Tenerife’s holiday rental market is experiencing a remarkable boom, with the number of available beds in non-hotel tourist accommodation now nearly matching those in traditional hotels. Over the past six years, the supply of tourist houses and flats on the island has grown by almost 30%, reaching 84,463 places, compared to 88,588 hotel beds — a category that has barely increased by 1% in the same period.
This shift highlights the expanding role of short-term holiday rentals in the Canary Islands tourism industry. With increasing occupancy rates and widespread availability, holiday lets are now considered a well-established and lucrative alternative to hotel accommodation. However, their rapid and largely unregulated expansion has sparked concern within the hotel industry, which has long called for comprehensive regulation to ensure a fair playing field.
A Legal Response to the Unchecked Growth
The Canary Islands Parliament is currently debating new legislation that aims to fill the existing regulatory gap. Acknowledging the explosive growth in holiday rentals, the proposed law seeks to introduce order into a sector that now accounts for 39% of all tourist accommodation on the islands. However, the proposed framework is contentious.
The Canary Islands Holiday Rental Association (Ascav) has criticised the draft legislation as excessively restrictive, warning that it could lead to the closure of 90% of current holiday homes. Ascav argues that holiday rentals help democratise the economic benefits of tourism, providing income to local homeowners and contributing approximately 3% to the archipelago’s GDP.
Tenerife Leads in Private Holiday Accommodation
Tenerife stands out as the island with the highest number of holiday homes, accounting for 41% of the total stock in the Canary Islands — significantly ahead of Gran Canaria’s 22%. According to figures from the Canary Islands Institute of Statistics (ISTAC) for April 2025, Tenerife currently offers 84,463 places across 20,396 holiday rentals.
This figure is strikingly close to the number of hotel beds available on the island (88,588), with only a gap of 4,125 beds. At the archipelago level, hotels still hold a substantial lead, but the difference is shrinking rapidly.
Hotels Stagnate, Holiday Rentals Surge
The growth in hotel accommodation has remained stagnant, constrained by the 2003 Canary Islands Guidelines Law, which permits only the construction of luxury hotels. Additionally, many existing hotels have undergone refurbishment aimed at raising their category, often resulting in a reduction in bed numbers — as seen in locations like Puerto de la Cruz.
In contrast, holiday rentals have added 19,214 beds since 2019, reflecting a 29.4% increase. Apartment complexes, once a key component of the region’s tourist infrastructure, are now in decline. Tenerife, for example, has lost nearly 8,000 apartment beds over the past six years, bringing the current total to just 36,036.
Territorial Spread and Housing Pressure
A notable feature of the holiday rental phenomenon is its geographical spread. While hotel accommodation in Tenerife is concentrated in just nine municipalities — which account for 97% of the island’s hotel beds — holiday rentals are present in all 31 municipalities. Of the 84,463 beds in holiday homes, around 20,000 are found in towns not traditionally considered tourist hubs.
For example:
- Santa Cruz de Tenerife has more beds in holiday homes (3,710) than in hotels (2,679).
- La Laguna shows an even greater disparity, with 2,435 holiday rental beds compared to only 673 in hotels.
- Arona, a major tourist area, has seen a 35% increase in holiday homes in six years, narrowing the gap with hotels to fewer than 2,000 beds.
Furthermore, Granadilla, Puerto de la Cruz, Guía de Isora, La Laguna, and Santa Cruz have actually seen a decline in hotel beds since 2019.
Occupancy and the Housing Market Impact
According to ISTAC, the average occupancy rate for holiday homes in April 2025 was 89.5%, exceeding the 76.9% occupancy rate for hotels during the same period. This underscores the profitability and established nature of the holiday rental model.
However, the proliferation of short-term rentals raises critical concerns about their impact on the local housing market, particularly in terms of availability and affordability for residents. The proposed new law faces the complex task of balancing the economic benefits of holiday lets with the need for regulation, territorial planning, and sustainable housing policy.
