s high season draws to a close, September data shows a -5.2% year-over-year decline in ADR to €145 and a -5.4% drop in RevPAR to €85. Occupancy remained flat at  -0.2% compared to last year, reaching 58%.

In recent years, visitor behavior has begun to shift, with more travellers choosing to visit during the shoulder seasons. The shoulder season in this case falls in March to May and September to October. 

Several factors explain this trend. Rising temperatures and frequent summer heatwaves are encouraging travelers to seek cooler months, while lower prices outside the high season add appeal. Growing concerns about overtourism are also prompting many to avoid the crowded summer period in favour of a more relaxed experience.

The data highlights this gradual seasonal flattening. In Athens, the share of annual demand during the shoulder months increased from 42% in 2019 to 46% in 2024, while summer’s share fell from 31% to 29%. Winter demand declined from 27% to 25%, reinforcing the city’s strength as a year-round destination.

Rhodes, traditionally reliant on summer travel, shows a similar pattern. Shoulder-season demand rose from 37% in 2019 to 41% in 2024, while summer’s share dipped from 51% to 49%. Although winter still accounts for just 10% of annual stays, the trend suggests visitors are extending trips beyond the peak months.

Overall, the data points to a structural broadening of Greece’s tourism calendar. Milder weather, lower prices, and fewer crowds are helping spread demand more evenly across the year. This shift benefits both urban and leisure destinations.