The pandemic has burst the holiday rental bubble that had been forming at great speed before the crisis. A report published by the Andalusian association of tourist accommodation (AVVA) states that as many as 4,000 properties registered as tourist accommodation in the province of Malaga will move into long-term rentals due to the current tourism crisis.
The study states that between six and ten per cent of owners are looking for tenants outside the tourism industry.
One owner, who only wished to be identified as Jaime, said he would wait until after the summer, although the quarantine imposed by the UK on travellers from Spain has blown his plans to recover some lost income during the peak summer season.
"Bookings were relatively good for August, all things considered, but since the UK's decision [to impose quarantine] all I'm getting are cancellations," he said.
He warned, however, that now is not the best time to be looking for long-term tenants either.
"We've all helped to increase the supply of flats for rent and so prices are falling, at a time when there is a downward trend in any case due to the financial situation that the majority of families are going through," he said.
The president of AVVA, Carlos Pérez-Lanzac, said that along with the owners who have already decided to move to the residential market, there is another large group who have opted to leave their properties empty for a year in the hope that the recovery of the tourism industry will be fast.
"People have also chosen this alternative for fear of the Urban Rentals Law, which establishes a contract period of five years; they are also afraid of being in a situation of tenants not paying and the long legal process for eviction," he explained.
He added that sources from the real estate industry had said that rental default had increase by 350% in the traditional market.
For those choosing to stick to holiday rentals, the scenario is not good. Hopes placed on the summer have been shattered, with last-minute cancellations increasing. And that is without the usual competition from holiday homes owned by foreigners, many of whom have decided to spend the summer in their own properties due to the health crisis, rather than renting them out and travelling elsewhere.
Pérez-Lanzac said that occupancy of holiday lets in July was 36%, bearing in mind that only around 70% of registered properties were operational. Last year, with 100% of properties on the market, occupancy rates were between 79% and 82%.
Forecasts for August say that among the properties still up for holiday rental, occupancy will be between 40% and 45%
Offering flexibility in the current situation has turned into a double-edged sword for property owners. They need to encourage tourists to make bookings, but this also allows them to cancel up to 48 hours before their arrival date at no cost.
"This volatility complicates our work a great deal. There's no margin for reaction," said Pérez-Lanzac.
With few bookings, panicking owners have started to drop their prices. This summer it is up to 30% cheaper to rent a holiday home on the Costa del Sol than last year.
This figure could be even higher for longer holiday rentals.
"We have to encourage people not to panic because we are now in August and there's still the last part of the year to come," said the AVVA president.
It is this scenario that is pushing owners to turn to the long-term residential rentals sector. AVVA has said that key real estate sources such as Idealista or Pisos.com report that Malaga province has gone from having 700 flats available for long-term rent to 2,000 due to the tourism crisis.
The pandemic has also significantly changed the profile of the average holiday rental customer on the Costa del Sol. The majority are now Spanish tourists, who book at the last minute.
In terms of international visitors, Pérez-Lanzac described a new trend of groups of friends or relatives from outside Spain making bookings just three days in advance, when this type of rental would normally be decided six months ahead.
There is also a larger number of reservations being made by professionals who come to the area for a couple of weeks for work reasons, something unheard-of in the month of August. "This gives us hope that this type of client will increase from September and help soften the damage caused in the summer," said the AVVA president.