Vermont Should Learn From Other States Before Targeting Short-Term Rentals (STRs)

Why Guess When There’s Good Data?

As Vermont lawmakers enter the 2026 legislative session, the state faces converging pressures that demand careful, data-driven decision-making. Rising costs of living, workforce shortages, and demographic decline are colliding with a slowing tourism economy and growing concern from employers that policy decisions are disconnected from Vermont’s economic reality.

The Vermont Chamber of Commerce has been clear—and VTSTRA agrees—Vermont needs a predictable, long-term economic strategy grounded in data and shaped in partnership with employers and communities.

At VTSTRA, we support reasonable regulation of vacation rentals. What we caution against are policies that reduce economic opportunity, increase costs for residents, or undermine visitor-funded revenue that communities rely on. Mounting evidence from across the country shows policies that limit STRs often fail to deliver promised outcomes that relate to housing impacts.

Tourism and Visitor Revenue Contribute to Affordability for Locals

Tourism remains a cornerstone of Vermont’s economy. In 2024, Vermont welcomed roughly 16 million visitors who spent more than $4.2 billion statewide. Visitor spending supported nearly 32,000 jobs, generated close to $300 million in state and local tax revenue, and subsidized over $1,000 per household in property taxes.

These dollars fund schools, infrastructure, emergency services, and municipal budgets. Importantly, they are largely paid by visitors, not residents. When visitor revenue declines, the costs do not disappear. They shift back onto Vermonters through higher property taxes or reduced services.

Vermont’s Economy Needs a Healthy Supply of Diverse Short-Term Rentals.

According to the data, short-term rentals make up approximately 3.5% percent of Vermont’s housing stock, yet they account for more than half of the state’s overnight visitor capacity. They are particularly critical in rural communities with no other lodging options and in resort communities where hotels alone cannot meet demand.

STRs generate substantial tax revenue. According to data provided to us by AirDNA, STR reservations contributed more than $50 million in Meals and Rooms Tax (MRT) revenue in 2024. Communities that collect Local Option Tax (LOT) receive a percentage of STR revenue generated in their town. The first 12 months of statewide 3% Surcharge Tax on STRs, which went into effect on August 1, 2024, brought in $9.3 million—roughly $4 million under the State’s projections.

STR guests spend significantly at local businesses. On average, STR guests spend roughly $1,500 per stay on food, retail, recreation, and services, supporting thousands of local businesses and jobs beyond their hosts. That can add up to hundreds of millions of dollars in annual spending by STR guests.

When Cities Ban STRs, Housing Markets Don’t Change

Across the country, cities that adopted total or effective bans on short-term rentals have experienced significant economic disruption, limited housing benefits, and years of legal and administrative fallout. In many cases, hotel operators emerged as the primary beneficiaries. As Rent Responsibly reports, STR bans intended to address housing affordability repeatedly end up protecting hotel markets rather than improving affordability for anyone.

The New York City Example: Hotel prices soar, housing gains stall

When New York City enacted Local Law 18 in late 2023, Airbnb listings fell by roughly 85 percent, dropping from more than 38,000 to fewer than 7,000, according to analysis by the American Enterprise Institute. Hotel occupancy surged above 90 percent, while average nightly rates climbed into the high $300s and beyond $400 in many neighborhoods. Despite these dramatic shifts, STRs had represented only about 1.4 percent of the city’s housing stock, and studies cited by AEI found no clear evidence that the law increased long-term housing availability or reduced rents. What did increase were enforcement costs, traveler complaints, and the burden of policing thousands of illegal listings.

The Dallas Example: Years of uncertainty and legal limbo

Dallas adopted ordinances in 2023 and 2024 that effectively prohibited STRs in most residential neighborhoods. Legal challenges quickly followed, and a court blocked enforcement. As Dallas prepares to host the 2026 FIFA World Cup, city officials continue to pursue litigation that could remove thousands of lodging units just as demand peaks. The result has been years of uncertainty, mounting legal costs, and a city caught between regulatory ambition and economic reality.

The Santa Monica Example: An effective ban without affordability gains

Santa Monica’s Home Sharing Ordinance reduced entire-home STR listings by nearly 60 percent within two years, according to research from the Center for Growth and Opportunity. The studies found little to no measurable reduction in rents following the decline in STR supply. Visitor spending shifted into hotels or neighboring cities, while legal costs and lost economic activity mounted.

The New Orleans Example: Concentrated tourism and lost neighborhood spending

In 2025, New Orleans enforced some of the strictest STR regulations in the country. Airbnb removed more than 1,000 unlicensed listings in a single enforcement action. Economic analysis by Charles River Associates estimated that restrictive STR policies in cities like New Orleans are associated with billions in unrealized annual economic activity, including an estimated $1.6 billion in lost local guest spending.

The Maui Example: Economic losses before housing gains

Maui’s Bill 9 phases out more than 6,000 vacation rentals by 2029. An analysis by the University of Hawaii Economic Research Organization projected annual losses of $900 million in visitor spending, 1,900 jobs, and $75 million in state and county tax revenue. Legal challenges are ongoing, and local officials have acknowledged that economic impacts are already being felt by workers and small businesses.

The Lesson: STR Bans Shrink Local Economies

These case studies share a common theme. Policies aimed at reducing short-term rentals often reshape tourism far more than housing markets. Promised affordability gains frequently fail to materialize at scale, while economic losses, legal costs, and increased concentration of tourism in corporate hotel zones become very real.

Cities have every right to regulate STRs thoughtfully. But bans, even effective ones, carry consequences that extend well beyond housing and often benefit “big business” industries at the expense of local entrepreneurs and governments.

VTSTRA supports fair, enforceable rules that prioritize safety, transparency, and tax compliance. What Vermont lawmakers should avoid are policies that reduce or disincentivize visitor-funded revenue, increase costs for residents, and weaken economic opportunities for small businesses.

Affordability is Not Achieved by Shrinking the Economy.

Affordability is achieved by aligning housing policy with economic reality, protecting revenue sources, and choosing a long-term strategy over a short-term reaction. The 2026 legislative session presents a clear choice for lawmakers. Vermont can learn from other states' experiences and pursue balanced, data-driven solutions, or it can repeat costly mistakes that communities across the country are still paying for.