Airbnb vs. Long-Term Rental: Profitability in Luxembourg

Published on September 30, 2025 and written by Cyril Jarnias

Short-Term vs Long-Term Rentals in Luxembourg: Which Option is More Profitable?

Against the backdrop of continuously rising real estate prices and evolving rental market trends in Luxembourg, many investors are questioning whether it’s more profitable to opt for short-term rentals through platforms like Airbnb or to favor traditional long-term leasing.

This article provides a detailed profitability analysis by city, highlighting the financial and logistical aspects of both options. Through an in-depth comparison, it explores how factors like tourist demand, local legislation, and market evolution influence these complex choices.

City-by-City Analysis

Luxembourg City, Esch-sur-Alzette, and other strategic locations will be scrutinized to determine where the real opportunities lie in this heart-of-Europe country.

Profitability Comparison: Airbnb vs Long-Term Rental in Luxembourg

Comparative Profitability Analysis: Airbnb vs Long-Term Rental in Luxembourg City

Criterion	Long-Term Rental	Airbnb (Short-Term Rental)
Average Price per m²	€39/m² (apartment, city center)	~€85-120/night for 1 bedroom
Typical Monthly Rent	1 bedroom: €1,500–2,200	€2,550–3,600 (at full occupancy rate)
Typical Occupancy Rate	~100% (stable tenant)	Variable: often between 55% and 80%
Management Fees	Low (~5-8%, agency or self-managed)	High (~15-25%, platform/cleaning fees)
Specific Regulations	Standard rental law, mandatory minimum lease	Restrictions on duration/tourist rental
Applicable Taxation	Standard property income	Commercial income, social contributions

Updated Average Prices

• City center Luxembourg apartment:
  • Average rent: €39/m²
  • For a 50 m² apartment: approximately €1,950/month
  • Houses very rare in long-term rental within the city
• Airbnb:
  • Equivalent studio/apartment: observed average nightly price between €85 and €120
  • Based on high occupancy rate (>80%):
    • 30 nights x €100 = up to €3,000/month
    • Realistic with average occupancy (~65%): €2,000–2,400/month

Factors Influencing Profitability

List of Key Determining Elements:

• Occupancy Rate
  • Long-term guarantees stability and continuous occupancy.
  • Airbnb heavily depends on seasons and local events.
• Additional Costs
  • Low agency or manager fees in traditional rental.
  • On Airbnb: platform fees, cleaning, more frequent maintenance.
• Regulations
  • Long-term rental subject to standard Luxembourg law.
  • Airbnb subject to municipal permits; sometimes quotas on tourist rentals; verification of building regulations compliance.
• Taxation
  • Standard rental income taxed as property income.
  • Airbnb income considered commercial activity with possible social contributions; separate declaration required.

Real Estate Market Trends

List of Trends Observed Early/Mid 2025:

• Moderate rent increase (+1.5% year-over-year), rental supply growth (+13%). Prices remain among the highest in Europe.
• Market marked by chronic shortage in affordable segment; houses are almost absent from private rental stock.

Potential Impact of Seasons and Tenant Preferences

Season/Period	Airbnb Occupancy
Spring/Summer	High tourist demand
Fall/Winter off-season	Low demand

Expatriates generally prefer long-term rentals to ensure professional/family stability while tourists/business travelers favor typical short-term offerings through Airbnb.

Concrete Examples/Simplified Case Study

A landlord rents their 50 m² apartment in Luxembourg City:

• Long-term: receives approximately €1,950/month net with little vacancy.

• Airbnb mode:
– If occupied year-round (optimistic assumption) = €3,000/month gross;
– After deducting various fees (-20%) = €2,400/month;
– If actual annual rate

City	Average Airbnb Income (year)	Average Long-Term Rental Income (year)	Airbnb Occupancy Rate	Long-Term Occupancy Rate	Annual Airbnb Expenses	Annual Long-Term Expenses
Luxembourg City	$31,143	$22,000 – $24,000	70%	95% – 98%	$6,500 – $8,000	$2,000 – $3,000
Esch-sur-Alzette	$24,500	$18,000 – $20,000	68%	95% – 98%	$5,500 – $7,000	$1,800 – $2,500
Differdange	$21,000	$16,000 – $18,000	65%	95% – 98%	$5,000 – $6,500	$1,500 – $2,000
Dudelange	$22,000	$16,500 – $18,500	66%	95% – 98%	$5,200 – $6,800	$1,600 – $2,200

Income and Occupancy Rate Comparison

• Average income generated by Airbnb generally exceeds long-term rental income by 25 to 40% in all major Luxembourg cities, assuming good occupancy rates and active management.
• Airbnb occupancy rate ranges between 65% and 70%, while long-term rental shows very high rates (above 95%), offering better income stability.
• Maintenance, management, and utility costs are significantly higher for Airbnb rentals due to frequent tenant turnover, cleaning, consumables, and management platforms.

Main Expense Categories for Each Rental Mode:

Airbnb:

• Frequent cleaning and laundry
• Supply of consumables (toilet paper, soap, etc.)
• Management or concierge fees (often 15-20% of gross income if outsourced)
• More intensive maintenance due to accelerated wear
• Platform fees (3-15%)

Long-Term Rental:

• Routine maintenance
• Standard rental charges
• Agency fees (if delegated management)
• Less turnover, therefore fewer additional costs

Rental Market Trends and Recent Regulations:

• The Luxembourg market experiences sustained demand for long-term rentals, driven by demographic growth and a dynamic job market, particularly in Luxembourg City.
• The Airbnb market shows strong seasonality, with peak profitability in spring and summer.
• Regulations remain relatively flexible nationally for short-term rentals, but some municipalities, including Luxembourg City, are considering increased regulation to limit competition with traditional residential rentals.

Landlord Testimonials and Case Studies

“Airbnb’s gross profitability is about 35% higher, but management efforts, taxation, and off-peak periods reduce the net gap. Long-term rental offers real peace of mind, especially over several years.”

“Less stress, few vacancies, and much simpler management. Profitability remains decent, even though Airbnb’s potential looked appealing on paper.”

Demographic and Economic Elements Influencing Demand:

• Luxembourg City: Dynamic capital, large expatriate population, high average incomes, high professional mobility.
• Esch-sur-Alzette: University and industrial city, rental demand supported by students and young professionals.
• Differdange and Dudelange: Demographic growth, good accessibility to employment centers, rental market driven by proximity to Luxembourg City.

Key Takeaways

Airbnb rental offers higher income potential but at the cost of more complex management, higher recurring expenses, and greater exposure to vacancy and regulation. Long-term rental, meanwhile, appeals through its stability, low overhead, and structurally strong demand, particularly in Luxembourg’s major cities.

Impact of Rental Contracts on Yield

Financial Yield Comparison: Airbnb vs. Long-Term Rental in Luxembourg

Rental Type	Average Annual Income (Luxembourg)	Average Occupancy Rate	Estimated Gross Profitability
Airbnb Short-Term	$18,409 – $31,143	44–70%	Up to +30% higher than long-term in tourist centers
Long-Term Rental	15–25% lower than Airbnb in sought-after neighborhoods; stable year-round income	~95–100% (standard lease)	Lower but stable gross profitability

Concrete example: A property in Southern Region generates on average $2,595/month via Airbnb, approximately $31K/year, with a 70% occupancy rate. Equivalent long-term rentals typically show lower annual incomes for the same location.

The higher yield on Airbnb is particularly marked in central and tourist areas.

Seasonal Fluctuations and Income Stability

Short-term rentals like Airbnb show strong seasonality: May is often the most profitable month (up to $3,611/month) while off-peak months drop to around $1,778/month.

Luxembourg cities like Luxembourg City or Esch-sur-Alzette experience variable tourist demand:

• Luxembourg City shows high occupancy (>65%) during summer; drops off-season.
• Conversely, long-term rental provides regular monthly income without dependence on tourist or event fluctuations.

Comparative List:

• Airbnb:
  • High monthly variability
  • Peak during events/high season
  • High risk during off-peak periods
• Long-term:
  • Fixed payment each month
  • Budget predictability

Operational Cost Analysis

Detailed List:

• Short-term via Airbnb:
  • Recurrent maintenance/cleaning costs (+15–25% of annual gross income)
  • Platform commission (~3%), possible rental management fees (15–20%)
  • Specific tax on short-term accommodation revenue locally applied (varies by Luxembourg municipality)
  • Accelerated wear of furniture/equipment
  • Complex taxation related to commercial activity
• Long-term rental:
  • Standard charges (property taxes, landlord insurance)
  • Regular but less frequent maintenance than short-term
  • Generally simpler and more predictable taxation

Vacancy Risk

Type	Vacancy Risk (%)	Impact on Yield
Airbnb	High off-season (up to 50% decrease)	Yields halved in low season
Long-term	Low (less than 5% with good location)	Negligible with solid lease