Despite recent regulatory challenges, Palm Springs remains a desirable and potentially profitable destination for short-term rental investments, with strong market appeal and consistent tourist demand, although current performance is impacted by caps on rental properties in high-demand neighborhoods.
Thriving Despite Challenges: Palm Springs' Short-Term Rental Market
While Palm Springs, California, has faced regulatory changes and market adjustments, the city's short-term rental market still shows resilient performance. Despite a cap on short-term rentals in high-demand neighborhoods, which has led to a slowdown in some areas, the overall market remains attractive. Occupancy rates, although slightly down, still sit at a respectable level, with an average occupancy of around 38% in some neighboring areas like Rancho Mirage, which sets a positive precedent for the region.
Average daily rates (ADRs) have held up well, with some areas experiencing growth. For instance, in Rancho Mirage, ADRs are up 17% to $672, indicating strong demand and pricing power. While there are challenges, such as declining booking windows and occupancy in Palm Springs itself, the broader Greater Palm Springs area continues to be a viable and profitable destination for short-term rental investments.
Short-Term Rental Regulations in Palm Springs, California for 2024
License and Registration Requirements
- To operate a short-term rental, you must obtain a Vacation Rental/Homeshare Registration Certificate and a Transient Occupancy Tax permit from the City of Palm Springs.
- Each property can only have one registration certificate, and hosts cannot own more than one Airbnb property.
- The registration number must be included in all listings and advertising.
Application and Fees
- Submit a completed application form along with the applicable annual fee:
- Vacation Rental: $1,258
- Junior Vacation Rental: $642
- Homeshare: $268
- Land Use Permit (LUP) Fee for Estate Homes: $426.
- Provide proof of ownership and $500,000 in liability insurance.
Safety and Health Standards
- Properties must undergo a safety inspection during the initial application and each renewal to ensure compliance with building and fire codes.
Occupancy Limits
- Maximum occupancy is set at two adults per bedroom, with an additional allowance for two occupants, capping at 10 adults and four children.
Operational Restrictions
- Homeshare: Rental of one or more bedrooms for 28 days or fewer while the owner resides in the home.
- Vacation Rental: Any accommodation available for 28 days or fewer without the owner present.
- No conversion of apartments into vacation rentals by evicting tenants or ending leases.
Neighborhood Density Cap
- A cap of 20 percent of short-term vacation rentals per residential neighborhood, with existing permits grandfathered in.
Rental Contracts Limitation
- New applicants are limited to 26 rental contracts per year; existing permits will be subject to this limit starting January 1, 2026.
Junior Permit
- A new “junior permit” allows for 6 rental contracts per year, with a reduced annual fee of 50 percent of the regular registration fee. These permits do not count towards the neighborhood density cap.
Taxes and Assessments
- Transient Occupancy Tax (TOT) must be reported and paid to the City each month. A one-time $25 fee is required for the TOT permit.
- A 1% Greater Palm Springs Tourism Business Improvement District (TBID) assessment on short-term stays of less than 28 days.
Quiet Hours and Other Regulations
- Strict quiet hours between 10 PM and 8 AM.
- Contracts between property owners and guests must be in place before allowing guests to stay.
Penalties for Non-Compliance
- Operating a vacation rental or homeshare without a Registration Certificate can result in a $5,000 fine and permanent disqualification from vacation rental operations. Three violations within a 12-month period can lead to a 2-year suspension of the permit.
Public Awareness and Compliance
- The city is considering a public awareness campaign to educate property owners about rental regulations, and may require escrow and title companies to include details on rental restrictions in closing packages.
High-Revenue Neighborhoods for Airbnb in Palm Springs, California
Area 92264
- Average Daily Rate: $507.8, peaking at $585 in April
- Occupancy Rate: Averages at 52%, surging to 74% in March
- Average Annual Revenue: $96.6K, peaking at $9,100 in April
- Revenue per Available Room (RevPAR): $249.7, jumping to $502 on weekends.
Neighborhoods:
- Baristo:
- Central location with unparalleled access to Palm Springs’ vibrant downtown.
- Home to art galleries, boutiques, and popular restaurants and bars.
Offers an urban charm and historical significance combined with modern developments.
Deepwell:
- Known for its historic charm and architectural heritage.
Attracts guests looking for a blend of old and new Palm Springs.
The Mesa:
- Characterized by its artistic vibe and unique cultural attractions.
Appeals to guests seeking a creative and inspiring environment.
Twin Palms:
- Features architectural marvels and a distinct neighborhood character.
- Attracts guests interested in mid-century modern architecture and a tranquil setting.
Area 92260 (Palm Desert, but adjacent and relevant to Palm Springs market)
- Average Daily Rate: $477.6, peaking at $508 in April and $512 in December
- Occupancy Rate: Averages at 52%, surging to 75% in March
- Average Annual Revenue: $91.4K, with March boasting the highest monthly revenue at $7,700.
Neighborhoods:
- Brava:
- Offers a diverse and attractive neighborhood environment.
Appeals to a variety of visitors with its unique characteristics.
Villa Portofino:
- Known for its luxurious and well-maintained properties.
Attracts guests looking for high-end accommodations and amenities.
Cahuilla Hills:
- Features scenic views and a tranquil atmosphere.
- Appeals to guests seeking a relaxing and natural setting.
General Appeal
These neighborhoods are highly appealing to guests due to several factors:- High Demand Seasons: Peak seasons, especially around events like Coachella, drive high occupancy rates and revenue.- Luxury and Amenities: Many properties offer luxurious amenities such as pools, hot tubs, and scenic views, which attract high-paying guests.- Cultural and Natural Attractions: Proximity to attractions like the Palm Springs Art Museum, Indian Canyons, and the Palm Springs Aerial Tramway makes these neighborhoods highly desirable.- Regulatory Environment: While regulations exist, they help maintain a balance between short-term rentals and community engagement, ensuring a positive experience for both guests and local residents.
Tips for Furnishing and Designing an Inviting Airbnb in Palm Springs, California
Embrace the Mid-Century Modern Aesthetic
- Incorporate vintage furniture, bold colors, and geometric patterns to give your guests the authentic Palm Springs experience. This style is iconic to the area and will make your property stand out.
Enhance the Guest Experience with Thoughtful Details
- Stage the unit with a unique welcome sign or gift, such as a bottle of wine from a local vineyard or a locally made treat. Small gestures like a personalized chalkboard welcome can go a long way.
Invest in Comfortable and Luxurious Amenities
- Prioritize quality beds, mattresses, bedding, and comfortable sofas. Luxury amenities like high-end appliances and spa-like bathrooms can make your property feel like a hotel, which is highly valued by guests.
Highlight Local References and Culture
- Incorporate local references in decorative objects and art. Use items such as black and white photos of historic locations or local murals to add a unique and memorable touch to your space. Avoid being too thematic or cliché.
Create Inviting Outdoor Living Spaces
- Take advantage of Palm Springs' beautiful weather by investing in comfortable outdoor seating, a pool or hot tub, and a barbecue or fire pit. These amenities will encourage guests to spend time outside and enjoy the natural scenery.
Use Lighting to Make a Statement
- Choose modern and grand lighting fixtures, such as mid-century modern chandeliers or pendant lights, to add a touch of elegance and functionality to your space.
Add Plants and Greenery
- Incorporate desert plants and mid-century modern decor to bring personality and a touch of the local environment into your space. Plants can also help in creating a welcoming and relaxing atmosphere.
Ensure Seamless Guest Experience
- Provide clear instructions for accessing the property and its amenities. Ensure the property is clean and well-maintained, and be responsive to guest needs throughout their stay.
Design for Functionality and Comfort
- Ensure that the living room, main room, and dining room can comfortably accommodate the number of guests listed in the occupancy. Include board games and other activities that bring people together.
Spruce Up the Entryway
- Create a lasting impression by painting the front door a vibrant and welcoming color and maintaining proper landscaping. Outdoor furniture can also establish ambiance as guests approach the property.
Incorporate High-Low Budgeting
- Prioritize budget for essential items like quality bed frames, mattresses, and bedding, while finding less costly options for rugs, light fixtures, wall hangings, and decorative objects.
Discover the Best of Palm Springs: Local Attractions and Insider Tips
Top Local Attractions
Natural Beauty and Outdoor Adventures
- Palm Springs Aerial Tramway: Take a 10-minute ride in the world’s largest rotating tram cars to Mount San Jacinto State Park and Wilderness, offering breathtaking views and over 50 miles of hiking trails.
- Indian Canyons: Explore the Agua Caliente Indian Canyons, featuring Palm Canyon, Andreas Canyon, and Murray Canyon, with their stunning flora, fauna, and ancient rock art.
- Tahquitz Canyon: Visit this canyon for its 60-foot waterfall, ancient rock art, and remnants of Cahuilla history, accessible via a 2-mile loop trail.
Culture and History
- Agua Caliente Cultural Plaza: Home to the Agua Caliente Cultural Museum and The Spa at Séc-he, showcasing Cahuilla culture, art, and history.
- Village Green Heritage Center: Includes the McCallum Adobe, Miss Cornelia White’s House, Ruddy’s General Store, and the Agua Caliente Cultural Museum, highlighting the area's Native American and pioneer history.
Family-Friendly Activities
- The Living Desert: A zoo and garden featuring animals and plants of the Sonoran Desert, with hiking trails and a variety of family-friendly activities.
- Palm Springs Surf Club: Enjoy waterslides, waves, a lazy river, and luxury amenities like private cabanas and gourmet restaurants.
Arts and Entertainment
- Palm Springs Art Museum: A state-of-the-art museum with a variety of art exhibitions and performances.
- Annenberg Theater: Located at the Palm Springs Art Museum, this theater hosts vibrant performances of jazz, dance, comedy, and more.
Shopping and Dining
- Palm Canyon Drive: Known for its goldmine of art galleries, restaurants, pubs, and shops. Don’t miss the Thursday night VillageFest, where the street is closed to traffic for vendor booths and entertainment.
- El Paseo: A shopper’s paradise in Palm Desert with over 300 stores offering fashion, accessories, dining, home furnishings, jewelry, and art.
Insider Tips
Festivals and Events
- Coachella Music and Arts Festival and Stagecoach: Attend these world-famous music festivals if you’re visiting in the spring.
- Local Festivals: Check out festivals celebrating dates, tamales, and Southwestern art for a unique cultural experience.
Outdoor Activities
- Golfing: Tee off at one of the over 110 local golf courses, a favorite pastime in Palm Springs.
- Hiking Trails: Explore more than 100 trails in the area, offering a mix of fitness and up-close discoveries of the natural beauty.
Relaxation and Wellness
- Spas and Day Spas: Treat yourself to relaxation and rejuvenation at one of the many spas in the area, perfect for a weekend getaway.
- Poolside Relaxation: Many resorts offer sparkling pools, VIP cabanas, and crafted cocktails for a relaxing day by the pool.
Unique Experiences
- Smoke Tree Stables: Go on a guided horseback ride through palm tree oases in the Indian Canyons.
- Palm Springs Air Museum: Visit this museum to explore a collection of World War II aircraft and learn about aviation history.
Pet-Friendly Activities
- Pet-Friendly Attractions: Many restaurants, shops, and off-leash dog parks welcome pets, so you can enjoy the sights and activities with your entire family, including your four-legged members.
By sharing these attractions and insider tips, you can help your Airbnb guests make the most of their visit to Palm Springs and enjoy a memorable and enriching experience.
Practical Tips for Running a Successful Short-Term Rental in Palm Springs, California
To effectively manage a short-term rental in Palm Springs, California, hosts should focus on compliance with local regulations and enhancing guest experiences. Noise regulations are particularly important; informing guests about quiet hours, which typically run from 10 PM to 7 AM, helps maintain neighborhood tranquility and prevents potential fines. Creating a comprehensive house manual, available in both digital and physical formats, can provide essential information such as instructions, Wi-Fi passwords, and local attractions. Additionally, implementing a simplified check-in process using smart locks can streamline arrivals, while providing clear parking instructions with accompanying photos will assist guests in navigating the property easily. By prioritizing these practical tips, hosts can cultivate positive guest experiences that lead to favorable reviews and repeat bookings.
Here is a brief list of house cleaning providers in Palm Springs, California:
House Cleaning Providers
Molly Maid
- Offers customized cleaning plans, no contracts, and a 24-hour warranty.
- Serves Palm Springs, Palm Desert, Desert Hot Springs, Rancho Mirage, La Quinta, and neighboring communities.
Jay’s One Stop Cleaning Services
- Provides a wide range of cleaning services, including vacation home cleaning, recurring house cleaning, and maid services.
- Serves Palm Springs, Palm Desert, Cathedral City, Indio, La Quinta, and Rancho Mirage.
CleanChris
- Specializes in vacation rental cleaning, general house cleaning, deep cleaning, and small business cleaning.
- Known for reliable and thorough cleaning services, with fully vetted local staff.
Campos Cleaning Services
- Highly rated for professional and detailed cleaning services.
- Recommended for residential cleaning needs in the Palm Springs area.
Independent Housekeepers via Care.com
- A platform listing various independent housekeepers in Palm Springs, with an average rate of $19/hr and an average experience of 6 years.
Understanding Short-Term Rental Management Fees in Palm Springs, California
In Palm Springs, California, short-term rental management fees typically range from 10% to 30% of rental revenue, depending on the level of service provided. Full-service management options—including guest communication, marketing, and maintenance—generally fall at the higher end of this spectrum, while basic management services may be more economical. Additionally, hosts should be aware that extra fees for cleaning, repairs, or design services may also apply. Given the city's strict regulations regarding short-term rentals, including the requirement for a Vacation Rental Registration Certificate and adherence to local ordinances, understanding these management fees is crucial for hosts looking to navigate the competitive rental landscape effectively while maximizing their investment returns.