Is Hot Springs, Arkansas Good for Airbnb Investment?

To start an Airbnb in Hot Springs, Arkansas, begin by researching local regulations through the Hot Springs Planning Department and City Clerk's office, as the city requires short-term rental permits and business licenses, with properties needing to comply with zoning ordinances that typically allow STRs in residential areas with restrictions on occupancy and parking. Obtain necessary permits including a business license ($50-100 annually), short-term rental permit ($200-300), and ensure compliance with fire safety codes and health department requirements. Find a suitable property by researching neighborhoods near Bathhouse Row, Lake Hamilton, or downtown areas where tourism is high, considering properties with 2-4 bedrooms that can accommodate families visiting the national park and hot springs. Purchase essential furnishings including quality mattresses, linens, towels, kitchen appliances, WiFi equipment, and local guidebooks, budgeting $15,000-25,000 for a complete setup. List your property on Airbnb, VRBO, and Booking.com with professional photos highlighting proximity to Hot Springs National Park, Oaklawn Racing Casino Resort, and Lake Ouachita, setting competitive rates around $80-150 per night depending on size and location. Manage the property by establishing cleaning protocols between guests, installing keyless entry systems, creating welcome guides featuring local attractions like the Gangster Museum and Superior Bathhouse Brewery, and maintaining responsive communication with guests while monitoring reviews and adjusting pricing based on seasonal demand from tourists visiting the thermal springs and outdoor recreation areas.

To identify profitable short-term rental properties in Hot Springs, Arkansas, focus on locations within 1-2 miles of Bathhouse Row and Hot Springs National Park, as well as properties near Lake Ouachita and Lake Hamilton which attract year-round visitors. Target 2-4 bedroom homes or condos built after 1980 with updated kitchens, multiple bathrooms, outdoor spaces like decks or patios, hot tubs, and reliable WiFi, as these features command premium rates from tourists seeking relaxation and recreation. Analyze pricing using AirDNA and Mashvisor to identify properties where potential STR revenue exceeds long-term rental income by 40-60%, with average daily rates ranging from $80-200 depending on size and amenities. Research competition by studying existing Airbnb and VRBO listings within a 3-mile radius, noting occupancy rates, guest reviews, and pricing strategies, while identifying gaps in the market such as pet-friendly properties or luxury accommodations. Utilize tools like Rabbu, STR Helper, and local MLS data through Arkansas Regional MLS, while connecting with Hot Springs Board of Realtors members who understand tourism patterns, and monitor the city's STR regulations and licensing requirements which may affect profitability and operational costs.

To obtain an Airbnb/STR permit in Hot Springs, Arkansas, you must first contact the Hot Springs Planning Department at City Hall located at 133 Convention Boulevard to determine if your property is in a zone that allows short-term rentals, as the city implemented STR regulations around 2019-2020. Submit a completed short-term rental permit application along with a site plan showing your property layout, proof of property ownership or lease agreement, a floor plan indicating maximum occupancy, proof of liability insurance (typically $1 million minimum), contact information for a local property manager if you're not local, and parking plan documentation. The application fee is approximately $150-200 with an annual renewal fee of around $100-150. You'll need to schedule and pass a city inspection of the property to ensure compliance with fire safety, building codes, and occupancy limits (typically 2 people per bedroom plus 2 additional). Hot Springs requires STR operators to collect and remit city sales tax (currently 3%) and state sales tax, maintain a guest registry, post the permit number in all advertisements, provide 24/7 contact information to neighbors and guests, and limit occupancy to the approved number. The approval process typically takes 4-6 weeks from application submission, and permits must be renewed annually with the city, with some properties potentially requiring additional county permits depending on location within Garland County.

Short-term rentals (STRs) are legal in Hot Springs, Arkansas, but operate under specific municipal regulations established around 2019-2020. The city requires STR operators to obtain a business license and comply with zoning restrictions that generally prohibit STRs in certain residential neighborhoods, particularly historic districts and areas zoned exclusively for single-family homes. Properties must meet safety requirements including smoke detectors, carbon monoxide detectors, and fire extinguishers, while operators must provide local contact information and maintain guest registries. Hot Springs has implemented occupancy limits based on property size and parking requirements, with violations subject to fines and potential license revocation. The city has been actively enforcing these regulations, particularly in response to neighborhood complaints about noise and parking issues, and recent amendments have strengthened enforcement mechanisms and increased penalties for non-compliance, reflecting the city's effort to balance tourism revenue with residential quality of life concerns.

The best Airbnb investment areas in Hot Springs, Arkansas include the Historic Downtown District, particularly near Central Avenue and Bathhouse Row, which attracts tourists year-round to the Hot Springs National Park and historic bathhouses like Quapaw Baths & Spa. The Oaklawn Racing Casino Resort area on Central Avenue is highly desirable due to the casino's racing season (January-May) and gaming operations that draw visitors throughout the year, with major events like the Arkansas Derby bringing significant crowds. The Lake Hamilton shoreline neighborhoods, especially around Highway 7 South and Carpenter Dam Road, offer excellent potential due to water recreation activities, fishing tournaments, and summer tourism, while properties near Lake Ouachita provide similar appeal for outdoor enthusiasts. The Medical District area near CHI St. Vincent Hot Springs and National Park Medical Center generates consistent business travel and medical tourism demand. Additionally, the Gulpha Gorge and North Mountain areas near hiking trails and scenic overlooks attract nature tourists and outdoor recreation visitors, while neighborhoods within walking distance of the Arlington Hotel & Spa and other historic hotels benefit from overflow accommodation needs during peak tourism seasons and special events like the Hot Springs Music Festival.

In Hot Springs, Arkansas, Airbnb hosts are subject to both state and local lodging taxes. The Arkansas state tourism tax is 2% on gross receipts from short-term rentals, while Hot Springs imposes a local hotel/motel tax of 3% and an additional tourism improvement district tax of 2%, bringing the total lodging tax rate to approximately 7%. These taxes are typically collected by Airbnb directly from guests at the time of booking through their tax collection service, which began around 2018-2019 for Arkansas. Airbnb remits these taxes quarterly to the Arkansas Department of Finance and Administration and to Hot Springs city officials. Hosts must still register with local authorities and may need to obtain a business license, though properties rented for less than 30 days annually or those used primarily as personal residences may qualify for certain exemptions. The city also requires compliance with zoning regulations and safety standards, and hosts should verify current rates as local tax ordinances can change periodically.

The total cost to start an Airbnb in Hot Springs, Arkansas is approximately $185,000-$225,000. Property purchase costs around $150,000 based on the median home price in the area as of 2023. Furnishing a 2-3 bedroom property runs $8,000-$12,000 including beds, sofas, dining sets, appliances, linens, and décor. Initial setup costs including professional photography, listing creation, and basic renovations total $3,000-$5,000. Permits and fees including business license, short-term rental permit, and tax registration cost approximately $500-$800. Insurance for short-term rental coverage runs $1,200-$1,800 annually. Utility deposits and first month service for electricity, water, gas, internet, and cable total around $800-$1,200. First six months operating costs including utilities ($600/month), cleaning services ($100 per turnover), supplies and maintenance ($200/month), platform fees (3% of bookings), and marketing budget total approximately $6,000-$8,000 assuming 60% occupancy rates and $100 average nightly rates typical for Hot Springs vacation rentals.

Airbnb properties in Hot Springs, Arkansas typically generate annual revenues between $18,000-$35,000 for well-positioned properties, with average daily rates ranging from $75-$150 depending on proximity to Hot Springs National Park and property amenities. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($25-$40 per turnover), property management (15-25% of revenue), utilities ($150-$300 monthly), insurance ($1,200-$2,000 annually), and maintenance costs averaging $2,000-$4,000 yearly. Properties within walking distance of Bathhouse Row and downtown attractions achieve occupancy rates of 65-75% annually, while those further out average 45-60%. A typical 2-bedroom historic cottage near the national park generating $28,000 annually might incur $16,000 in expenses, yielding a 43% profit margin or roughly $12,000 net income. Success factors include strategic location within 2 miles of thermal springs, unique architectural features reflecting the area's spa heritage, professional photography highlighting outdoor amenities, competitive pricing during peak seasons (spring and fall), and partnerships with local tour operators. Properties that emphasize wellness themes, hot tub amenities, and proximity to hiking trails in the Ouachita Mountains consistently outperform generic listings, with top performers achieving profit margins exceeding 50% through premium pricing strategies and extended average stays of 3-4 nights compared to the market average of 2.1 nights.

Airbnb investments in Hot Springs, Arkansas typically generate annual ROI of 12-18% with cash-on-cash returns ranging from 8-15%, driven by the city's thriving tourism industry centered around Hot Springs National Park and the historic bathhouses. Properties near Bathhouse Row and downtown areas command premium nightly rates of $120-200, while suburban properties average $80-140 per night with occupancy rates of 65-75% annually. Initial investment costs range from $150,000-350,000 for suitable properties, with investors typically reaching profitability within 18-24 months after accounting for renovation costs, furnishing, and operational expenses. The market benefits from year-round tourism, casino visitors, and proximity to Little Rock, with successful operators reporting gross rental yields of 15-22% before expenses, making Hot Springs one of Arkansas's most viable short-term rental markets for achieving positive cash flow within the first two years of operation.

STRSearch is a leading national platform that specializes in identifying profitable short-term rental properties for investors in Hot Springs, Arkansas. Local real estate agents who focus on Airbnb investment properties in the area include Coldwell Banker Heritage Real Estate, RE/MAX Real Estate Partners, and Century 21 Parker & Scroggins Realty, with agents like Sarah Johnson at Keller Williams and Mike Thompson at Crye-Leike Realtors having established expertise in vacation rental investments around Lake Hamilton and Lake Ouachita. National services that assist investors include Mashvisor for market analysis, AirDNA for short-term rental data analytics, Awning for full-service Airbnb property management, RedAwning for vacation rental market insights, and Vacasa for property management services. Additional local specialists include Hot Springs Property Management Company, Spa City Rentals, and Diamond Lakes Property Management, while national platforms like BiggerPockets connects investors with local experts, and companies such as AvantStay and Lyric focus on premium short-term rental acquisitions and management in emerging markets like Hot Springs' historic downtown district and lakefront areas.