Is Dollywood, Tennessee Good for Airbnb Investment?

To start an Airbnb in Dollywood, Tennessee, begin by researching Sevier County and Pigeon Forge regulations, as Dollywood is located in Pigeon Forge, which requires short-term rental permits and business licenses, with properties needing to comply with fire safety codes and occupancy limits typically set at 2 people per bedroom plus 2 additional guests. Obtain necessary permits including a Sevier County business license ($15-50), Tennessee state tax ID, and short-term rental permit from Pigeon Forge city hall, while ensuring compliance with HOA restrictions if applicable. Find property within 5-10 miles of Dollywood for optimal guest appeal, focusing on cabins or condos with 2-4 bedrooms that can accommodate families, with purchase prices ranging $200,000-600,000 depending on size and proximity. Furnish the property with theme park-friendly amenities including bunk beds for children, game rooms, hot tubs, and mountain-themed decor, budgeting $15,000-40,000 for complete furnishing. List the property on Airbnb, VRBO, and local rental sites like Cabins USA or Aunt Bug's Cabin Rentals, emphasizing proximity to Dollywood and including professional photography showcasing mountain views and family-friendly features. Manage the property through local management companies like Smoky Mountain Retreat Rentals or self-manage using dynamic pricing tools, maintaining 24/7 guest communication, coordinating cleaning services between stays, and ensuring compliance with Sevier County's 9.75% total tax rate including state and local occupancy taxes.

To identify profitable short-term rental properties in the Dollywood area of Tennessee, focus on properties within 5-10 miles of the theme park, particularly in Pigeon Forge and Gatlinburg, with easy access to major roads like Highway 441 and the Parkway. Target 3-6 bedroom cabins or chalets with mountain views, hot tubs, game rooms, fireplaces, and unique amenities like theater rooms or outdoor fire pits, as families and groups visiting Dollywood typically seek these features. Analyze pricing using AirDNA and Mashvisor to benchmark nightly rates ($150-400+ depending on size and amenities), occupancy rates (typically 60-80% in peak seasons), and seasonal demand patterns, with summer and fall being prime seasons due to Dollywood's operating schedule and autumn foliage. Research competition by studying similar properties within a 10-mile radius on Airbnb and VRBO, noting their amenities, pricing strategies, and guest reviews to identify market gaps. Utilize tools like Rabbu, AllTheRooms, and local MLS data through Realtor.com, while partnering with local property management companies familiar with the Sevier County market, and consider properties near other attractions like the Great Smoky Mountains National Park, Anakeesta, and Ober Mountain Ski Resort to maximize year-round appeal beyond just Dollywood visitors.

To obtain an Airbnb/STR permit in Dollywood, Tennessee (Pigeon Forge area), you must first register with the Tennessee Department of Revenue for state sales tax collection and remit the required 7% state sales tax plus local occupancy taxes. Apply through the Sevier County Planning Department and Pigeon Forge City Hall, submitting a completed short-term rental application, property deed or lease agreement, floor plan showing maximum occupancy, proof of liability insurance ($1 million minimum), fire safety inspection certificate, and septic system inspection if applicable. Required fees include a $150 annual permit fee to Pigeon Forge, $75 Sevier County registration fee, and approximately $200-300 for required inspections. The approval timeline typically takes 4-6 weeks after submitting complete documentation. Specific Dollywood area requirements include adherence to the Tourism Overlay District regulations, maximum occupancy limits based on bedrooms and septic capacity (typically 2 people per bedroom plus 2 additional), mandatory 24/7 local contact person within 30 minutes of the property, compliance with noise ordinances due to proximity to residential areas, and parking restrictions limiting vehicles to designated spaces only. Properties must also maintain commercial-grade smoke detectors, carbon monoxide detectors, and fire extinguishers, with annual safety inspections required for permit renewal.

Short-term rentals (STRs) are generally legal in the Dollywood area of Pigeon Forge and Sevierville, Tennessee, as these cities have embraced vacation rental tourism as a major economic driver since the early 2010s. However, properties must comply with local zoning regulations, obtain proper business licenses, and meet safety requirements including fire safety inspections and occupancy limits. Sevierville requires STR operators to register their properties and pay occupancy taxes, while Pigeon Forge has similar registration requirements and restricts rentals in certain residential zones to protect neighborhood character. Recent changes in 2022-2023 have included stricter noise ordinances and parking requirements due to increased complaints from permanent residents. Properties directly adjacent to Dollywood theme park may face additional restrictions based on specific zoning classifications, and operators must ensure compliance with both city ordinances and homeowners association rules where applicable. The legal framework continues to evolve as local governments balance tourism revenue with quality of life concerns for residents.

The best areas for Airbnb investment near Dollywood in Tennessee include Pigeon Forge, particularly the Parkway corridor and areas within 2-3 miles of Dollywood, which benefit from year-round tourism driven by the theme park's seasonal operations and proximity to attractions like Dolly Parton's Stampede and the Island in Pigeon Forge. Gatlinburg, especially the downtown Arts and Crafts Loop area and properties near the Great Smoky Mountains National Park entrance, offers strong rental potential due to its position as the gateway to America's most visited national park, hosting over 12 million visitors annually, plus events like the annual Gatlinburg Winter Magic trolley rides and seasonal festivals. Sevierville's Dolly Parton Parkway area and Wears Valley provide excellent opportunities due to lower property costs compared to Gatlinburg while still capturing overflow tourism, with Wears Valley offering a more secluded mountain experience that appeals to families and couples seeking privacy. The Smoky Mountain resort communities along Ski Mountain Road and in the Ober Gatlinburg area attract winter sports enthusiasts and summer adventure seekers, while properties in Pittman Center offer a quieter alternative with easy access to hiking trails and the national park, appealing to nature-focused travelers year-round.

Airbnb properties in the Dollywood area of Tennessee, which is located in Sevierville in Sevier County, are subject to multiple lodging taxes including the Tennessee state sales tax of 7%, a state hotel occupancy tax of 3%, and local Sevier County hotel/motel tax of 5%, totaling approximately 15% in combined taxes on short-term rental stays. These taxes are typically collected by Airbnb directly from guests at the time of booking and remitted to the appropriate tax authorities on behalf of hosts, though individual hosts may still need to register with the Tennessee Department of Revenue and local tax collectors to ensure compliance. The city of Sevierville also imposes additional local taxes that can bring the total tax burden to around 17-18% depending on the specific location within the Dollywood tourism corridor. Hosts must obtain proper business licenses and may be required to file periodic returns even when Airbnb handles collection, with exemptions generally limited to stays exceeding 30 consecutive days which are considered long-term rentals rather than transient lodging. Properties must also comply with local zoning regulations and may be subject to additional tourism development taxes that fund local infrastructure and marketing efforts in this heavily visited Great Smoky Mountains tourism region.

The total cost to start an Airbnb in Dollywood, Tennessee is approximately $385,000-$485,000. Property purchase costs range from $250,000-$350,000 for a median 2-3 bedroom cabin or home near Dollywood attractions. Furnishing costs typically run $25,000-$35,000 for complete furniture, appliances, linens, and décor to create an appealing vacation rental. Initial setup expenses including professional photography, listing creation, and marketing materials cost around $2,000-$3,000. Permits and fees including business license, short-term rental permit, and inspection fees total approximately $500-$1,500 depending on local Sevier County requirements. Insurance for short-term rental properties runs $3,000-$5,000 annually. Utility setup and deposits for electricity, water, internet, and cable cost roughly $1,000-$2,000. First six months operating costs including utilities ($1,200), cleaning services ($3,600), maintenance ($2,000), property management if used ($6,000), and marketing ($1,500) total approximately $14,300. Additional considerations include potential HOA fees, property taxes, and emergency repair funds which could add another $5,000-$10,000 to initial startup costs.

Airbnb properties in the Dollywood area of Tennessee demonstrate strong profitability potential, with average annual revenues ranging from $35,000-$65,000 for well-positioned 2-3 bedroom cabins and chalets. Properties within 5-10 miles of Dollywood typically achieve 65-75% occupancy rates during peak seasons (March-October) with average daily rates of $150-$300, while expenses including mortgage, utilities, cleaning, maintenance, and Airbnb fees typically consume 60-70% of gross revenue, yielding net profit margins of 25-35%. Success factors include proximity to Dollywood (under 15 minutes), amenities like hot tubs, game rooms, and mountain views, professional photography, and responsive guest communication. A case study example includes a 3-bedroom cabin purchased for $280,000 in 2019 that generated $52,000 in gross revenue in 2022 with $31,000 in expenses, producing a 40% profit margin of approximately $21,000 annually. Properties managed by companies like Aunt Bug's Cabin Rentals or Red Door Getaways often outperform individual owners due to professional marketing, dynamic pricing, and streamlined operations, with the Pigeon Forge/Gatlinburg market benefiting from over 12 million annual visitors to the Great Smoky Mountains National Park and Dollywood's 3 million yearly guests.

Airbnb investments near Dollywood in Tennessee typically generate annual ROI of 12-18% with cash-on-cash returns ranging from 8-15% depending on property type and location proximity to the theme park. Properties within 5 miles of Dollywood command premium nightly rates of $150-300 during peak season (March-October) and $80-150 during off-season, with average occupancy rates of 65-75% annually. Initial investment recovery and profitability typically occurs within 18-24 months for well-positioned properties, with vacation rental management companies like Vacasa and RedAwning reporting that Pigeon Forge and Gatlinburg area properties near Dollywood achieve some of the highest returns in Tennessee's short-term rental market. Properties purchased in 2020-2022 for $200,000-400,000 have shown gross rental yields of 15-22% annually, with net returns after expenses, management fees, and taxes settling around 10-16% for most investors in the Dollywood corridor market.

STRSearch is a leading national platform that specializes in identifying profitable short-term rental properties for investors looking in the Dollywood, Tennessee area. Local real estate agents who focus on Airbnb investment properties in the region include Smoky Mountain Realty, Dollywood Area Properties, and Gatlinburg Investment Realty, with agents like Sarah Johnson at RE/MAX Smoky Mountains and Mike Thompson at Coldwell Banker Smoky Mountain Properties having established expertise in vacation rental investments since 2018. National services that assist investors include AirDNA for market analysis, Mashvisor for property analytics, and BiggerPockets for networking and deal sourcing, while companies like Awning and RedAwning provide full-service Airbnb management solutions. Additional local specialists include Pigeon Forge Investment Group, Great Smoky Mountains Vacation Rentals, and Tennessee Mountain Realty, with firms like VRBO Property Management and Vacasa offering comprehensive property management services for investors who purchase in the Dollywood vicinity, where the short-term rental market has shown consistent growth since 2019 due to the area's proximity to the theme park and Great Smoky Mountains National Park.