The global short-term rental (STR) market is now 20 times larger than it was in 2011, transforming what was once a niche hospitality segment into a permanent and expanding part of local economies.
For local governments, this growth is more than an economic trend; it is an operational shift that affects housing availability, public safety, tax collection, and community livability. The new 2026 State of Digital Government: Trends in the Short-Term Rental Market benchmark report, developed in partnership with ath Power Consulting, provides a detailed look at how jurisdictions are managing this expansion and where traditional compliance and enforcement methods are falling behind.
The report makes one thing clear: Short-term rentals are not slowing down. Governments must modernize their approach to keep pace.
STR growth is global, but its impact is highly local
Short-term rentals are expanding across communities of every size, but the pace and impact vary widely.
Nearly one-third of governments (32.6%) reported STR market growth of 0% to 4% over the past year, while another 23.9% reported growth of 5% to 10%. More notably, 21.7% experienced growth between 11% and 20%, and more than 21% reported growth exceeding 21%, including 8.7% that saw growth above 51%.
In total, more than three-quarters of all government respondents reported some level of STR market growth, confirming that expansion is not isolated to tourism-heavy regions — it is widespread.
This sustained growth directly affects housing availability, neighborhood character, and demand for public services. As the report explains:
“This sustained growth is not just a market trend; it is a critical factor influencing local planning, economic development, and regulatory policy.”
For many jurisdictions, especially seasonal communities, population fluctuations amplify the challenge. The report found that 54.5% of jurisdictions experience seasonal population expansion, and one-third reported their population more than doubles during peak visitor seasons.
This surge creates additional pressure on enforcement teams, infrastructure, and service delivery systems.
As STR markets expand, compliance workflows are under pressure
Despite the scale and complexity of today’s STR market, many governments continue to rely on outdated compliance methods.
In jurisdictions with populations of 250,000 or more, 60% of professionals still rely on manual searches and spreadsheets to track short-term rental compliance.
These manual processes create significant operational strain. Staff must identify listings across multiple platforms, verify ownership, track permits, reconcile tax records, and respond to complaints, all without centralized systems. The result is slower enforcement, increased administrative burden, and reduced visibility into the full scope of STR activity.
Continued growth in the STR market without a balancing increase in operational capacity is one of the most significant risks facing local governments today.
Enforcement challenges often stem from data gaps, not policy gaps
For most jurisdictions, the challenge is not a lack of regulations. It is a lack of accurate, accessible data.
The benchmark report identified three primary enforcement barriers:
- Inability to contact STR property owners or managers.
- Mismatched data between STR platforms and official property records.
- Lack of court-admissible evidence to support enforcement action.
- These gaps make it difficult to resolve complaints, ensure compliance, and enforce regulations consistently.
Operational limitations compound the problem. The report found that 21.4% of respondents identified inadequate complaint processing systems and insufficient staffing resources as major challenges, while 11.9% cited inefficient paper-based permitting and licensing workflows.
These outdated processes are fundamentally mismatched with the digital nature of today’s STR ecosystem.
STR revenue potential is significant — but many governments lack confidence in recovery
Short-term rentals represent a major revenue opportunity for local governments — but capturing that revenue consistently remains a challenge.
The report found that 82.5% of governments collect revenue through permitting and licensing fees, while 65% collect revenue through occupancy or tourism taxes.
However, revenue confidence varies significantly.
Overall, only 47.5% of respondents believe STR revenue sufficiently funds programs related to community livability, public safety, and affordability, highlighting widespread uncertainty about the effectiveness of revenue recovery.
This uncertainty reflects broader challenges in identifying all STR properties, ensuring compliance, and accurately tracking tax obligations.
Without modern compliance systems, jurisdictions risk leaving substantial revenue uncollected.
Technology is becoming essential to effective STR management
As STR markets grow in size and complexity, governments are recognizing the need for modern compliance infrastructure.
Jurisdictions that successfully manage STR programs are increasingly adopting digital tools that can:
- Automatically identify STR listings across platforms.
- Provide accurate property ownership and contact information.
- Streamline permitting, licensing, and tax collection workflows.
- Simplify evidence collection for enforcement.
- These capabilities allow governments to move from reactive enforcement to proactive program management.
By automating manual processes and improving data visibility, governments can improve compliance rates, increase revenue recovery, and reduce operational strain on staff.
STRs are a permanent part of the modern government landscape
The rapid expansion of short-term rentals presents both opportunities and challenges.
Done well, STR programs can generate revenue, support local economies, and enhance tourism. But without modern compliance and enforcement systems, growth can strain staff resources, reduce regulatory effectiveness, and erode community trust.
The benchmark report makes clear that the path forward requires a strategic, technology-enabled approach to compliance, enforcement, and revenue management.
Governments that modernize their STR programs will be best positioned to balance economic opportunity with community protection.
Download the full benchmark report
The 2026 State of Digital Government: Trends in the Short-Term Rental Market benchmark report provides detailed insights into STR growth trends, compliance challenges, revenue strategies, and modernization opportunities.
Download the report to see how your peers are managing short-term rental expansion — and what steps your jurisdiction can take to improve compliance, increase revenue recovery, and protect community livability.
