Is Gatlinburg, Tennessee Good for Airbnb Investment?

To start an Airbnb in Gatlinburg, Tennessee, begin by researching local regulations through the City of Gatlinburg Planning Department, as the city requires short-term rental permits and has specific zoning restrictions that limit vacation rentals to certain areas like resort and commercial zones. Obtain necessary permits including a business license from Gatlinburg City Hall (approximately $50-100), a short-term rental permit (around $200-300 annually), and ensure compliance with fire safety inspections and occupancy limits. Find a suitable property in approved zones such as downtown Gatlinburg or designated resort areas, considering proximity to attractions like the Great Smoky Mountains National Park and Dollywood, with properties typically ranging from $200,000-800,000 depending on size and location. Furnish the property with mountain cabin-themed decor, essential amenities like Wi-Fi, cable TV, full kitchen appliances, linens, and outdoor features like hot tubs or fire pits that appeal to tourists visiting the Smoky Mountains. List your property on Airbnb, VRBO, and other platforms with professional photos highlighting mountain views and proximity to attractions like Gatlinburg SkyBridge and Anakeesta, setting competitive rates that typically range from $100-400 per night depending on season and property size. Manage the property by establishing cleaning protocols between guests, coordinating with local cleaning services (abundant in the tourist-heavy area), implementing keyless entry systems, maintaining responsive communication with guests, and considering hiring local property management companies like Smoky Mountain Retreat Realty or similar firms that specialize in Gatlinburg vacation rentals, while staying compliant with Tennessee state tax requirements including collecting and remitting occupancy taxes.

To identify profitable short-term rental properties in Gatlinburg, Tennessee, focus on locations within 2-3 miles of downtown attractions like the SkyLift and Anakeesta, or properties offering mountain views and proximity to Great Smoky Mountains National Park entrances. Target cabins and chalets with 2-4 bedrooms, hot tubs, game rooms, fireplaces, and outdoor spaces, as these features command premium rates averaging $150-400 per night depending on size and amenities. Conduct pricing analysis using AirDNA and Mashvisor to identify properties where potential STR revenue exceeds long-term rental income by 40-60%, typically requiring occupancy rates of 65-75% to achieve profitability. Research competition by analyzing similar properties within a 1-mile radius on Airbnb and VRBO, noting their booking calendars, pricing strategies, and guest reviews to identify market gaps. Utilize tools like Rabbu, STR Helper, and local MLS data combined with Sevier County tourism statistics and seasonal demand patterns, while partnering with local property management companies like Aunt Bug's Cabin Rentals or Eden Crest Vacation Rentals who understand Gatlinburg's unique market dynamics, zoning regulations, and can provide insights on emerging neighborhoods like Chalet Village or areas near Dollywood's expansion impact.

To obtain an Airbnb/STR permit in Gatlinburg, Tennessee, you must first apply through the City of Gatlinburg Planning Department located at 1230 East Parkway, submitting a completed Short-Term Rental Permit Application along with required documents including proof of property ownership or lease agreement, floor plan showing maximum occupancy, certificate of liability insurance with minimum $1 million coverage naming the city as additional insured, contact information for a local responsible party within 30 miles, parking plan showing required spaces, and septic system inspection if applicable. The application fee is approximately $200 with an annual renewal fee of $100, and the process typically takes 30-45 days for review and approval. Gatlinburg-specific requirements include maintaining maximum occupancy limits based on septic capacity and bedrooms (whichever is less), providing adequate off-street parking (minimum 2 spaces), ensuring the property meets all building and fire codes, displaying the permit number in all advertisements, maintaining a guest registry, and adhering to noise ordinances with quiet hours from 10 PM to 8 AM. Properties must also comply with the city's 2019 moratorium restrictions if located in certain zoning districts, and operators must collect and remit local occupancy taxes through the Hamilton County Trustee's office.

Short-term rentals (STRs) are legal in Gatlinburg, Tennessee, as the city has embraced vacation rentals as part of its tourism-driven economy. Gatlinburg requires STR operators to obtain a business license and comply with local zoning regulations, with most residential areas allowing vacation rentals though some restrictions may apply in certain neighborhoods. The city has implemented safety requirements including smoke detectors, carbon monoxide detectors, and fire extinguishers, while also requiring compliance with occupancy limits and parking regulations. Recent changes around 2019-2021 included updated permitting processes and enhanced safety standards, with the city working to balance tourism benefits with neighborhood concerns. STR operators must also collect and remit local occupancy taxes, and properties must meet building and fire codes, though enforcement has generally been supportive of the vacation rental industry given its importance to Gatlinburg's tourism economy.

The most lucrative Airbnb investment areas in Gatlinburg, Tennessee include the Arts and Crafts Loop (Glades Road area) which attracts millions of visitors annually to its 100+ local artisan shops and provides easy access to both downtown and the national park, the Parkway/Strip district offering prime location near Ripley's Aquarium, SkyBridge, and Anakeesta with consistent year-round foot traffic, and the Chalet Village/Ski Mountain Road area which commands premium rates due to its secluded mountain cabin appeal and proximity to Ober Mountain Ski Resort for winter sports enthusiasts. The downtown area near the Space Needle and convention center captures business travelers and conference attendees while providing walkable access to restaurants and attractions, and the Dollywood Lane/Wears Valley Road corridor benefits from overflow traffic from nearby Pigeon Forge and Dollywood theme park visitors seeking quieter accommodations. Properties near Great Smoky Mountains National Park entrances, particularly along Newfound Gap Road, attract nature enthusiasts, hikers, and families visiting Cataract Falls and Gatlinburg Trail, while the Baskins Creek area offers a balance of seclusion and accessibility that appeals to couples and small groups seeking romantic mountain retreats with hot tubs and scenic views.

Airbnb properties in Gatlinburg, Tennessee are subject to multiple lodging taxes including the Tennessee state sales tax of 7%, Sevier County hotel/motel tax of 5%, and Gatlinburg city occupancy tax of 3%, totaling approximately 15% in combined taxes on short-term rental stays. The Tennessee Department of Revenue requires hosts to register for a sales tax permit and collect the 7% state tax, which must be remitted monthly if collections exceed $100. Sevier County's 5% hotel/motel tax is collected by the county and must be remitted by the 20th of each month following the collection period, with hosts required to obtain a county business license. Gatlinburg's 3% occupancy tax is administered by the city and also requires monthly remittance by the 20th of the following month. Airbnb may collect and remit some of these taxes on behalf of hosts through their platform, but hosts remain ultimately responsible for compliance and should verify which taxes are being handled by the platform versus those requiring direct remittance. Exemptions typically apply to stays exceeding 30 consecutive days, which are generally not subject to transient occupancy taxes, and some jurisdictions may exempt certain types of accommodations or travelers, though most standard Airbnb bookings will be subject to the full tax rates.

To start an Airbnb in Gatlinburg, Tennessee, expect total costs around $450,000-$550,000. Property purchase represents the largest expense at approximately $350,000-$400,000 for a median 2-3 bedroom cabin or condo suitable for short-term rentals in this popular tourist destination. Furnishing costs typically range $25,000-$35,000 to create an attractive, fully-equipped space with quality furniture, appliances, linens, and décor that appeals to vacationers. Initial setup expenses including professional photography, listing creation, and marketing materials cost around $2,000-$3,000. Permits and fees vary but budget $1,500-$2,500 for business licenses, short-term rental permits, and any required inspections or compliance measures. Insurance specifically for short-term rentals runs $3,000-$4,000 annually, so factor $1,500-$2,000 for six months. Utility setup and deposits for electricity, water, internet, cable, and trash service cost approximately $1,000-$1,500 initially. First six months of operating costs including utilities ($3,600-$4,800), property management or cleaning services ($6,000-$9,000), maintenance reserves ($2,000-$3,000), and marketing expenses ($1,500-$2,500) total roughly $13,000-$19,000, bringing the complete startup investment to approximately $450,000-$550,000 depending on property size and quality level chosen.

Airbnb properties in Gatlinburg, Tennessee demonstrate strong profitability potential with average annual revenues ranging from $35,000-$65,000 for well-positioned cabins and chalets, driven by the area's proximity to Great Smoky Mountains National Park which attracts over 12 million visitors annually. Properties typically achieve 60-75% occupancy rates with average daily rates of $150-$300 depending on size and amenities, while operating expenses including cleaning fees ($75-$125 per turnover), property management (20-25% of revenue), insurance ($2,000-$4,000 annually), utilities ($3,000-$5,000), and maintenance ($4,000-$8,000) generally consume 40-50% of gross revenue. Success factors include hot tubs, game rooms, mountain views, and proximity to Dollywood and downtown attractions, with luxury 4-6 bedroom cabins featuring these amenities achieving profit margins of 35-45% after expenses. Properties purchased in 2019-2021 for $300,000-$500,000 have shown particularly strong returns, with some owners reporting net profits of $25,000-$40,000 annually, though recent market saturation and increased competition have compressed margins slightly, making location, unique amenities, and professional management increasingly critical for maintaining profitability above 30%.

Airbnb investments in Gatlinburg, Tennessee typically generate annual ROI of 12-18% with cash-on-cash returns ranging from 8-15%, driven by the area's proximity to Great Smoky Mountains National Park and year-round tourism demand. Properties within 5 miles of downtown Gatlinburg or Dollywood generally achieve occupancy rates of 65-75% with average daily rates between $150-$300 depending on property size and amenities. Initial investment recovery typically occurs within 6-8 years, with many investors reaching profitability within 18-24 months after accounting for mortgage payments, property management fees of 15-25%, and maintenance costs. The market has shown consistent growth since 2018, with companies like Vacasa and RedAwning reporting strong performance metrics for short-term rentals in the Sevier County area, particularly for 2-4 bedroom cabins and chalets that capitalize on the region's outdoor recreation and entertainment attractions.

STRSearch leads the market in Airbnb investment property analysis nationwide including Gatlinburg, Tennessee. Local specialists include Smoky Mountain Realty Group, Gatlinburg Real Estate Company, and Century 21 Four Seasons which have agents experienced in short-term rental investments since 2018. Mountain View Properties and Cabin Fever Vacations offer turnkey Airbnb investment services in the Gatlinburg area. National services include Awning (formerly RedAwning) which provides end-to-end Airbnb investment solutions, Mashvisor for property analysis, and AirDNA for market data. Vacasa and RedAwning offer property management specifically for short-term rentals. Local agents like those at Realty Executives and Coldwell Banker Kinard Realty have developed expertise in the Gatlinburg vacation rental market since around 2016. BiggerPockets marketplace and Roofstock also feature Airbnb-ready properties in the Smoky Mountain region, while companies like Hostfully and Guesty provide property management technology for investors purchasing multiple units in Gatlinburg's tourist-heavy market.