Cottonwood, Arizona Short-Term Rental Market
North-central Arizona STRs near Cottonwood averaged $331 ADR, 54.7% occupancy and $4,748 monthly revenue in September 2026.
Quick Answer: Cottonwood, Arizona is an active short-term rental market. average occupancy in the Sedona market area is 55%. average monthly revenue in the Sedona market area is $4,748. average daily rate in the Sedona market area is $331.
Market data reflects the Sedona regional market, which includes Cottonwood. Regulations, taxes, and permit details below are specific to Cottonwood.
Market Overview
This profile covers the north-central Arizona STR market that includes Cottonwood, Clarkdale, Dewey and Happy Jack. These towns share one tracked set of performance numbers, so every figure below describes the north-central Arizona STR market rather than Cottonwood alone. As of September 2026, the average daily rate (ADR) across all listings was $331, occupancy was 54.7%, and average monthly revenue per listing was $4,748. Entire-place rentals averaged $340 per night, and luxury listings averaged $627. Year over year, occupancy rose 9.7%, ADR rose 2.5%, and revenue rose 11.6%, so most of the revenue gain came from more booked nights rather than higher rates.
Cottonwood itself has a population of 12,522 and is the commercial hub of Arizona’s Verde Valley. It is branded the Heart of Arizona Wine Country, and Old Town Cottonwood clusters seven wineries and tasting rooms within walking distance. About half of visitors are Arizonans who drive roughly two hours from the Phoenix metro for cooler weather at 3,300 feet of elevation, scenery and wine. Dead Horse Ranch State Park, Verde River paddling and fishing, and Tuzigoot National Monument add outdoor and historic draws, and Cottonwood also serves as a lower cost lodging base for people visiting nearby Sedona. No city level annual visitor count is published.
The annual figures show a market that has settled at a higher rate level. ADR was $175 in 2017, $264 in 2021 and $324 in 2025, while occupancy peaked at 70.5% in 2021 and measured 56.9% in 2025. The 2026 reading through nine months is 56.8% occupancy and a $327 ADR. Bedroom, channel and listing-type counts, along with top operator names, are tracked at a shared regional level rather than uniquely for Cottonwood, so this profile omits them.
Seasonal Patterns
| Month | Occupancy |
|---|---|
| Jan | 47% |
| Feb | 63% |
| Mar | 76% |
| Apr | 69% |
| May | 63% |
| Jun | 55% |
| Jul | 53% |
| Aug | 50% |
| Sep | 57% |
| Oct | 67% |
| Nov | 61% |
| Dec | 56% |
Month-by-month nightly rates and revenue figures for Cottonwood are available to StaySTRA Pro members. Unlock with StaySTRA Pro or analyze a specific address free.
What Kind of STR Should I Buy in Cottonwood?
Revenue and nightly-rate breakdowns by bedroom count, property tier, and dwelling type for Cottonwood are available to StaySTRA Pro members. Unlock with StaySTRA Pro or analyze a specific address free.
Home Value Trends (Cottonwood)
Typical home values, median sale prices, and the 10-year price trend for Cottonwood are available to StaySTRA Pro members. Unlock with StaySTRA Pro or analyze a specific address free.
Booking Insights
Booking-window and length-of-stay analysis for Cottonwood — how far ahead guests book and how to price around it — is available to StaySTRA Pro members. Unlock with StaySTRA Pro or analyze a specific address free.
Short-Term Rental Regulations
Short-term rentals are permitted in Cottonwood, and the city cannot ban them. Arizona state law (ARS 9-500.39) preempts local bans, night caps, and general owner-occupancy or primary residence requirements, so none of those apply here. Cottonwood also cannot restrict STRs to specific zones, and they are generally allowed in residential, commercial, mixed-use and rural residential areas. Private HOA and CC&R restrictions may still apply independently.
Every STR (a residential property rented for 30 days or less) must register with the city under Ordinance #731, adopted March 7, 2023. Registration costs $50 and renews annually, well under the $250 state cap on permit fees. Owners also need an Arizona Transaction Privilege Tax license, whose number must appear in all advertising, Yavapai County tax registration, and liability insurance of at least $500,000. Operators must give the city 24-hour emergency contact information, post that information inside the unit within about 15 feet of the main entrance, and notify adjacent, across-the-street and diagonal neighbors that the property is an STR.
The Cottonwood lodging tax is about 3.0%. Combined with the Arizona TPT of 5.6% and the Yavapai County excise tax, total lodging taxes run roughly 9% to 11% of gross receipts, and Airbnb and VRBO collect much of this automatically. Enforcement is based on registration and complaints and is rated moderate, with civil penalties of up to $1,000 per 30-day period for missing contact information that can escalate under state law. Ordinance #731 was the city’s first STR regulation, and later state amendments continue to preempt stricter local rules. Confirm current requirements with the City of Cottonwood before operating.
Market Comparison
The north-central Arizona STR market looks like a rate-driven market. September 2026 occupancy was 54.7% and the ADR was $331. Entire places at $340 and professionally managed listings at $390 sit above the all-listings ADR, and luxury listings at $627 are nearly double it.
The higher rate reflects the demand around Cottonwood: wine tourism in the Verde Valley, state park and river recreation, and spillover from Sedona lodging. Average monthly revenue per listing was $4,748.
Momentum is also favorable. Year over year, occupancy is up 9.7%, ADR is up 2.5% and revenue is up 11.6%. Seasonal peaks reach 76.1% occupancy in March, while January at 47.4% and August at 50.0% are the softest months. Investors comparing this market with others should weigh the strong spring and fall against the soft summer and winter. Top operator names are tracked at a shared regional level rather than uniquely for Cottonwood, so this profile omits them.
Frequently Asked Questions About Cottonwood, Arizona
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