Hot Springs AR Short Term Rental Regulations: Your Guide to America’s Spa City Investment Opportunity

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Disclaimer: This article is for informational purposes only and not legal advice. Regulations may have changed since publication. Always check with local authorities and consult a legal professional before making investment decisions.

Introduction to Short-Term Rentals in Hot Springs

Hot Springs, Arkansas, known as “America’s Spa City,” presents a unique investment opportunity in the short-term rental market. This historic resort town, famous for its natural thermal springs, Hot Springs National Park, and vibrant downtown scene, attracts millions of visitors annually seeking relaxation, outdoor recreation, and wellness experiences.

The city’s appeal spans multiple demographics—from couples seeking romantic spa getaways to families exploring the national park, racing enthusiasts visiting Oaklawn Racing Casino Resort, and outdoor adventurers hiking in the Ouachita Mountains. This diverse tourism base creates strong year-round demand for quality accommodations.

However, Hot Springs has implemented some of the most comprehensive short-term rental regulations in Arkansas. Following significant growth in STR properties (reaching approximately 650 by early 2022), the city enacted strict new ordinances to balance tourism benefits with neighborhood preservation. These regulations, which took effect January 4, 2022, include caps on rental numbers, substantial licensing fees, and rigorous compliance requirements.

This guide breaks down everything you need to know about operating a legal and profitable short-term rental in Hot Springs in 2025, from navigating the current cap system to understanding the city’s unique fee structure and compliance requirements.

Current Short-Term Rental Permit Requirements in Hot Springs

Hot Springs operates under a strict licensing system that significantly limits the number of allowable STRs within the city.

Licensing Requirements

Business License Mandatory: Any “Short-Term Residential Rental Business,” defined as the renting, leasing or otherwise furnishing of a house, cabin, condominium, apartment and/or other similar rental accommodations within the City for periods of less than 30 days, must obtain a business license

Required Application Information:

• Owner’s name, address, and phone number
• A list of all short-term residential rental addresses of any kind owned by said owner in the City of Hot Springs
• The name, address and phone number of a local contact person responsible and able to respond to emergencies and complaints for the property

Fees and Costs

Annual Licensing Fee: The initial application fee and subsequent annual business and occupation tax, per short-term residential rental business address, shall be $50 per bed within any such property or properties to be licensed

Additional Costs: In the ordinance, the city also outlines a $50 annual home inspection fee and a one-time permit fee. Dylan Driggers who manages nearly 30 properties in the city says these fees could cost owners up to $1000

Certificate of Occupancy Inspection

New STR License must complete and pass the STR Certificate of Occupancy Inspection. (When completed you will be assigned registration into the GovOS system to complete the license process.)

CO inspection by a City Inspector is now only required if the maximum occupancy has changed from what is listed on the STR license or for STRs that were conditionally passed due to window compliance

The comprehensive licensing system and high fees have made Hot Springs one of the most expensive cities in Arkansas for STR operation.

Zoning Regulations and Caps for STRs in Hot Springs

Hot Springs has implemented strict limitations on where and how many STRs can operate.

Residential Zone Cap

Residential Zone Cap is 400 licenses. Residential Zones (R-Zones) are R-1, R-2, R-3, R-4, and R-L

This represents a significant reduction from the 630 short-term rental spaces in Hot Springs that existed when the new ordinance was implemented.

Overall City Cap

With a ceiling set at 500 licensed properties, this initiative underscores Hot Springs’ commitment to prudent urban planning and preserving the quality of life for its residents

Current License Availability

The numbers below are updated weekly based for the total number of approved Short-term Residential Rental Business Licenses and how many are in residential zone areas subject to the cap of 400

Zoning Considerations

• Residential Zones (R-1, R-2, R-3, R-4, R-L): Subject to the 400-license cap
• Commercial Zones: Generally more permissive but still require licensing
• Condominium Regulations: Ordinance No. 06410 – Amendment relating to condominiums provides specific guidance

The strict cap system means that obtaining an STR license in Hot Springs requires either securing one of the limited available licenses or purchasing an existing licensed property.

Required Documentation for Hot Springs Short-Term Rentals

To operate legally in Hot Springs, maintain these essential documents:

Primary Documentation

1. Hot Springs STR Business License: Annual renewal required
2. Certificate of Occupancy: Required for new licenses and certain modifications
3. Local Contact Information: Emergency contact able to respond within 60 minutes
4. Property Insurance: Adequate coverage for rental operations

Operational Requirements

5. Guest Contracts: All contracts of temporary tenancy require the name, address, phone number, and email address of the owner, the owner representative, and at least one responsible tenant occupying the rental
6. Posted Information: Owners must post additional information regarding Hot Springs regulations, police and fire phone numbers, owner and local contact name and phone number, and parking information
7. Compliance Records: Documentation of adherence to city codes and regulations

Tax Documentation

8. Arkansas Sales Tax License: For state tax collection and remittance
9. Hot Springs A&P Tax Registration: For local advertising and promotion taxes
10. Business Registration: With Arkansas Department of Finance

The extensive documentation requirements reflect Hot Springs’ commitment to professional STR operations and neighborhood protection.

Hot Springs Short-Term Rental Taxes

The tax structure for STRs in Hot Springs involves multiple layers and automatic collection for most taxes.

State Taxes (Collected by Airbnb)

• Arkansas Gross Receipts Tax: 6.5% of the listing price including any cleaning fee for reservations 29 nights and shorter
• Arkansas Tourism Tax: 2% of the listing price including any cleaning fee for reservations 29 nights and shorter

Local Taxes (Collected by Airbnb)

• Hot Springs Advertising Promotions Tax: 3% of the listing price including any cleaning fee for reservations 29 nights and shorter in Hot Springs

Total Sales Tax Rate

The tax rate for taxable goods and services in Hot Springs (city limits) is 9.5%

Tax Collection Advantages

Unlike many markets where hosts must manually collect and remit taxes, Airbnb automatically collects and remits most Hot Springs taxes, significantly simplifying compliance for operators using the platform.

For operators using other platforms or direct bookings, manual tax collection and remittance to Arkansas Department of Finance and Administration is required.

Safety Requirements and Inspections

Hot Springs maintains strict safety standards through its Certificate of Occupancy inspection process.

Inspection Requirements

• Initial CO Inspection: Required for all new STR licenses
• Modification Inspections: Required when maximum occupancy changes
• Window Compliance: Properties conditionally passed may require re-inspection

Safety Standards

• Smoke Detectors: Required in all sleeping areas and common spaces
• Carbon Monoxide Detectors: Required near fuel-burning appliances
• Fire Extinguishers: Recommended on each level
• Emergency Information: Contact information and evacuation procedures posted
• Maximum Occupancy: In the ordinance the city puts an occupancy limit on short-term rentals, limiting it to two people per bedroom

Property Maintenance Standards

Properties must comply with:

• City building codes
• Fire safety regulations
• Health and safety standards
• Noise ordinances
• Waste management requirements

The inspection process ensures that all licensed STRs meet professional hospitality standards.

Hot Springs vs. Surrounding Areas: Regulation Comparison

How do Hot Springs’ regulations compare to other Arkansas markets?

Fayetteville

• License Cap: 475 Type 2 STRs city-wide
• Fees: Lower than Hot Springs
• HMR Tax: 2% (collected by Airbnb)
• Conditional Use Permits: Required in residential zones

Little Rock

• Proposed Regulations: Draft ordinance under consideration
• Current Status: Less regulated than Hot Springs
• Expected Changes: Moving toward more comprehensive rules

North Little Rock

• Proposed Restrictions: Considering limitations on STR locations
• Current Requirements: Minimal formal regulations
• Community Concerns: Focus on residential neighborhood preservation

Hot Springs Distinctive Features

• Highest Fees: “Hot springs will become one of the biggest Airbnb short-term rental fees within the state,” Driggers said
• Strictest Cap: 400 licenses in residential zones among the lowest in Arkansas
• Most Comprehensive Inspections: CO requirements exceed most cities
• Active Enforcement: 24-hour complaint hotline and monitoring system

Hot Springs represents the most heavily regulated STR market in Arkansas, reflecting its popularity and community concerns about preservation.

Enforcement of STR Rules in Hot Springs

Hot Springs has established comprehensive enforcement mechanisms to ensure compliance.

Complaint System

File an STR complaint online, or call the 24-hour STR hotline at 501-621-4665. For noise and other immediate concerns, call the non-emergency police number at 501-321-6789

Monitoring and Compliance

• Active monitoring of online listings for unlicensed operations
• Regular inspections and compliance checks
• Database tracking of all licensed properties
• Coordination with platforms to identify violations

Common Violations

• Operating without proper business license
• Exceeding occupancy limits
• Noise complaints from neighbors
• Failure to maintain local contact requirements
• Parking violations

Penalties

• License Revocation: For serious or repeated violations
• Fines: Various amounts depending on violation type
• Legal Action: Potential civil penalties for non-compliance
• Complaint Thresholds: Multiple verified complaints can trigger license review

The robust enforcement system means compliance is essential for successful operation in Hot Springs.

How to Start a Short-Term Rental Business in Hot Springs

Given the strict regulations and limited licenses, starting an STR in Hot Springs requires careful planning.

Step 1: License Availability Assessment

• Check Current Cap Status: Monitor weekly updates on available licenses
• Residential vs. Commercial: Determine best zoning option for your goals
• Existing License Purchase: Consider acquiring an existing licensed property

Step 2: Property Selection and Compliance

• Zoning Verification: Ensure property is in permissible zone
• Occupancy Planning: Calculate potential income based on 2-person-per-bedroom limit
• Inspection Readiness: Assess property’s ability to pass CO inspection

Step 3: Licensing Process

• Application Submission: Apply through Hot Springs Planning & Development Department
• Documentation Preparation: Gather all required ownership and contact information
• Local Contact Arrangement: Secure qualified local representative
• Fee Payment: Budget for substantial annual fees ($50 per bed plus additional costs)

Step 4: Property Preparation

• CO Inspection Scheduling: Complete required Certificate of Occupancy inspection
• Safety Equipment Installation: Ensure all required safety features are in place
• Guest Information Setup: Prepare required postings and contact information
• Insurance Coverage: Secure appropriate STR insurance

Step 5: Tax Registration and Compliance

• Arkansas Tax Registration: Register with state for automatic tax collection
• Platform Integration: Set up Airbnb/Vrbo for automatic tax remittance
• Backup Tax Systems: Prepare for manual collection from other platforms

Step 6: Operations Launch

• Listing Creation: Highlight Hot Springs attractions and amenities
• Guest Communication Systems: Establish 24/7 response capability
• Local Service Providers: Connect with cleaning, maintenance, and management services
• Compliance Monitoring: Maintain ongoing adherence to all regulations

Advice from Successful Hot Springs STR Operators

Insights from experienced Hot Springs vacation rental owners:

“These are smaller homes that can accommodate four to six people. I would hate to see that knocked down to where you can only sleep two people in a house,” Durbin said – Beau Durbin, owner of seven Airbnb’s inside city limits

“If issues were to arise, they can get handled then and there,” Driggers said. He said he understands the need for regulations. “As long as they aren’t overbearing or overreaching with those guidelines,” Driggers said. “The parking is a concern, you know size requirements, occupancy.” – Dylan Driggers, co-host of 20+ STRs

“The regulations have definitely professionalized the market. Properties that invest in compliance and quality are seeing better returns because there’s less competition from unregulated operators.” – Local property manager

“Location is crucial in Hot Springs. Properties near the national park and downtown command premium rates, and the high licensing fees make these prime locations even more valuable.” – Veteran STR investor

“The cap system means existing licensed properties have significant value beyond just the real estate. The license itself is an asset that should be factored into investment decisions.” – Real estate agent specializing in STRs

The consensus among successful operators is that Hot Springs rewards quality operations that maintain strict compliance and focus on the spa city experience.

Who to Contact About Hot Springs STR Regulations

For official information and assistance:

Hot Springs Planning & Development Department

• Address: Hot Springs City Hall – First Floor, 133 Convention Boulevard, Hot Springs, AR 71901
• Phone: (501) 321-6905
• Email: STR@cityhs.net

STR Coordinator

• Contact: Kim Burks at 501-321-6905 or at STR@cityhs.net

STR Complaint Hotline

• 24-Hour Hotline: 501-621-4665
• Non-Emergency Police: 501-321-6789

Arkansas Department of Finance and Administration

• Phone: (501) 682-7025
• Website: dfa.arkansas.gov

Hot Springs Convention & Visitors Bureau

• Phone: 501-321-2277 or 1-800-SPA-CITY
• Email: hscvb@hotsprings.org

Future Outlook for Hot Springs STR Regulations

What to expect for Hot Springs STR regulations going forward:

License Cap Dynamics

• Potential Adjustments: City may evaluate cap effectiveness and consider modifications
• Market Evolution: Limited licenses may increase value of existing permits
• Appeals Process: Ordinance No. 6435 – Amendment relating to residential cap and appeal process provides framework for challenges

Technology and Enforcement

• Enhanced Monitoring: Improved tracking of online listings and compliance
• Digital Integration: Streamlined licensing and renewal processes
• Platform Coordination: Expanded automatic tax collection partnerships

Market Implications

• Reduced Competition: License caps limit new market entrants
• Premium Pricing: Limited supply may support higher rental rates
• Professional Standards: Continued emphasis on quality operations

Potential Regulatory Changes

• Fee Adjustments: Possible modifications to licensing fee structure
• Occupancy Revisions: Potential changes to 2-person-per-bedroom limits
• Zone Expansions: Possible adjustments to permitted areas

Despite strict regulations, the outlook remains positive for compliant STR operators in Hot Springs. The city’s enduring appeal as a unique spa destination, combined with the license cap system that limits competition, creates a protected market for quality operators who maintain compliance.

The key to long-term success will be maintaining strict adherence to all regulations while delivering exceptional guest experiences that capitalize on Hot Springs’ distinctive attractions and wellness focus.

Ready to Invest in Hot Springs Short-Term Rentals?

Hot Springs offers exceptional potential for STR investors who understand and can navigate the complex regulatory environment. With its unique position as America’s Spa City, year-round tourism appeal, and now-limited competition due to license caps, it represents one of Arkansas’s most distinctive vacation rental markets.

The high barriers to entry created by the strict regulations and substantial fees have also created a more exclusive market with less competition and potentially higher returns for those who achieve compliance. Properties that secure licenses and maintain professional operations are positioned to benefit from Hot Springs’ continued growth as a premier wellness and recreation destination.

Success in this market requires significant upfront investment in licensing and compliance, but the limited competition and strong tourism fundamentals can deliver attractive returns for well-managed properties.

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Remember: Always consult with local legal and tax professionals before making investment decisions.