The Financial Times has published an analysis concluding that holiday rentals are winning the battle for Europe's city centres, a verdict that lands as hotel operators, city authorities and short-let platforms fight over the same urban room stock.

The FT's framing matters for operators because it names the direction of travel: in the competition for guests in Europe's most visited cities, serviced apartments and short-term rental supply are gaining ground against traditional hotels. That shift affects pricing power, RevPAR trajectories and real estate allocation across the sector's biggest urban markets.

Why does the short-let sector keep growing?

Regulators across Europe have spent years trying to restrain short-term rentals. Barcelona has moved to phase out tourist apartment licences. Amsterdam, Paris, Lisbon and Berlin have all imposed registration rules, night caps or primary-residence restrictions on hosts. Yet, as the FT analysis sets out, holiday rentals continue to expand their footprint in city centres.

Demand is one driver. Travellers, particularly families and longer-stay guests, increasingly choose apartments over hotel rooms on price and space. Supply follows demand: property owners can earn more from nightly lets than from residential tenancies in many prime districts, and platforms have made the operational barrier to entry close to zero.

What does this mean for hotels and investors?

For hotel chains and independent operators, the analysis reinforces a competitive reality rather than a new one. Short-lets put a ceiling on city-centre room rates in softer demand periods, and they capture segments — groups, extended stays, budget-conscious leisure travellers — that hotels once counted as core business.

For investors, the trend cuts both ways. Assets converted to short-let use support alternative accommodation operators and serviced apartment brands, while hotel owners in gateway cities face fragmentation on the supply side that limits pricing discipline. Real estate owners increasingly weigh nightly-let income against residential and hotel leases when they underwrite city-centre properties.

Can regulation change the outcome?

The FT's conclusion implies that the regulatory wave has slowed rather than stopped the shift. Registration regimes give cities data on host activity, and night caps bite at the margin, but enforcement capacity varies widely between municipalities. Fragmented national rules across the EU mean a platform or host facing restrictions in one capital can shift activity to another.

City authorities now face a balancing act between housing policy pressures and tourism economics. Operators and investors should expect the regulatory file to stay active, with further city-level restrictions, licence reviews and EU-level data-sharing requirements on short-term rentals all in prospect over the coming legislative cycles.

What happens next: watch for new licence decisions and enforcement steps in the cities named above, continued platform consolidation in alternative accommodation, and hotel groups pushing harder into apartment-style formats to defend urban market share.