The 2026 Nashville Airbnb & STR Market Report: What Investors Need to Know

Written By Jack Costigan

Short-term rentals in Nashville are entering one of the most important transitional periods of the last decade. The days of “buy anything downtown and it will make money” are long over, and what’s replacing it is a far more sophisticated, data-driven market where the investors with the right strategy will outperform the rest by a wide margin.

As someone who works daily with STR buyers, sellers, operators, and developers across Greater Nashville, I’m seeing a very clear picture emerge for 2026. And with the release of new 2025 tourism, revenue, and occupancy data, investors finally have the clarity they’ve been waiting for.

This guide provides the full breakdown: where demand is headed, what regulations are shaping investment, how much revenue the average STR can really expect, and what segments of the market will deliver the highest returns in 2026 and beyond.

1. The 2025 Tourism Surge: Why Nashville Isn’t Slowing Down

If you want to understand STR performance in Nashville, you start with tourism. And the most important story entering 2026 is this:

Nashville tourism demand has hit new highs again in 2025 — and is projected to keep rising.

According to early city reports and tourism board projections:

Why this matters for STR investors:

Demand isn’t the issue — supply and positioning are. Tourism increases do not automatically translate to revenue increases unless your STR is in the right bucket (more on that later).

2. 2025 STR Performance Data: Occupancy, ADR, Revenue

For investors, 2025 delivered the clearest, most honest look at STR performance Nashville has seen in years.

2025 STR Data Snapshot (AirROI 2024–2025 Rolling Calendar):

Source: AirROI Nashville Market Report
https://www.airroi.com/report/world/united-states/tennessee/nashville

  • Average Occupancy (2025 YTD): ~44%
    This reflects the citywide mean across unit types. The best units are far above this.

  • Average Daily Rate (ADR): ~$310
    Group-friendly units cluster in the $350–$450+ range.

  • Median Annual Revenue: ~$41,636
    This is the median, not the average — meaning the top 25% of STRs dramatically outperform this figure.

  • Event Weekends Remain Explosive
    Example: In May 2025, during Taylor Swift’s Nashville weekend, STR occupancy surged over 80%.
    Source: NASTRA (Nashville Short-Term Rental Alliance)
    https://nastra.org/hotels-vs-short-term-rentals-in-nashville/

What 2025 performance tells us:

  • There is a widening gap between winners and losers.

  • Design-forward, 2–4 BR group units continue to dominate revenue.

  • “Commodity” STRs (one-bedrooms, dated condos, poor locations) have softened noticeably.

  • Revenue volatility is stabilizing — meaning 2026 forecasting is more reliable.

3. Nashville’s 2025 Regulatory Landscape: What Investors Must Understand

Nashville’s STR laws haven’t drastically changed in 2025 — but enforcement has intensified, and nuances matter more than ever.

Key 2025 Regulatory Realities (Metro Nashville):

Sources:
Metro Nashville Zoning & STR Info – https://www.nashville.gov/departments/codes/short-term-rentals
Metro Land Use Table – https://www.nashville.gov/departments/codes

  • Non-Owner-Occupied (NOO) STRs remain limited to specific commercial/mixed-use zoning districts.
    Residential zones do not allow new investor STR permits.

  • Annual renewals require full compliance, including:

    • No violations

    • Fire, safety, and egress standards

    • Occupancy limits

    • Updated documentation

  • Enforcement in 2025 has increased significantly, including:

    • More proactive investigations

    • Higher scrutiny on occupancy violations

    • Permit revocations for repeat offenders

  • New construction “STR-friendly” developments are tightly controlled and require special zoning or commercial entitlements.

What it means for 2026 investors:

Legal STR supply is intentionally constrained — and constrained supply is a major long-term price-supporting factor.

Investors holding legal, transferable non-owner-occupied permits retain a major competitive advantage going into 2026.

4. Revenue Drivers for 2026: What Will Actually Increase Returns

Nashville is far more sensitive to STR product type than many markets. The highest performers in 2026 will be those that meet:

1. Group-Focused Design

Nashville has become the #1 “group travel + friend trip” market in the Southeast.

The best producers in 2026 will prioritize:

  • 3–5 bedroom layouts

  • 8–12+ guest capacity

  • Multiple en-suite bathrooms

  • Instagrammable design themes

  • Rooftops + proximity to downtown

2. Event-Driven Pricing

Smart operators implementing dynamic pricing continue outperforming “set it and forget it” hosts.

If your pricing doesn’t spike for:

  • CMA Fest

  • Titans, Preds, SC games

  • Draft events

  • Concert weekends

  • SEC tournaments

  • Major conventions

You’re leaving thousands on the table annually.

3. High-End Amenities

In 2025 and 2026, guests are looking for:

  • Game rooms

  • Themed bunk rooms

  • Custom murals

  • Premium bedding

  • Professional-grade kitchens

  • Rooftop views

Design-forward units have 15–30% higher RevPAR.

5. Revenue Risks for 2026: What Could Hurt Performance

1. One-Bedroom Investor Units

This property type faces:

  • Higher competition

  • Lower group demand

  • No pricing leverage on event weekends

2. Outdated or Under-Furnished Listings

Photos and finishes matter more than ever.

3. Poorly Located STRs

Nashville’s event-driven tourism rewards proximity.

Locations far from:

  • Broadway

  • Stadiums

  • Vanderbilt

  • Music Row
    typically underperform.

4. Overleveraged Operators

Higher interest rates have pressured bottom lines. Cash-on-cash for poorly positioned STRs is compressing.

6. The 2026 Nashville STR Forecast (Full Breakdown)

1. Occupancy Outlook

  • 2025 average occupancy: ~44%

  • 2026 forecast occupancy: 46–48% citywide
    Driven by visitor growth and enhanced event scheduling.

Top-quartile units will hit:

  • 60–70% occupancy

  • $350–$450+ ADR

  • $90K–$150K+ annual revenue, depending on size and finishes

2. ADR Outlook

ADR will remain stable with slight upward pressure:

  • 2025 ADR: ~$310

  • 2026 projected ADR: $315–$340
    With 4–6 bedroom luxury units commanding significantly higher rates.

3. Revenue Outlook

Based on 2025 medians + 2026 demand drivers:

  • Typical unit revenue: $40K–$65K

  • Top-tier units: $100K–$180K+

4. Regulation Outlook

No major changes are expected barring political shifts.
Enforcement will tighten, which reduces supply and stabilizes returns.

5. The Biggest 2026 Winner: Limited Supply

New legal NOO STR developments are extremely rare.

This restriction means:

  • Appreciation is supported

  • Rental demand stays concentrated

  • Group-focused units remain in high demand

7. Who Should Invest in Nashville STRs in 2026?

Ideal Profiles:

  • High-income W2 earners seeking STR tax benefits

  • Investors wanting a legal NOO permit with long-term stability

  • Buyers wanting appreciation + revenue balance

  • Operators who can invest in design and management

Not Ideal:

  • Under-capitalized buyers

  • Investors seeking “easy” bookings

  • One-bedroom-only strategies

  • Buyers unwilling to furnish/design at a high level

8. STR Tax Advantages Going Into 2026

2026 remains one of the best years for STR-focused tax strategy, because:

  • STRs qualify for material participation tax benefits

  • Bonus depreciation is still available into 2026

  • Cost segregation studies remain highly advantageous

  • High-income W2 owners can offset active income
    IRS Reference: https://www.irs.gov/publications/p925

For many investors, tax savings alone cover:

  • Furnishing

  • Design

  • Renovation

  • Initial carrying costs

9. The Bottom Line for 2026: Nashville STRs Are Still Strong — If You Buy Right

Nashville remains one of the strongest STR markets in the U.S.
But “buy anything and cash flow” is dead.

In 2026, winners will be:

  • Legal

  • Well-designed

  • Group-focused

  • High-capacity

  • Professionally operated

  • Strategically located

  • Properly priced

If you align with those seven pillars, you will outperform the market — and 2026 is looking like one of the most predictable, stable years for STR investing since 2018–2019.

📌 Q&A Section

Q1: Are Nashville STRs still profitable going into 2026?

Yes — but only if they meet the criteria that align with current guest demand: legal permitting, strong design, high guest capacity, professional revenue management, and proximity to major event corridors. Top-quartile STRs are still producing $100K–$180K+ annually, even as the market normalizes.

Q2: What property type performs best in Nashville now?

3–5 bedroom, design-forward, group-friendly units with 8–12+ guest capacity consistently outperform all other categories. One-bedroom “commodity” STRs saw the largest softening in 2024–2025 and are not expected to rebound meaningfully in 2026.

Q3: What’s the biggest mistake investors are making right now?

Buying purely based on old revenue projections. 2026 winners will be investors who underwrite conservatively using 2025 actuals, not inflated post-COVID numbers. The gap between high-performing and underperforming listings is widening — and design, location, and legal zoning matter more than ever.

Q4: Will new STR regulations make it harder to buy in 2026?

Not necessarily harder — but definitely more selective. Nashville has tightened enforcement, not expanded bans. Legal NOO STRs in commercial zoning remain viable, and their scarcity is actually a long-term advantage because it limits new supply.

Q5: Is Nashville still a good market for STR tax strategy?

Yes. Short-term rentals continue to qualify for material participation tax benefits and can still leverage bonus depreciation and cost segregation into 2026. For high-income W-2 earners, this remains one of the strongest tax-advantaged real estate categories.

Q6: What should first-time STR investors focus on in 2026?

  • Buying legal — NOO permits only in approved zones.

  • Prioritizing high-capacity layouts.

  • Investing in design at the top 10% of the market.

  • Using dynamic pricing software.

  • Underwriting based on 2025 real data, not projections.

Q7: What’s your outlook for Nashville STRs by late 2026?

Stable, competitive, and rewarding for well-positioned properties. Nashville’s tourism base, event calendar, and limited legal STR supply create a resilient long-term foundation. Over-leveraged, poorly located, or poorly designed units will continue to struggle.

Conclusion

Nashville is entering its most transparent and mature STR era ever. The market is no longer driven by hype — it’s driven by fundamentals: tourism strength, legal zoning, design quality, guest capacity, and professional operations.

2026 won’t reward every property equally, but it will heavily reward the right ones.

Legal NOO units in favorable commercial zones, built for groups, thoughtfully designed, and priced dynamically will continue to generate top-tier revenue. Meanwhile, generic one-bedroom units and poorly located listings will keep feeling pressure as guest expectations rise and inventory normalizes.

If you invest strategically — with real 2025 data, the right location, and a modern design-forward product — Nashville remains one of the most compelling STR markets in the country going into 2026.

Jack Costigan
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