Short-term Rentals in the Algarve: Reshaping the Tourism Landscape

Abstract

This study examines how short-term rentals are reshaping tourism and housing in the Algarve, Portugal’s most tourism-dependent and highly seasonal non-metropolitan region. Using municipal data from the National Registry of Tourism, TravelBI, and Eurostat overnight stays, and Idealista housing prices, we combine Tourist Intensity and Tourist Density with sale and rental price indicators to identify municipalities facing the highest tourism–housing pressures. Results show a pronounced coastal concentration of short-term rentals, particularly in Albufeira, Loulé, Lagos, and Portimão, municipalities which also hold most of the region’s formal accommodation capacity, while inland municipalities remain marginal. The highest-intensity and highest-density destinations record the steepest increases in sales and rental prices. Apartments dominate both formal accommodation and short-term rentals in these municipalities, intensifying competition for residential housing. The findings highlight the need to integrate short-term rentals into coherent accommodation, housing, and land-use governance. Targeted measures are required in saturated coastal municipalities to manage seasonal peaks and housing stress, while inland areas offer opportunities for carefully managed diversification supported by investment and governance capacity. Conceptually, the study reframes short-term rentals in tourism-dependent regions as mechanisms of cumulative saturation that intensify pre-existing tourism and housing pressures rather than redistributing them spatially.