Residents and state legislators in Sedona are debating how to reclaim the 20 percent of housing now used as Airbnb rentals.

In the 11 years since its launch, Airbnb has disrupted the hotel industry by taking the centuries-old concept of boarding houses and reworking it for the 21st century. Travelers would get to experience cities like a local for a relatively affordable price and homeowners would generate extra income.

In recent years, however, Airbnb has gained as many enemies as it has fans — cities like Los Angeles, San Francisco, and New York City have wrestled with the $35-billion company over hotel taxes and other regulations, such as limits on the number of days a property can be rented.

Now the battle has extended to smaller metros, such as the picturesque desert town of Sedona. According to a report by AZ Central, 20 percent of the city’s existing housing inventory are short-term rentals. Furthermore, developers are investing millions into building new housing for the same purpose.

“We have a very good city council, and the state of Arizona has emasculated them in this area,” said Sedona resident Avrum Cohen in a city council meeting. “It’s the only state in the union that has done this to its cities, and it’s a state that doesn’t like the federal government.”

In 2017, Arizona passed one of the country’s most lenient short-term rental laws. Senate Bill 1350 stripped cities, towns and counties of their right to pose limitations on short-term rentals in their jurisdiction. Moreover, the law allowed investors and developers to build additional housing solely for short-term rental use. Debbie Lasko, the senator who co-sponsored the bill, also wants to eliminate short-term rental taxes, but failed.

Sedona leaders say the passage of the bill has turned neighborhoods into mini-hotel conclaves that are driving up home prices as developers gobble up more inventory. Sedona City Manager Justin Clifton told AZ Central there are more than 1,000 short-term rentals in the city, which accounts for 20 percent of the city’s housing. As a result, the median cost of a home in Sedona has risen to $562,000 — a $50,000 increase from the previous year.

Arizona state representatives are trying to reverse the damage done by SB-1350 through House Bill 2672, which allows cities and counties to limit short-term rentals to overnight stays and stops short-term rentals from being used for weddings and large-scale parties. The bill originally included a clause that would limit investors and developers, but it was stripped.

Even though HB-2672 offers some solace for Sedona residents, it seems unlikely they’ll get the solution they’re looking for. Arizona governor Doug Ducey has been public in his support of loose short-term rental laws, saying, “In Arizona, we respect the right to do what we want with our property without undue government interference.”

Although Airbnb and other short-term rental platforms seem to be winning the battle in Arizona, it’s important to note that The Grand Canyon State is an anomaly — states like Massachusetts, New York, and California are cracking down on the short-term rental industry.

Massachusetts in July passed a tax reform that applies the state’s 5.7 percent hotel tax to short-term rentals. The law is expected to boost short-term rental rates, which Governor Charlie Baker says will “[level] the playing field for short-term rental operators who use their properties as de-facto hotels.”

Los Angeles and New York City have also fought back against short-term rentals this year, enacting new rules that limit the kinds of properties eligible to become short-term rentals and how long properties can be rented out.

Email Marian McPherson

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Thank you for subscribing to Morning Headlines.
Back to top
Only 3 days left to register for Inman Connect Las Vegas before prices go up! Don't miss the premier event for real estate pros.Register Now ×
Limited Time Offer: Get 1 year of Inman Select for $199SUBSCRIBE×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription