The Economics of Short Stays vs Extended Stays in Europe

Short stays and revenue volatility

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Short-stay hospitality models generate most of their revenue in limited periods of the year. This makes performance more exposed to seasonality and sudden changes in demand, even in markets with strong tourism fundamentals.

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Data from CoStar’s Europe Hotel Performance (2025) shows that, across multiple European markets, the gap between peak and off-peak RevPAR widened during 2024–2025. This increased revenue dispersion for hotels primarily driven by short stays, reinforcing reliance on pricing during high-demand periods while performance weakens outside those peaks.

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Operating costs add another layer of pressure. The Deloitte European Hotel Industry and Investment Survey (2024) shows that staffing, energy and maintenance costs remain largely fixed throughout the year. When occupancy drops, margins tend to fall faster than revenues.

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This pattern became more visible as financing conditions tightened during 2024 and into 2025. Hotels with more concentrated revenue streams showed greater differences in performance within the same markets, highlighting the higher risk profile of short-stay models.

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How extended stays change operating economics

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Extended-stay models alter the economics of hospitality by spreading revenue across longer periods of time. Instead of concentrating income into short demand peaks, performance becomes more evenly distributed throughout the year.

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Operating costs also behave differently. With fewer guest turnovers, extended-stay assets typically require less frequent housekeeping and front-desk activity. Deloitte (2024) notes that models with lower operational intensity tend to manage staffing and service costs more efficiently relative to occupancy.

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Together, these dynamics narrow performance swings over time. From an economic perspective, extended stays move hospitality closer to a stable operating business rather than one driven primarily by seasonal demand cycles.

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The economic variables that change with length of stay

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The economic difference between short stays and extended stays is driven by how revenue and costs behave over time, not by total demand.

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Short stays concentrate revenue into peak periods, increasing exposure to seasonality and pricing cycles. This leads to higher volatility, as reflected in European hotel performance patterns observed by CoStar (2025).

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Extended stays spread revenue over longer periods. This supports steadier occupancy and reduces reliance on constant guest turnover, in line with length-of-stay trends shown in Eurostat data (2024). Lower turnover also reduces operational intensity, allowing staffing and service costs to scale more efficiently, as highlighted by Deloitte (2024).

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Key economic differences between short stays and extended stays

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Taken together, these variables explain why length of stay has become a financial driver, not just an operational detail, in hospitality investment decisions.

Why nights are growing faster than arrivals in Europe

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Data from Eurostat (2024) shows continued growth in total nights spent at tourist accommodation across the European Union. Importantly, in several Southern European markets, growth in total nights outpaced growth in arrivals.

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In several European markets, the number of nights has risen faster than guest arrivals, indicating longer average stays. This pattern reflects a shift in travel behaviour, with demand extending beyond short leisure trips into longer, more flexible stays.

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Eurostat’s annual accommodation results (2024) confirm that this dynamic is visible across different accommodation types, including hotels and aparthotel formats. The result is a demand profile that supports steadier occupancy levels over longer periods.

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From an economic perspective, longer stays reduce the need for constant guest turnover to sustain annual performance. Revenue generation becomes more evenly distributed, improving visibility at the asset level.

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Capital is shifting toward predictability

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As financial conditions became more demanding in 2024 and 2025, investors began to reassess how risk is managed in hospitality. The focus is moving away from chasing peak returns and toward securing more stable and visible income.

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According to the PwC Global Investor Survey (2024), income stability and downside protection rank among the top priorities for investors allocating capital to real assets.

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This change matters for hospitality. Models that depend on strong seasonal peaks are seen as less reliable when financing is tighter and capital is more selective. Revenue swings are harder to absorb, even in attractive markets.

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As a result, operating models that deliver smoother income throughout the year are gaining attention. Predictable revenue is no longer just an operational benefit. It has become a key factor in how investors evaluate hospitality assets.

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Why Portugal fits this shift in hospitality economics

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Portugal combines strong tourism demand with a growing share of longer stays, supported by flexible work, relocation planning and seasonal residence. This allows hospitality assets to operate with steadier occupancy across the year, reducing dependence on short peak periods and smoothing revenue generation.

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From an investor perspective, this profile aligns well with the current preference for predictability. A hospitality market that supports longer stays and more even income distribution fits better with disciplined capital allocation and lower tolerance for volatility.

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Within this context, Portugal stands out as a market where hospitality investment aligns naturally with current economic dynamics. For international investors, the Golden Visa functions as the residency framework that enables this capital deployment, allowing qualifying investments to support European residency without permanent relocation. This positions the programme as a practical channel for investors already seeking exposure to Portugal’s hospitality market, rather than as the primary driver of the investment decision.

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How VIDA Capital enables this approach

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At VIDA Capital, investors can access Portugal’s Golden Visa through a CMVM-regulated hospitality fund designed around operational efficiency. The focus is on professionally managed hospitality assets aligned with income stability rather than short-term volatility.

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This structure allows investors to pursue European residency while participating in a hospitality model shaped by regulation, visibility and long-term value creation.

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If you would like to explore how this investment structure may align with your residency or capital planning, feel free to contact our team at rita@vida-cap.com or schedulle a call here.