Best Airbnb Vacation Rental Cities in Tennessee

Imagine owning a cozy house or cottage in a place where millions of visitors flock every year, drawn by stunning mountain views, legendary music scenes, vibrant city life and mouthwatering restaurants and shops. That’s exactly what Tennessee offers to Airbnb investors.

But not every destination is the same when it comes to rental potential. Some spots offer higher occupancy rates and better revenue opportunities, making them ideal for investors.

In this blog, we’ll dive into the top Airbnb markets in Tennessee, so you can make the smartest investment choices and cash in on the coolest Airbnbs in the state, close to the best places to visit.

What Draws People to Tennessee?

Tennessee undeniably offers an array of attractions stemming from its multifaceted allure.

Ranging from its unparalleled musical heritage to its rich mosaic of historical significance, the state possesses an inherent ability to captivate visitors and astonish even its own residents with its irresistible charisma.

Tennessee stands as an idyllic haven for connoisseurs of art and music, as well as history aficionados who yearn to delve deeper and uncover the layers of its past, ultimately engendering experiences that etch themselves indelibly into memory.

This is a state that caters equally to families seeking a unique vacation in pursuit of cherished memories amidst its enchanting landscapes. Whether it's the rolling hills of the countryside or the scenic beauty of a national park, Tennessee is the perfect backdrop for unforgettable vacations.

Why Invest in Airbnb Properties in Tennessee?

Investing in Tennessee’s vacation rental market makes financial sense for several reasons:

Strong tourism demand

Tennessee is a major travel destination, drawing millions of visitors each year. With attractions like the Great Smoky Mountains, Beale Street, Dollywood and the Country Music Hall of Fame, the state is packed with year-round tourism.

This high visitor influx ensures a steady stream of guests for Airbnb hosts, leading to consistent bookings and strong occupancy rates.

Affordable real estate market

Compared to other popular vacation hotspots like Florida or California, Tennessee boasts lower property prices.

This affordability allows investors to enter the market with a lower initial investment while still enjoying high rental demand. Plus, lower home prices mean faster return on investment (ROI) and higher profit margins in the long run.

High occupancy rates

Short-term rentals in Tennessee’s top Airbnb markets — such as Pigeon Forge, Nashville and Chattanooga — maintain high occupancy rates throughout the year.

Thanks to the state’s mix of seasonal tourism, music festivals and outdoor attractions, rental properties enjoy consistent income potential.

Even in off-peak seasons, Tennessee’s affordability and variety of attractions keep the short-term rental market thriving.

Diverse market opportunities

Investors have a wide range of property options to choose from in Tennessee.

Whether it’s a cabin retreat in the mountains, a loft in downtown Nashville or a lakefront home in Chattanooga, the state caters to different traveler demographics.

This diversity allows investors to customize their rental strategy, offering unique take on location, guest preferences and revenue potential.

No state income tax

One of Tennessee’s biggest advantages for real estate investors is its lack of state income tax. This means Airbnb hosts can keep more of their rental income compared to states with high tax burdens.

The state’s investor-friendly tax policies make it an attractive place to own rental properties, increasing overall profit margins.

However, it's important to be aware of local Airbnb regulations and zoning laws before investing. Let's take a closer look at the best Airbnb markets in Tennessee and what makes each one stand out.

What Is The Best Location To Own An Airbnb?

1. Chattanooga- An outdoor enthusiast's paradise

Chattanooga is a breathtaking gem tucked between the mountains of Southeast Tennessee, along the scenic Tennessee River.

It’s no surprise that Lonely Planet named it one of the "Best in the U.S." and "10 U.S. destinations you need a trip to see," while The New York Times listed it among the "Top 45 Places to Go" in the world.

Whether you're into hiking, kayaking or exploring scenic parks, this destination has something for everyone. Tourists flock here to experience Lookout Mountain, Rock City and Ruby Falls, making it a great location. Its proximity to major outdoor attractions also boosts its rental appeal.

From cozy cabins with fire pits to modern downtown loft bedroom, the vacation rental market here is diverse and profitable. Investors can expect an average daily rate of $179.8 and an occupancy rate of 52%, translating to an estimated annual revenue of $21.6K.

Short-term rental hosts in Chattanooga need to obtain a permit and comply with local zoning laws. Make sure to check for any property-specific regulations and ensure safety standards are met before listing your rental.

2. Gatlinburg- The gateway to the Smokies

Source: Gatlinburg, Tennessee

For those craving a mountain retreat, this stunning area is the right place. Nestled at the entrance of the Great Smoky Mountains National Park, it’s a top Airbnb location in Tennessee.

It attracts nature lovers, hikers and families looking for a peaceful getaway in a cabin in the woods. The demand for cozy cabins with fire pits and hot tubs is consistently high, making this a profitable market for Airbnb hosts.

With an average daily rate of $361.20 and an occupancy rate of 60%, investors can expect a revenue potential of $75.7k per year, making this one of the strongest short-term rental markets in Tennessee.

Short-term rental operators in this region must obtain a business license and adhere to local zoning regulations. There are also safety requirements, such as fire inspections, that must be met before listing a property.

3. Pigeon Forge- A family-friendly vacation hub

Source: Pigeon Forge, Tennessee

Just minutes from Gatlinburg, Pigeon Forge is another top Airbnb location in Tennessee. With Dollywood, theaters, restaurants and countless attractions, this town is perfect for family vacations.

Many vacation rentals here feature game rooms, hot tubs and spacious decks, making them highly sought after by tourists. Due to its high tourism demand, Airbnb rentals in Pigeon Forge see an average daily rate of $361.20 with an occupancy rate of 60%, leading to a potential annual revenue of $75.7k.

Hosts in Pigeon Forge must register their rental with the city and obtain a short-term rental permit. Additionally, zoning laws dictate where vacation rentals can be located. HOA rules may also apply, so investors should research their specific property location before listing.

4. Nashville- The hottest Airbnb market in Tennessee

Nashville needs no introduction. As the home of honky tonks, the Country Music Hall of Fame and the Grand Ole Opry, it’s a popular tourist hotspot all year long. Downtown Nashville, East Nashville and Music Row are some of the best areas for short-term rentals.

Investors can find historic homes, modern lofts and stylish condos, all of which are in high demand. The average daily rate for an Airbnb in Nashville is $333.70 and properties maintain an occupancy rate of 56%, leading to an estimated annual revenue of $65.1k.

As the music city of the U.S., Nashville offers an endless stream of visitors eager to enjoy its vibrant cultural scene, making it one of the top markets for Airbnb investments.

Nashville has strict short-term rental regulations. Hosts must obtain a short-term rental permit, which varies depending on whether the property is owner-occupied or non-owner-occupied. There are also zoning restrictions and permits can be denied based on neighborhood opposition.

5. Memphis- A city of music, culture and history

Memphis is famous for Beale Street, blues, country music hall and barbecue. It's a city where heritage and culture blend seamlessly. Downtown Memphis is the most popular area for vacation rentals, with loft-style apartments and historic homes being highly desirable for travelers.

Investors in this music city can expect an average daily rate of $188.20 and an occupancy rate of 49%, leading to an estimated annual revenue of $32.7k.

This location requires Airbnb hosts to register with the city and pay hotel/motel taxes. Certain neighborhoods have zoning restrictions and multi-unit buildings may require HOA approval before being listed as short-term rentals.

6. Knoxville- The perfect blend of city and nature

Knoxville is a great choice for travelers who want both urban charm and outdoor adventures. From Market Square to the Smoky Mountains, there’s plenty to explore.

Loft space in downtown Knoxville and quaint cottages in quiet neighborhoods are some of the most popular Airbnb options. Knoxville's short-term rentals have an average daily rate of $207.60 with an occupancy rate of 54%, resulting in a potential annual revenue of $39k.

Knoxville requires hosts to register their property and comply with zoning restrictions. Certain areas have caps on the number of short-term rentals allowed and HOA regulations can also affect rental opportunities.

Is Tennessee Your Next Airbnb Hotspot?

Tennessee is home to some of the best Airbnb locations in the country. Whether you’re drawn to the music and nightlife of Nashville or the history of Memphis, there’s no shortage of amazing vacation rental opportunities.

If you're looking for the best Airbnb in Tennessee, choosing a house in the right city can make all the difference in maximizing your rental income.

With strong occupancy rates, a diverse Airbnb market and steady tourist traffic, Tennessee is a prime spot to start or grow your short-term rental business. Just be sure to stay on top of local Airbnb rules and pick the right location for your investment!

For those who plan wisely and follow the regulations, Tennessee offers a golden opportunity to build a thriving Airbnb business — while giving travelers unforgettable stays in one of the most captivating states in the U.S.

FAQS

1. Which location in Tennessee is the best for Airbnb investment?

Gatlinburg and Pigeon Forge offer the highest revenue potential, while Nashville provides strong demand for urban rentals.

2. Do I need a permit for an Airbnb in Tennessee?

Most Tennessee cities require short-term rental permits. Regulations vary by location, so hosts should research zoning laws, business licenses and tax obligations before listing a property.

3. What type of Airbnb properties perform best?

Cabins in the Smoky Mountains, downtown lofts in Nashville and Memphis, and large group-friendly homes in Pigeon Forge are among the most profitable.

4. Is Airbnb profitable in Nashville despite regulations?

Yes, but investors must carefully navigate local laws. Nashville’s short-term rental permits are limited, and zoning restrictions affect non-owner-occupied properties.

Despite these hurdles, well-located rentals in high-demand areas like Downtown, East Nashville and Music Row can yield strong profits.

5. How does seasonality affect Airbnb income in Tennessee?

Peak seasons vary by area. Gatlinburg and Pigeon Forge experience the highest demand in fall and winter, while Nashville and Memphis see steady bookings throughout the rest of the year due to events, festivals and business travel.

Although some areas experience seasonal fluctuations, Tennessee’s tourism industry remains robust, offering consistent rental opportunities.