Owning a short-term rental is not just about listing a property and waiting for bookings. It starts with choosing the right location, and that is why we are showing you how to find the best city for Airbnb business in this guide.
In some places, high demand and relaxed rules create the perfect setup for steady income. In others, strict regulations and inconsistent bookings eat into profits. If you are serious about hosting, you need more than a popular destination; you need cities built for it.
This guide takes you through the most promising markets in the U.S., highlighting Airbnb-friendly cities in the U.S., the best states for Airbnb investment, and smart tips on how to start an Airbnb business that earns, scales, and lasts.
See Also: Top 10 Best States for Hotel Business in USA -Top U.S. Locations for High ROI
Key Takeaways
- The best city for an Airbnb business combines guest demand, income potential, and supportive regulations.
- States like Florida, Texas, and Tennessee offer the strongest mix of profitability and flexibility.
- High-performing cities thrive on tourism, culture, and consistent short-term rental demand.
- Success in Airbnb hosting starts with strategy, understanding the market, running the numbers, and choosing a location wisely.
What Is an Airbnb Business?
An Airbnb business is a short-term rental enterprise where property owners or managers lease out homes, apartments, or rooms to travellers for a daily fee, typically through platforms like Airbnb.
Unlike traditional long-term rentals, Airbnb hosting focuses on flexibility, customer experience, and maximising income through short stays.
It is becoming an increasingly attractive model for entrepreneurs looking to generate passive income, enter the real estate market, or build a full-scale hospitality brand without needing hotel infrastructure.
However, not all Airbnb businesses are the same; your strategy can differ greatly based on your investment goals, location, and how hands-on you want to be.
Types of Airbnb Businesses
Below is a breakdown of the common Airbnb business types you can operate:
| Type | Description | Ideal For |
|---|---|---|
| Entire Home Rental | Renting out a full property (apartment, house, cottage) to guests. | Investors, families, and solo entrepreneurs |
| Private Room Rental | Renting a single room in a shared property (often the host’s primary home). | Homeowners looking for side income |
| Shared Space Rental | Renting a shared area (e.g., living room with sofa bed). | Budget-conscious hosts or urban dwellers |
| Rental Arbitrage | Leasing a property long-term and re-renting it short-term via Airbnb. | Low-capital startups, urban entrepreneurs |
| Co-Hosting | Managing someone else’s Airbnb property for a share of the profits. | Service-oriented entrepreneurs |
| Luxury or Themed Rentals | High-end or experience-based properties designed to attract niche travellers. | Premium investors, branding-savvy hosts |
See Also: Hospitality Business Ideas You Can Start In Nigeria
What Makes a Great Airbnb Market?
Before diving into the top cities for Airbnb hosting, it is critical to understand what makes a market profitable for short-term rentals.
Here are the key elements that define a high-performing Airbnb market:
| Success Factor | What It Means | Why It Matters |
|---|---|---|
| Occupancy Rate | Percentage of days booked in a month/year | Predicts booking consistency and income |
| Average Daily Rate (ADR) | Average price charged per night | Directly impacts monthly revenue |
| Local Regulations | Zoning, licensing, and tax rules for Airbnb hosts | Ensures legal, stress-free operation |
| Demand Drivers | Attractions, universities, events, and business travel | Sustains high guest traffic |
| Property Price | Entry cost of homes in target cities | Affects ROI and mortgage feasibility |
| Seasonality | Whether bookings stay strong year-round | Reduces the financial risks of slow seasons |
Top 10 Best City for Airbnb Business in the U.S.
The right location is everything in the Airbnb game. Some cities simply outperform others, offering better occupancy, stronger returns, and fewer regulatory headaches.
Here are ten standout states and the cities within them that are leading the short-term rental market in the U.S.
1. Florida
Florida is one of the most dependable markets for short-term rentals. Its appeal lies in its year-round sunshine, popular tourist destinations, and host-friendly regulations.
Cities like Key West and Orlando offer two very different Airbnb opportunities, one driven by high-end vacationers, the other by family-friendly travel.
Key West consistently delivers high occupancy and premium nightly rates, while Orlando benefits from constant demand tied to major theme parks and convention traffic. Both markets offer solid income potential for investors.
| City | Occupancy Rate | Average Daily Rate (ADR) | Estimated Annual Revenue | Regulation |
|---|---|---|---|---|
| Key West | 59% | $628 | $73,063 | Few restrictions, permits are optional |
| Orlando | 51% | $243 | $21,974 | Host‑friendly |
2. Texas
Texas offers one of the most versatile landscapes for short-term rental investment. From Austin’s tech-fueled tourism and cultural events to Houston’s affordability and year-round business travel, the state blends strong demand with manageable regulation.
If you are looking for high-yield urban stays or stable, entry-level returns, Texas stands out as a reliable Airbnb market with room to scale.
| City | Occupancy Rate | Average Daily Rate (ADR) | Estimated Annual Revenue | Regulation |
|---|---|---|---|---|
| Austin | 51% | $284 | $34,100 | STR permit required |
| Houston | 49% | $184 | $17,616 | STR-friendly, minimal barriers |
3. Tennessee
Tennessee, particularly Nashville, offers strong Airbnb potential driven by year-round tourism, music events, and a booming convention scene.
Nashville’s vibrant tourism ecosystem, fueled by music, festivals, conferences, and convention traffic, supports solid booking rates and excellent nightly pricing.
With an average ADR of $363 and annual revenue around $43.6k, it offers investors a reliable income stream. While short-term rental permits are required, the regulatory framework is transparent and host-friendly overall.
| City | Occupancy Rate | Average Daily Rate (ADR) | Estimated Annual Revenue | Regulation |
|---|---|---|---|---|
| Nashville | 54% | $363 | $43,654 | Permit required; manageable |
4. Nevada
Nevada is a magnet for global travellers, thanks to Las Vegas’ world-famous entertainment, business conventions, and nightlife. For Airbnb hosts, this means steady guest flow and above-average nightly rates.
While occupancy is moderate, the volume of visitors and high ADRs make Las Vegas a strong performer. The state’s short-term rental regulations are clear; licences are required, but the framework is relatively host-friendly.
| City | Occupancy Rate | Average Daily Rate (ADR) | Estimated Annual Revenue | Regulation |
|---|---|---|---|---|
| Las Vegas | 49% | $298 | $23,920 | STR licence required |
| North Las Vegas | 53% | $242 | $27,500 | Similar licensing rules |
5. Arizona
Arizona’s Airbnb market combines scenic appeal with strong financial returns, particularly in Phoenix and Scottsdale.
Phoenix draws year-round visitors such as business travellers, “snowbirds”, and event-goers, while Scottsdale attracts upscale guests seeking desert resorts and outdoor experiences.
Though regulations vary by city, both markets offer rewarding ADRs and steady occupancy.
| City | Occupancy Rate | Average Daily Rate (ADR) | Estimated Annual Revenue | Regulation |
|---|---|---|---|---|
| Phoenix | 53% | $216 | $26,700 | STR-friendly with minimal restrictions |
| Scottsdale | 58% | $376 | $42,000 | Permit required; local rules enforced |
See Also: Examples Of Tourism Business Ideas To Start Now And Make Money
6. Georgia
Savannah, Georgia, stands out for its charming architecture, cultural tourism, and consistent short-term rental performance, making it one of the best Airbnb-friendly cities in the U.S.
Savannah’s appeal lies in its well-preserved historic district, lively festivals, and year-round tourism.
Despite some seasonal dips, guests consistently pay premium rates. Clear but reasonable registration rules help protect neighbourhoods while keeping hosting viable.
| City | Occupancy Rate | Average Daily Rate (ADR) | Estimated Annual Revenue | Regulation |
|---|---|---|---|---|
| Savannah | 58% | $297 | $40,102 | Regulated; registration required |
7. California
California offers some of the most lucrative short-term rental markets in the country, particularly in wine country destinations like Napa and Sonoma.
These areas attract high-paying guests seeking luxury and exclusivity. Though occupancy is moderate, exceptionally high nightly rates drive strong annual returns.
Clear regulations and permit requirements are in place, but they are manageable for serious investors.
| City | Occupancy Rate | Average Daily Rate (ADR) | Estimated Annual Revenue | Regulation |
|---|---|---|---|---|
| Napa | 49% | $498 | $37,900 | Permit required; local oversight |
| Sonoma | 53% | $698 | $82,400 | Registration and compliance are required |
8. Hawaii
Hawaii’s vacation rental market remains one of the most lucrative in the U.S., thanks to its high visitor demand and premium pricing.
Islands like Maui and Oahu consistently outperform most U.S. markets. However, hosts must navigate a shifting regulatory landscape, which includes licensing restrictions and zoning limitations that vary by county.
Despite regulatory challenges, Hawaii remains a top-earning Airbnb market if you are ready to handle more complex local rules.
| Location | Occupancy Rate | Average Daily Rate (ADR) | Estimated Annual Revenue | Regulation |
|---|---|---|---|---|
| Lahaina (Maui) | 63% | $759 | $97,933 annually | Strict licensing required after fires; permit caps enforced |
| Honolulu (Oahu) | 66% | $315 | $38,210 annually | VR zoning: hosts are allowed only in resort-designated zones |
| Kihei (Maui) | 67% | $437 | $61,440 annually | County permits required; regulations tightening |
9. Louisiana
Louisiana, particularly New Orleans, has long been a popular destination for short-term rentals. Known for its music, food, and year-round festivals, the city draws millions of visitors annually, making it one of the top cities for Airbnb hosting.
The market offers solid income potential, driven by strong daily rates and consistent guest interest.
However, recent policy changes have tightened the operating environment. New rules require owner-occupied listings and limit permits by residential block, creating challenges for remote investors.
Still, for those willing to meet the requirements, New Orleans remains one of the best cities for Airbnb investment in terms of cultural appeal and guest demand.
| City | Occupancy Rate | Average Daily Rate (ADR) | Estimated Annual Revenue | Regulation |
|---|---|---|---|---|
| New Orleans | 49% | $314 | $31,200 | Permit required; owner-occupied only, zoning caps |
10. Illinois
Illinois offers Airbnb investors a compelling blend of market dynamics: urban strength through Chicago and rising potential in smaller cities like Peoria.
Chicago delivers solid occupancy and revenue driven by business travel, events, and tourism, while Peoria presents a low-cost entry point ideal for testing your Airbnb business model.
Together, they illustrate how a state can provide both high-volume returns and grassroots investment opportunities.
| City | Occupancy Rate | Average Daily Rate (ADR) | Estimated Annual Revenue | Regulation |
|---|---|---|---|---|
| Chicago | 59% | $244 | $24,900 | STR permits required; city-level zoning |
| Peoria | 58% | $102 | $9,646 | Generally STR-friendly; low local fees |
Side-by-Side Comparison of the Best Cities for Airbnb Business in the U.S.
Finding the best city for Airbnb business requires balancing demand, revenue, affordability, and legal ease. This snapshot pulls together top-performing locations across ten states, each offering unique advantages for hosts.
If you are aiming for luxury stays, budget-friendly growth, or regulatory simplicity, this table helps you spot the most promising markets in the U.S.
| State | City | Occupancy Rate | Average Daily Rate (ADR) | Estimated Annual Revenue | Regulation |
|---|---|---|---|---|---|
| Florida | Key West | 59% | $628 | $73,063 | Few restrictions; permits are lightly enforced |
| Orlando | 51% | $243 | $21,974 | Host-friendly | |
| Texas | Austin | 51% | $284 | $34,100 | STR permit required |
| Houston | 49% | $184 | $17,616 | Minimal barriers | |
| Tennessee | Nashville | 54% | $363 | $43,654 | Permit required; manageable |
| Nevada | Las Vegas | 49% | $298 | $23,920 | STR licence required |
| North Las Vegas | 53% | $242 | $27,500 | Similar licensing rules | |
| Arizona | Phoenix | 53% | $216 | $26,700 | STR-friendly; minimal restrictions |
| Scottsdale | 58% | $376 | $42,000 | Permit required | |
| Georgia | Savannah | 58% | $297 | $40,102 | Registration required; clearly defined |
| California | Napa | 49% | $498 | $37,900 | Permit required |
| Sonoma | 53% | $698 | $82,400 | Registration and compliance are required | |
| Hawaii | Lahaina (Maui) | 63% | $759 | $97,933 | Strict permit enforcement |
| Honolulu (Oahu) | 66% | $315 | $38,210 | Zoning limits rentals to resort areas | |
| Kihei (Maui) | 67% | $437 | $61,440 | County permits required | |
| Louisiana | New Orleans | 49% | $314 | $31,200 | Permit required; owner-occupied only |
| Illinois | Chicago | 59% | $244 | $24,900 | STR permits required; zoning applies |
| Peoria | 58% | $102 | $9,646 | STR-friendly; minimal local restrictions |
How to Invest Smartly in Airbnb
Investing successfully in Airbnb goes beyond picking the right city. It is about making intentional choices from understanding regulations to optimising guest experience, that transform a property into a consistent source of income.
Here is how savvy investors navigate the market to build long-term, sustainable Airbnb businesses.
Choose Markets That Align With Your Strategy
Not all Airbnb markets are created equal, and not all investors have the same goals. Some aim for high-margin, low-volume luxury stays, while others prefer budget-friendly properties that book frequently.
For example, Maui and Sonoma offer high ADRs, which can yield significant returns on fewer bookings. On the other hand, cities like Phoenix and Orlando support volume-based strategies with lower nightly rates but consistent occupancy.
Understanding what type of returns you are targeting, be it cash flow, capital appreciation, or both, will help you choose the market that aligns with your financial strategy.
Know the Laws Before You Buy
Regulatory oversight has become one of the biggest make-or-break factors for Airbnb hosts. Cities like New Orleans and Honolulu have introduced strict permit systems and zoning laws that limit where and how you can operate.
Even seemingly Airbnb-friendly areas may have specific rules around occupancy limits, insurance, or registration requirements.
Before you purchase, research the local laws thoroughly. In cities with complex regulations, it is worth speaking to a real estate attorney or short-term rental consultant who understands the local landscape.
Ignorance of the law is not just risky; it can end your business before it begins.
Invest in Guest Experience, Not Just Property
Success in an Airbnb business does not come from simply owning a property; it comes from creating an experience guests want to repeat and recommend.
That starts with choosing the right location within your target city. Being near major attractions, transport hubs, or event venues boosts visibility and convenience for guests.
From there, everything inside the property matters. Guests notice clean, stylish interiors, fast Wi-Fi, thoughtful amenities, and a seamless check-in process.
A well-managed property stands out in a crowded marketplace, often commanding higher rates and earning five-star reviews that drive more bookings.
Automate to Scale Efficiently
Managing one Airbnb is time-consuming; managing several without the right tools is chaos. That is why top hosts use automation platforms to streamline pricing, guest communication, cleaning schedules, and reviews.
Tools like Hospitable, Guesty, or PriceLabs let you operate with professional consistency, whether you are on-site or investing from afar.
For remote properties or multi-unit portfolios, consider hiring local co-hosts or professional property managers. They can handle daily operations, compliance checks, and guest concerns, freeing you up to focus on growth.
Grow Intentionally
The most resilient Airbnb portfolios were not built overnight. Smart investors start small, typically with one property in a proven market.
They monitor performance closely, such as occupancy, revenue per available night, and guest feedback, and refine their systems before scaling.
Over time, profits from one successful property can be reinvested into new listings. This organic, data-informed approach allows investors to scale sustainably, avoid overexposure, and adapt to shifting market conditions.
Conclusion
The most profitable Airbnb hosts do not guess; they invest where the numbers, demand, and regulations work in their favour. This guide has highlighted ten states and the top cities within them that offer real potential for income, sustainability, and growth.
If you want consistent returns, choose your market carefully, follow the rules, and build your business like a professional.
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Frequently Asked Questions (FAQs)
Which city is most profitable for Airbnb?
Currently, Maui (Lahaina), Hawaii, stands out as the most profitable city for Airbnb, with an average daily rate of $759 and annual revenue reaching nearly $98,000 per listing.
However, these earnings come with strict local regulations, so hosts must ensure full compliance before investing.
What is the best city to own an Airbnb?
The best city to own an Airbnb depends on your goals. If you are seeking high luxury returns, Sonoma, California, or Scottsdale, Arizona, are excellent choices.
For more accessible entry points with strong demand, Orlando, Florida, and Austin, Texas, offer solid opportunities with host-friendly environments.
What city do people Airbnb the most in?
Las Vegas, Nevada, and Orlando, Florida, consistently rank among the top cities by Airbnb booking volume. Both destinations benefit from year-round tourism, major events, and short-term rental infrastructure that supports high guest turnover.
Where is the most profitable place for Airbnb?
Profitability is a balance of occupancy, ADR, and regulation. Based on annual returns, Sonoma, California, and Kihei (Maui), Hawaii, lead the list. These markets combine premium pricing with steady demand, making them two of the best cities for Airbnb investment in the U.S.
What are the Airbnb-friendly cities in the U.S.?
Airbnb-friendly cities in the U.S. include Houston, Phoenix, Orlando, and Savannah, all known for accommodating local laws, strong demand, and fewer hosting restrictions.
How do I choose the best city for Airbnb business in the USA?
Start by analysing occupancy rates, average daily rates (ADR), annual revenue potential, and local regulations. Use tools like AirDNA to compare cities and target those that align with your budget, risk appetite, and hosting style.
