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 ($25-50 annually), short-term rental permit ($100-200), 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 $5,000-15,000 for a complete setup depending on property size. List your property on Airbnb, VRBO, and Booking.com with professional photos highlighting proximity to Hot Springs National Park, Oaklawn Racing Casino Resort, and local attractions, setting competitive rates based on seasonal demand (peak during racing season January-May and summer months). Manage the property by establishing cleaning protocols between guests, responding promptly to inquiries, coordinating key exchanges through lockboxes or smart locks, maintaining relationships with local cleaning services and handymen, and ensuring compliance with Hot Springs' noise ordinances and occupancy limits while providing guests with information about local hot springs, hiking trails, and downtown attractions.

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 1990 with amenities like hot tubs, lake views, or historic charm, ensuring properties have dedicated parking and outdoor spaces since tourists often seek relaxation-focused accommodations. Analyze pricing using AirDNA and Mashvisor to benchmark against similar properties, aiming for nightly rates between $80-200 depending on size and location, with occupancy rates typically ranging 60-75% annually due to Hot Springs' consistent tourism from thermal springs and outdoor recreation. Research competition by studying listings within a 3-mile radius on Airbnb and VRBO, noting that properties near Oaklawn Racing Casino Resort and downtown entertainment districts command premium rates, while lakefront properties maintain strong summer demand. Utilize local resources including the Hot Springs Convention & Visitors Bureau data, Garland County property records, and connect with local property management companies like Vacasa or RedAwning who understand seasonal patterns, as the market benefits from both leisure travelers seeking spa experiences and business travelers visiting the area's growing healthcare and technology sectors.

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 regulations around 2019-2020. Submit an application that includes a completed STR permit form, proof of property ownership or lease agreement, a site plan showing parking arrangements, proof of liability insurance (typically $1 million minimum), contact information for a local property manager if you're not local, and a floor plan indicating maximum occupancy. The application fee is approximately $100-200 with an annual renewal fee of around $50-100. You'll need to schedule an inspection with the city's code enforcement office to ensure compliance with fire safety, occupancy limits, and parking requirements. Hot Springs requires STR properties to have adequate off-street parking (usually 1-2 spaces), maintain quiet hours typically from 10 PM to 8 AM, post maximum occupancy limits visibly, and provide 24/7 contact information for guests. The approval process typically takes 30-45 days from submission to permit issuance, and you must also register with the Arkansas Department of Finance and Administration for state tax collection purposes. Once approved, you'll receive a permit number that must be displayed at the property and included in all rental listings.

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 occupancy limits based on property size. Recent changes have included stricter enforcement of noise ordinances and parking requirements, with the city implementing a complaint-driven system for violations. Hot Springs has been more accommodating to STRs compared to some Arkansas municipalities, recognizing their importance to the tourism economy given the city's status as a resort destination, but maintains oversight to balance tourism benefits with neighborhood preservation concerns.

The most promising Airbnb investment areas in Hot Springs, Arkansas include the Historic Downtown District, particularly near Central Avenue and Bathhouse Row, which attracts tourists visiting Oaklawn Racing Casino Resort (operating since 1904) and the historic bathhouses like Quapaw Baths & Spa. The Mid-America Science Museum area and neighborhoods near Hot Springs National Park offer strong potential due to year-round tourism and outdoor recreation activities. The Lake Hamilton and Lake Ouachita vicinity areas are highly attractive for vacation rentals, drawing visitors for boating, fishing, and water sports, with properties commanding premium rates during peak seasons. Areas near the Hot Springs Convention Center benefit from business travelers and conference attendees, while neighborhoods close to Garvan Woodland Gardens see consistent bookings from nature enthusiasts and event attendees. The Gulpha Gorge and North Woods areas near hiking trails and camping facilities attract outdoor recreation tourists, and properties within walking distance of the Arlington Resort Hotel & Spa and The Majestic Hotel benefit from overflow guests and visitors attending events at these historic venues.

Hot Springs, Arkansas imposes a 2% city lodging tax on all short-term rental accommodations including Airbnbs, which is collected from guests and must be remitted monthly to the Hot Springs Board of Directors by the 20th of the following month. Additionally, Arkansas state sales tax of 6.5% applies to lodging, along with Garland County's 2% county lodging tax, bringing the total occupancy tax burden to approximately 10.5%. Airbnb hosts must register with both the Arkansas Department of Finance and Administration for state tax collection and the City of Hot Springs for local lodging tax permits. The state portion is typically collected through Arkansas's online tax filing system, while city taxes are remitted directly to Hot Springs' finance department. Properties rented for 30 days or longer are generally exempt from these occupancy taxes, and some hosts may qualify for small business exemptions if their annual rental income falls below $1,000, though most active Airbnb operators exceed this threshold and must comply with full tax collection and remittance requirements.

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 requires $8,000-$12,000 for quality furniture, bedding, kitchen essentials, and decor to create an attractive rental space. Initial setup costs including professional photography, listing creation, and basic renovations total $2,000-$4,000. Permits and fees in Hot Springs include business license ($50), short-term rental permit ($200), and potential HOA approval fees totaling approximately $500-$800. Insurance for short-term rentals costs $1,200-$2,000 annually, with the first year paid upfront. Utility setup and deposits for electricity, water, gas, internet, and cable run $500-$800 initially. First six months of operating costs including utilities ($150/month), cleaning services ($75 per turnover averaging 8 cleanings monthly), maintenance reserves ($200/month), property management software ($50/month), and marketing expenses ($100/month) total approximately $3,450. Additional working capital of $5,000-$10,000 should be reserved for unexpected repairs, extended vacancy periods, and seasonal fluctuations in bookings.

Airbnb properties in Hot Springs, Arkansas typically generate annual revenues between $25,000-$45,000 for well-positioned properties, with average daily rates ranging from $80-$150 depending on proximity to Hot Springs National Park and local attractions. Operating expenses generally consume 40-60% of gross revenue, including cleaning fees ($30-50 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 Hot Springs command premium rates and achieve 65-75% occupancy rates, resulting in net profit margins of 25-35%. A typical 2-bedroom historic home near the national park purchased for $180,000 and renovated for $25,000 can generate approximately $38,000 in annual revenue with $22,000 in expenses, yielding a 16% return on investment. Success factors include strategic location within 1-2 miles of major thermal springs, professional photography showcasing the area's unique attractions, competitive pricing during peak seasons (spring and fall), and maintaining high cleanliness standards to capitalize on Hot Springs' reputation as a wellness destination. Properties targeting the growing medical tourism market and spa visitors tend to outperform those positioned solely as budget accommodations.

Airbnb investments in Hot Springs, Arkansas typically generate annual ROI of 12-18% due to the city's strong tourism market driven by Hot Springs National Park, historic bathhouses, and Oaklawn Racing Casino Resort. Cash-on-cash returns generally range from 8-14% annually, with properties near the national park and downtown historic district performing at the higher end of this range. Most investors achieve profitability within 18-24 months, with average daily rates of $85-$120 and occupancy rates of 65-75% throughout the year. Properties purchased in the $150,000-$250,000 range in neighborhoods like Quapaw Quarter and Park Avenue have shown consistent performance, with companies like Vacasa and RedAwning reporting strong booking rates for well-maintained properties. The market benefits from year-round demand due to thermal springs tourism, with peak seasons during spring and fall generating 20-30% higher rates, and the overall investment climate has remained stable since 2019 with continued growth in visitor numbers to the area.

STRSearch is a 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 include Coldwell Banker Elite and RE/MAX Real Estate Partners, with agents like those at Century 21 Garland County Realty having experience in vacation rental markets around Lake Hamilton and Lake Ouachita areas. National services that assist investors include Mashvisor, which provides Airbnb analytics and market data for Hot Springs, AirDNA for rental performance insights, and Awning for property management services. Local property management companies such as Hot Springs Vacation Rentals and Spa City Property Management offer turnkey solutions for investors. Real estate investment firms like BiggerPockets connect investors with local Hot Springs agents experienced in short-term rental properties, while companies like RedAwning and Vacasa provide comprehensive property management services for Airbnb investments in the Hot Springs market, particularly around the historic downtown district and lake areas that attract tourists year-round.