People enjoy the sunny weather in Mallorca. | Majorca Daily Bulletin reporter

A new law to curb rents in high-demand areas won't stop owners renting property to tourists, a loophole that could fuel an uncontrolled boom in short-term accommodation, Spain's main tourism lobby said today.

The bill, introduced by the government on Tuesday, caps annual rent hikes at 3% in certain areas to help those who cannot afford soaring prices in tourist hotspots such as the Balearic and Canary archipelagos or Mediterranean cities like Malaga.

But the draft law does not directly address short-term leases, which could encourage owners to rent out their properties to tourists rather that long-term tenants, industry group Exceltur said.

"The reform omitted the issue of houses for tourists and this could further aggravate the problem," the lobby's vice-president, Jose Luis Zoreda, told a press conference in Madrid.

Exceltur, whose members include large hotel groups such as Melia, has called on the government and the European Union to ensure that online platforms check the short-term accommodation offered complies with local permits.

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The number of houses rented to tourists in Spain rose 20% in the first quarter compared to the same period in 2022, according to data compiled by Exceltur, which described it as an "uncontrolled" increase.

In contrast, hotel bookings were up 2% year-on-year.

In the first two months of 2023, demand for short-term tourist rentals grew by 42.6% compared to 2019 - before the COVID-19 pandemic disrupted global travel - while hotel bookings rose only 3%, according to official data.

Spain's tourism sector has bounced back after the pandemic, with sales in the first quarter of this year 10.4% higher than in 2019, Exceltur said.

Exceltur now sees tourism activity rising by 9.4% compared to 2019, up from the 7% increase it forecast at the beginning of the year.