Cottonwood, Arizona Short-Term Rental Market
Cottonwood, AZ short-term rentals averaged $350/night at 61.7% occupancy in May 2026.
Quick Answer: Cottonwood, Arizona is an active short-term rental market. average occupancy is 48%. average monthly revenue is $4,386. average daily rate is $317.
Market data reflects the Sedona regional market, which includes Cottonwood. Regulations, taxes, and permit details below are specific to Cottonwood.
Market Overview
Cottonwood is the commercial center of Arizona’s Verde Valley, located at approximately 3,300 feet elevation roughly two hours north of Phoenix. The city has a resident population of approximately 12,522 and markets itself as the heart of Arizona’s wine country, with seven wineries and tasting rooms clustered in Old Town along the Verde Valley Wine Trail (Verde Valley AVA covers more than 20 wineries). The city also serves as an affordable base for visitors to nearby Sedona, approximately 20 minutes away. Outdoor draws include Dead Horse Ranch State Park, the Verde River, and Tuzigoot National Monument. Annual visitor counts for the city are not published in available sources, though regional river-connected recreation and tourism is valued at approximately $87.5 million.
In May 2026, the local STR market recorded an average daily rate of $350 and an occupancy rate of 61.7%, producing a RevPAR of $216. Average monthly revenue per active listing was approximately $6,001. Year-over-year compared to May 2025, occupancy rose 1.8 percentage points and ADR gained 0.5%, resulting in a 0.3% revenue increase.
Over the long-term trend, ADR grew from $175 in 2017 to $324 in 2025 and $341 in early 2026. Annual average occupancy peaked at 70.5% in 2021 and has moderated to 56.9% in 2025. Revenue per listing averaged $5,157 per month in 2025, up from $4,972 in 2024.
Bedroom mix, channel mix, and listing-type breakdowns are not available in the current snapshot for this area.
Seasonal Patterns
| Month | Occupancy | ADR | Revenue |
|---|---|---|---|
| Jan | 47% | $235 | $3,252 |
| Feb | 63% | $247 | $3,814 |
| Mar | 76% | $291 | $6,005 |
| Apr | 69% | $284 | $5,352 |
| May | 63% | $276 | $4,786 |
| Jun | 55% | $261 | $3,954 |
| Jul | 54% | $235 | $3,473 |
| Aug | 51% | $232 | $3,163 |
| Sep | 57% | $245 | $3,569 |
| Oct | 67% | $260 | $4,709 |
| Nov | 61% | $260 | $4,171 |
| Dec | 56% | $259 | $3,960 |
What Kind of STR Should I Buy in Cottonwood?
Revenue and pricing by property type, tier, and bedroom count.
ADR by Property Tier
| Entire Home | $324 |
| Luxury | $587 |
| Professionally Managed | $376 |
Revenue by Dwelling Type
| Apartment | $2,486 |
| Entire Place | $4,511 |
| House | $4,953 |
Investment Analysis
Cottonwood’s STR market reflects the broader Verde Valley and Sedona-area demand base, where sustained visitor interest in wine tourism, hiking, and red rock scenery supports ADR well above national norms. In May 2026, average ADR of $350 exceeded the national STR median of approximately $220 by roughly 59%.
Average monthly revenue per active listing was $6,001 in May 2026. The 2025 calendar-year monthly average was $5,157, implying an annualized gross revenue of approximately $61,884 per active listing before platform fees, taxes, and operating costs. The 2024 annual average was $4,972 per month, suggesting year-over-year revenue growth resuming after a modest dip in 2023.
No housing price snapshot is currently available for this area, which limits a direct gross yield calculation. Investors should source current Cottonwood comparable sales independently before modeling returns.
ADR has risen from $175 in 2017 to $341 in early 2026, reflecting sustained pricing power in a market that benefits from both Sedona spillover demand and its own wine-tourism identity. Tier-level data (luxury ADR, professionally managed ADR) is not available in the current snapshot.
Revenue Trend (5 yr)
ADR & Occupancy Trends (5 yr)
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Booking Insights
Booking lead time and length-of-stay data are not available in the current snapshot for this area. Cottonwood’s spring peak and wine-tourism profile suggest weekend and long-weekend bookings drive significant demand, particularly from the Phoenix metro market (roughly a two-hour drive). Operators should expect different booking windows for wine-weekend short stays versus extended leisure trips. Monitoring booking lead time through platform analytics is the most reliable calibration method for this market.
Short-Term Rental Regulations
Cottonwood requires all short-term rentals (residential properties rented for 30 days or less) to register with the city under Ordinance #731, adopted March 7, 2023. The annual registration fee is $50. Operators must also hold an Arizona Transaction Privilege Tax (TPT) license (the number must appear in all advertising), Yavapai County tax registration, and a liability insurance policy with at least $500,000 in coverage.
Operators must provide 24-hour emergency contact information to the city, post that contact and emergency information inside the unit within approximately 15 feet of the main entrance, and notify neighboring properties (adjacent, across the street, and diagonal) that the property is a short-term rental.
The city transient lodging tax rate is 3.0%, in addition to Arizona state TPT (5.6%) and Yavapai County excise taxes, for a combined lodging tax in approximately the 9 to 11 percent range on gross rental receipts. Airbnb and VRBO collect much of this automatically.
Owner-occupancy and primary-residence requirements do not apply under Arizona state preemption (ARS 9-500.39). There is no cap on maximum nights per year. New accessory dwelling units with a certificate of occupancy dated September 14, 2024 or later are subject to a narrow statewide owner-residency requirement.
Enforcement is categorized as moderate. Civil penalties can reach $1,000 per 30-day period for missing emergency contact information and escalate further under state law for operating without required permits.
Market Comparison
Cottonwood’s May 2026 ADR of $350 matches the performance of the broader Verde Valley and Sedona-adjacent corridor, putting this market well above the national STR median of approximately $220. Occupancy at 61.7% is above the approximate US STR median of 55%, indicating solid demand relative to supply.
RevPAR of $216 is a strong result for a mid-size Arizona tourism market. The city’s combination of wine-country identity and Sedona adjacency provides two distinct demand drivers that most markets of this size do not have.
Top property manager data is not available in the current snapshot. Operator concentration and professional management share cannot be assessed from current data.
Frequently Asked Questions About Cottonwood, Arizona
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