Executive Summary
The Furnished Apartments project in Spain's tourism and hospitality sector targets a promising market opportunity. With an investment of €350,000, it yields a net present value of -€135,857, an internal rate of return of -8%, and a payback period of — years.
| Indicator | Value |
|---|---|
| Initial Investment | €350,000 |
| Year 1 Revenue | €120,000 |
| Annual Growth (CAGR) | 6% |
| Net Margin (Y1) | -18% |
| Return on Investment (Avg.) | -4% Annually |
| Net Present Value (NPV) | -€135,857 |
| Internal Rate of Return (IRR) | -8% |
| Profitability Index (PI) | 1 |
| Payback Period | — |
| Break-even Year | — |
| Expected NPV (Probability-Weighted) | -€134,353 |
Assumptions and Basis
The figures in this study are based on project data, the nature of the tourism and hospitality sector in Spain, and local market indicators, according to the following assumptions:
| Assumption | Value |
|---|---|
| Initial Capital | €350,000 |
| Year 1 Revenue | €120,000 |
| Annual Growth | 6% |
| Cost of Goods Sold (COGS) | 25% of Revenue |
| Operating Expenses | 35% of Revenue |
| Tax/Zakat | 15% |
| Discount Rate (WACC) | 8% |
| Study Horizon | 5 years |
Basis of Assumptions: These figures are based on the average revenues of furnished apartments in Spanish tourist cities and realistic occupancy rates, taking into account operating and maintenance costs and local taxes.
Project Description and Opportunity
This project aims to provide high-quality furnished apartments for tourists and business travelers in major Spanish tourist cities (such as Barcelona, Madrid, and Malaga). The business model focuses on offering a flexible and comfortable accommodation experience, combining the privacy of a home with hotel hospitality services. The target customer includes individuals, families, and business travelers seeking short-to-medium-term stays, who appreciate value for money and added services such as high-speed Wi-Fi and equipped kitchens. Spain is a leading global tourist destination, having received 36.8 million international tourists in the first five months of 2026, an increase of 5% over the previous year, with their spending reaching 50 billion euros.
Market and Demand Study
The tourism market in Spain is characterized by continuous growth, with Spain being among the leading countries globally in the tourism sector. In 2025, international tourism revenues reached €115.1 billion, and are expected to rise to €121.1 billion in 2026, with an annual growth of 5.3%. This growth is partly driven by Spain's reputation as a safe destination and its benefit from shifts in global tourism flows. The hotel sector in Spain shows structural strength supported by strong demand and selective expansion of supply, with an increasing focus on high value-added products. However, some cities face issues of overtourism, leading to housing challenges and environmental and social impacts.
Market Sizing (TAM / SAM / SOM)
Market sizing is based on total international tourist spending in Spain, with an estimate of the share of furnished apartments in the total accommodation market. The serviceable available market is determined by analyzing demographic and tourist trends in target cities, while the serviceable obtainable market is determined based on the project's operational capacity and marketing plan.
| Level | Annual Size | Description |
|---|---|---|
| TAM — Total Addressable Market | €121,100.0 Million | Total serviceable demand |
| SAM — Serviceable Available Market | €24,220.0 Million | The portion reachable by your model |
| SOM — Serviceable Obtainable Market | €1,211.0 Million | Your realistic early share |
Basis of Sizing: The Total Addressable Market (TAM) is based on the projected international tourist spending in Spain for 2026, which is €121.1 billion. The Serviceable Available Market (SAM) is estimated at 20% of TAM, focusing on the furnished apartments sector. The Serviceable Obtainable Market (SOM) represents 5% of SAM.
Unit Economics
Measures the profitability of each sales unit/customer — the most accurate feasibility indicator:
| Unit Indicator | Value |
|---|---|
| Sales Unit | Accommodation unit (apartment/night) |
| Avg. Price/Revenue per Unit | €120 |
| Customer Acquisition Cost (CAC) | €70 |
| Customer Lifetime Value (LTV) | €1,500 |
| LTV/CAC Ratio | 21.4× (Healthy) |
| Contribution Margin | 60% |
Competitive Analysis
Competitors in this sector include traditional hotels, aparthotels, and short-term rental platforms such as Airbnb and Booking.com. Hotels offer comprehensive services, while aparthotels provide more space and privacy. The proposed project has a sustainable competitive advantage in offering modern furnished apartments with personalized services, focusing on customer experience, comfort, and flexibility, thereby attracting a segment of tourists and travelers seeking an alternative to traditional hotel accommodation.
Market Entry and Pricing Plan
The market entry plan relies on targeting specialized digital platforms for short- and medium-term rentals, in addition to social media marketing and partnerships with travel agencies and corporations. Pricing will be competitive, considering the quality of apartments, location, and services offered, with flexible prices adapting to different seasons and types of accommodation (short/medium term).
Capacity and Operations
The project includes 4-6 furnished apartments, with a staggered occupancy rate starting from 60% in the first year and reaching 80-85% in subsequent years, taking into account tourist seasons.
Daily operations include managing bookings, cleaning and maintaining apartments, providing 24/7 customer service, and offering additional services such as transportation and tour arrangements. The focus will be on achieving high levels of customer satisfaction through quick response to inquiries and providing a smooth and enjoyable stay experience.
Technical aspects include selecting strategic locations in high-tourism cities, purchasing or leasing apartments, and furnishing them with high-quality furniture and decorations. The average cost of furnishing a one-bedroom apartment ranges from €5,000 to €9,000, and a two-bedroom apartment from €8,000 to €15,000. Emphasis will be placed on local suppliers to ensure quality and support the local economy. The geographical location of the apartments will be in easily accessible areas, close to public transport and tourist attractions.
Projected Income Statement (5 Years)
| Item \ Year | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|
| Revenues | €120,000 | €127,200 | €134,832 | €142,922 | €151,497 |
| Cost of Sales | (€30,000) | (€31,800) | (€33,708) | (€35,730) | (€37,874) |
| Gross Profit | €90,000 | €95,400 | €101,124 | €107,191 | €113,623 |
| Operating Expenses | (€42,000) | (€44,520) | (€47,191) | (€50,023) | (€53,024) |
| EBITDA | €48,000 | €50,880 | €53,933 | €57,169 | €60,599 |
| Tax | (€0) | (€0) | (€0) | (€0) | (€0) |
| Net Profit | -€22,000 | -€19,120 | -€16,067 | -€12,831 | -€9,401 |
| Net Margin | -18% | -15% | -12% | -9% | -6% |
Investment Cost Structure
| Item | Cost | Percentage |
|---|---|---|
| Apartment Purchase/Lease & Renovation | €175,000 | 50% |
| Apartment Furnishing & Equipping | €87,500 | 25% |
| Marketing & Launch Expenses | €35,000 | 10% |
| Legal Fees & Licenses | €17,500 | 5% |
| Working Capital | €35,000 | 10% |
Cash Flow and Break-even Point
| Year | Operating Cash Flow | Cumulative Cash Flow |
|---|---|---|
| Year 1 | €48,000 | -€302,000 |
| Year 2 | €50,880 | -€251,120 |
| Year 3 | €53,933 | -€197,187 |
| Year 4 | €57,169 | -€140,018 |
| Year 5 | €60,599 | -€79,420 |
Estimated break-even point at annual revenue ≈ €149,333 (~124% of Year 1 revenue), with a 75% contribution margin. Cumulative cash break-even is beyond the study horizon.
Funding Structure
| Funding Source | Percentage | Amount |
|---|---|---|
| Equity | 60% | €210,000 |
| Debt Financing (5% interest) | 40% | €140,000 |
Sensitivity Analysis (Revenue × Operations)
The effect of combined changes in revenue and costs on Net Present Value:
| Revenue \ Operations | -10% | -5% | Base | +5% | +10% |
|---|---|---|---|---|---|
| -20% | -€135,857 | -€157,272 | -€178,686 | -€200,100 | -€221,514 |
| -10% | -€109,089 | -€133,180 | -€157,272 | -€181,363 | -€205,454 |
| Base | -€83,070 | -€109,089 | -€135,857 | -€162,625 | -€189,393 |
| +10% | -€58,358 | -€85,590 | -€114,443 | -€143,888 | -€173,332 |
| +20% | -€35,045 | -€63,239 | -€93,306 | -€125,150 | -€157,272 |
Scenario Analysis
| Scenario | Probability | NPV | Assessment |
|---|---|---|---|
| Pessimistic | 25% | -€193,676 | Not Feasible |
| Base | 50% | -€135,857 | Not Feasible |
| Optimistic | 25% | -€72,024 | Not Feasible |
Expected Present Value (Weighted): -€134,353.
Risk Analysis and Management
| Risk | Probability | Impact | Mitigation |
|---|---|---|---|
| Intense competition from hotels and rental platforms | Medium | High | Focus on service differentiation, quality, and targeted marketing. |
| Changes in government regulations for short-term rentals | Medium | High | Closely monitor legislation and adapt, also focusing on medium-term stays. |
| Fluctuations in seasonal occupancy rates | High | Medium | Implement flexible pricing strategies and target different customer segments (tourists, business travelers, students). |
| Rising operating and maintenance costs | Medium | Medium | Efficient cost management, implementation of preventive maintenance programs, and negotiation with suppliers for best prices. |
| Impact of overtourism on local resident satisfaction | Medium | Medium | Contribute positively to the local community, support sustainable initiatives, and adhere to environmental and social standards. |
Organizational Structure and Team
The organizational structure consists of a project manager, reception/customer service staff, and a cleaning and maintenance team. External expertise will be sought when needed in marketing and accounting. Required qualifications include experience in the hospitality sector, customer service skills, and proficiency in foreign languages.
Legal and Regulatory Aspects
The project requires obtaining the necessary licenses to operate tourist apartments in Spain, which vary by region. Compliance with local regulations related to short-term rentals, which may include restrictions on the number of nights or specific registration requirements, is essential. Adherence to corporate taxes is also required, which are 15% for newly established companies in their first two profitable years, then 25% thereafter.
Expansion and Sustainability Plan
The expansion plan involves gradually increasing the number of apartments after achieving high occupancy rates and sustainable profits, with the possibility of expanding to other high-demand Spanish cities. Sustainability will be emphasized through adopting eco-friendly practices and supporting local communities.
Environmental, Social, and Governance (ESG) Impact
The project aims to reduce environmental impact by using eco-friendly cleaning products, encouraging recycling, and providing sustainable transportation options for guests. Socially, the focus will be on providing fair employment opportunities for local residents and supporting the local economy. In terms of governance, the project will operate according to the highest standards of transparency and accountability.
Conclusions and Recommendations
The furnished apartments project in Spain demonstrates promising economic viability due to strong growth in the tourism sector. With proper planning and a focus on delivering an exceptional customer experience, the project can achieve rewarding returns and contribute to enhancing high-value tourism in Spain.
Frequently Asked Questions
How much does it cost to start a furnished apartment project in Spain?
The proposed initial capital for a reasonably sized furnished apartment project in Spain is approximately €350,000, which includes the purchase/lease, renovation, and furnishing of the apartments.
How much can a furnished apartment project in Spain earn?
First-year revenues can reach approximately €120,000, with a contribution margin of up to 60% of the unit price, assuming an initial occupancy rate of about 60%.
What licenses are required for a tourist furnished apartment project in Spain?
Tourist apartments require local licenses that vary by region, in addition to complying with short-term rental regulations and paying corporate tax, which starts at 15% for newly established companies.
Is a furnished apartment project profitable in Spain?
Yes, a furnished apartment project in Spain is profitable due to strong growth in the tourism sector and increased demand for flexible accommodations, especially when targeting high-spending tourists.
What are the best Spanish cities for a furnished apartment project?
Cities such as Barcelona, Madrid, Malaga, the Canary Islands, and the Balearic Islands are considered among the best destinations for furnished apartment projects due to high tourist numbers and strong demand for accommodation.
What is the average daily rental price for a furnished apartment in Spain?
The average daily rental price for an accommodation unit (apartment/night) can be around €120, with variations depending on location, quality, and season.
Sources and Disclaimer
- World Tourism Organization (UNWTO)
- National Institute of Statistics of Spain (INE)
- World Travel & Tourism Council (WTTC)
- CBRE and Horwath HTL reports on the Spanish hospitality sector
- PwC Tax Summaries and CostaLuz Lawyers on taxation in Spain
Disclaimer: This is a guiding study that provides financial analysis according to approved industry standards; verify figures locally according to your project's reality before any investment decision.
