Spain · Profitability & Management
How to Calculate the Real Return on Your Vacation Rental
Revenue is not the same as return. We show you how to calculate the number that truly matters, with the formulas and costs almost no one adds up.
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How Much Can You Really Earn from a Vacation Rental in 2026
When a property owner reaches out to us, they almost always ask the same thing: how much can I make? And they almost always expect a single figure. A round, clean number that lets them decide in thirty seconds.
↓When a property owner reaches out to us, they almost always ask the same thing: how much can I make? And they almost always expect a single figure. A round, clean number that lets them decide in thirty seconds.
That number doesn't exist. But the math behind it does — and that can be explained.
This article won't tell you that your property can generate €40,000 a year. It will tell you how to calculate what your property can actually generate, where each line item takes its cut, and why the figure you see in online simulators almost never matches what lands in your account.
The data we use comes from managing properties in Spain and Colombia, with over 2,167 completed bookings. These aren't projections — they're invoices.
The formula nobody teaches you
The gross income of a vacation rental comes down to three variables:
Annual gross income = ADR × nights booked
Where ADR (Average Daily Rate) is the average nightly rate you actually charge, and nights booked are the ones you genuinely sell. Nothing more.
It sounds simple. The problem is that almost everyone estimates both variables poorly — and the error compounds.
Your ADR is not your listing price
Here's the first misconception. If you list your apartment at €120 per night, your ADR is not €120.
Your ADR is the result of blending:
- The August nights you sell at €180
- The May nights you sell at €95
- The November nights you sell at €65 — because otherwise they don't sell at all
- Long-stay discounts (typically 10–15% weekly, 20–30% monthly)
- Last-minute deals to fill gaps
For a coastal property, that real ADR typically lands 20% to 35% below the peak-season rate. Anyone calculating income by multiplying the August price by 365 is off by tens of thousands of euros.
Real occupancy — not the number you wish for
The second mistake is worse. Many owners calculate at 80% occupancy because "it's always full in summer."
The average annual occupancy of a well-managed vacation rental in Spain sits between 55% and 70%, depending on location and property type. And that's already a strong result. Without professional management, it easily drops to 40–50%.
The difference lies in when those nights fall:
| Area | High season | Mid season | Low season |
|---|---|---|---|
| Mediterranean coast | Jun–Sep | Apr–May, Oct | Nov–Mar |
| Canary Islands | Oct–Apr | Mid-Aug–Sep | May–mid-Aug |
| City (Madrid, Barcelona, Bilbao) | Spring and autumn | Summer | Jan–Feb |
The Canary Islands are the interesting case — and they work exactly the opposite of what most people assume. Their peak season is winter: October through April, when northern Europe is chasing the sun. From May onward demand softens, bottoming out in early summer — when Europeans already have sunshine at home and head to the Mediterranean instead — before picking back up again in mid-August.
This has one very practical consequence: a Canary Islands owner who applies a mainland calendar loses money. Raise prices in July thinking it's high season and you'll sit empty. Drop them in January and you're giving away your best month.
It's exactly the kind of thing that never shows up in a simulator — and can only be learned by actually managing properties on the island.
The calculation with real numbers
Let's work through a concrete example. A 2-bedroom apartment on the Costa Blanca, with a shared pool, 10 minutes from the beach. A profile we manage many times over.
Gross income:
| Item | Calculation |
|---|---|
| Real ADR (annual average) | €98 |
| Nights sold | 219 (60% occupancy) |
| Annual gross income | €21,462 |
That's the number a simulator shows you. And that's where almost everyone stops calculating.
What disappears before it reaches your account
Of that €21,462, you won't see €21,462. Not even close.
Platform commissions
Airbnb charges the host 3% under the standard model, but Booking.com takes between 15% and 18% of each booking, and Expedia operates in a similar range. Since a significant share of volume comes through Booking, the weighted average OTA commission typically lands around 8–12% of gross revenue.
In our example: ≈ €2,150.
There's an important nuance here that rarely gets explained: you can reduce this line item by shifting bookings to direct channels. It's one of the reasons we work with over 25 channels and operate our own booking engine — every direct booking saves the entire commission.
Cleaning
This is the most underestimated line item. It's not "one clean a month" — it's one clean per checkout.
With an average stay of 5 nights, 219 nights booked means roughly 44 turnovers a year. At €45–60 per clean for a 2-bedroom apartment:
≈ €2,300 per year.
Yes, the cleaning fee is usually charged to the guest. But here's the catch: that charge is part of the total price the traveler sees, and so it competes directly with your ADR. If you charge €60 for cleaning, your nightly rate needs to be lower to keep the total competitive. It's not free money — it's a communicating vessel.
Utilities
Water, electricity, gas, and internet in a vacation rental bear no resemblance to those in a primary residence. Guests don't pay the bill, so they don't moderate consumption — the air conditioning runs at 18°C with the window open.
For an apartment of this type at average occupancy: €1,400–1,900 per year. And in the Canary Islands or the Costa Blanca, air conditioning in August sends the summer peak through the roof.
Replacement and maintenance
Everything wears out faster than you'd expect. Towels, bed linen, crockery, the coffee machine, the TV remote, the blind a guest forces open in August.
Our rule, drawn from real management: between 3% and 5% of gross income. In this example, ≈ €850. The first year tends to run higher, as the initial setup gets fine-tuned along the way.
Specialist insurance
A standard home insurance policy does not cover vacation rental activity. If an incident occurs while guests are on the property and your policy is a residential one, you have a serious problem.
A specialist liability policy for vacation rental: €250–400 per year.
Community fees, property tax, and local charges
These costs would exist whether you rented or not, but they need to be counted to get a true picture of asset profitability. They vary so much by municipality that a single average figure is meaningless — check your own bills.
In this example, an apartment with a shared pool: community fees ≈ €1,200, property tax (IBI) ≈ €450.
Management
There are two paths here, and it's worth being honest about the numbers on each one.
If you manage it yourself: you pay no commission, but you pay in time. And time has a cost. Answering messages at eleven at night, coordinating cleaners between checkout and check-in, dealing with the guest who locks their keys inside, updating prices every week, filing guest records with the police. Between 8 and 15 hours a month in season, with peaks.
If you delegate: at Fee4Me, the Impulso Plan charges 12% per booking and the Llave en Mano Plan charges 18% for apartments and flats, or 21% for villas and detached houses. Applied to our example's gross, the full-service plan comes to ≈ €3,860.
The full picture
| Item | Amount |
|---|---|
| Gross income | €21,462 |
| OTA commissions (≈10%) | −€2,150 |
| Cleaning (44 turnovers) | −€2,300 |
| Utilities | −€1,650 |
| Replacement and maintenance (4%) | −€850 |
| Specialist insurance | −€320 |
| Community fees | −€1,200 |
| Property tax (IBI) | −€450 |
| Subtotal before management | €12,542 |
| Full-service management (18%) | −€3,860 |
| Net before tax | €8,682 |
That €8,682 is the honest number. Not the €21,462 from the simulator.
And the tax authority still hasn't had its turn: vacation rental income is taxed under Spain's personal income tax (IRPF) as real estate capital income (or as business income if hospitality services are provided), and it does not benefit from the 60% reduction that applies to long-term residential lettings. We cover this in depth in our tax guide.
So is it worth it?
It depends on what you're comparing it to. And that's where the calculation gets interesting.
That same apartment on a traditional long-term lease at €750/month would generate €9,000 gross per year. Subtract property tax, community fees, insurance, and an allowance for non-payment and damage, and you're left with around €6,800–7,200 net.
In other words: a well-managed vacation rental yields around 25–30% more for this type of property. Our internal data points to a +34% income advantage over self-management — a different comparison, but it points in the same direction.
But there are three nuances nobody mentions that can change the decision entirely:
1. Vacation rental is not passive income. A traditional lease is income that arrives on its own. A vacation rental is a small business: if you don't tend to it, it falls apart. That's exactly the difference between 55% occupancy and 70%.
2. Location decides almost everything — and not just because of volume. Run the same calculation in Puerto de la Cruz and it comes out differently than on the Costa Blanca, not because one location is "better," but because their calendars are inverted. Where one peaks, the other troughs. There is no single national answer to this question, and no pricing strategy that works for both.
3. Medium-term rentals exist. Between pure vacation rental and traditional long-term leasing, there's a middle ground — stays of one to eleven months — that works extremely well in cities like Madrid, Barcelona, and Bilbao: less turnover, less cleaning, and income above the long-term rate. We explain it in full on our medium-term rental page.
The three mistakes we see time and time again
Calculating with the August rate. The most common and the most costly. August is 31 nights out of 365.
Forgetting the turnovers. It's not one cleaning cost — it's 44. People calculate one and multiply by twelve.
Not counting your own time. "I'll manage it myself and save the commission" is arithmetically correct. But if you're putting in 12 hours a month, you're paying yourself around €27 an hour to act as a late-night receptionist. That might be worth it to you. Or it might not. Either way, it's a decision that deserves to be made with the numbers in front of you — not on autopilot.
How to find out what your property actually earns
The ranges in this article are meant to explain the mechanics, not to calculate your specific case. Two apartments on the same street can differ by 30% depending on floor, views, terrace, or whether the pool is visible from the living room.
If you want an estimate based on your property's actual data, we have two tools:
- The income calculator, which gives an instant estimate based on property type, location, and capacity.
- The free valuation, where we look at your specific situation against real data from your area and tell you what to expect. No commitment required.
And if you want the full breakdown — with tables and a calculation template — it's all in our Profitability Guide in PDF.
It depends on location, property type, and management. For a 2-bedroom coastal apartment, annual gross income typically falls between €18,000 and €25,000, leaving a net of €8,000–12,000 after costs, commissions, and management fees. In inland areas with seasonal demand, figures are lower. And be careful about assumptions around the calendar: in the Canary Islands, high season is winter — not summer.
Fee4Me manages vacation rentals in Spain and Colombia: over 2,167 completed bookings and €1,437,293 in managed revenue. The figures in this article come from that operation — not from market estimates.
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