Gatlinburg, Tennessee
“The Gateway to the Great Smoky Mountains” Attracts Visitors & Investors
By Carole VanSickle Ellis
Gatlinburg, Tennessee, has always been an attractive destination. Hundreds of years before the city was settled in 1806 as the settlement White Oaks Flats, Native American tribes traversed the area regularly as they hunted up and down the peaks and valleys of the mountain range we know today as the Great Smoky Mountains.
Gatlinburg would have been founded three years earlier, but the original settler, a South Carolinian named William Ogle, died of malaria after prepping enough logs to build a cabin and then returning to his native state for the winter. Three years later, his widow and her remaining family returned to the area and assembled the cabin Ogle had left behind him in what is, today, the heart of Gatlinburg.
In the wake of the American Revolution, the area around Gatlinburg attracted veterans from both that war and the War of 1812 who were eager to convert their war pay, 50-acre deeds for U.S. land, and become landowners in the beautiful and fruitful area that Ogle had dubbed “The Land of Paradise.” Many of their descendants make up the roughly 3,600 permanent residents of Gatlinburg today.
Although fewer than 4,000 people live in Gatlinburg proper, which is often referred to as “The Gateway to the Great Smoky Mountains,” roughly 12 million people visit Sevier County, where Gatlinburg is located, each year. The area attracts tourists during every season thanks to a host of activities for history buffs, skiers of all levels, and nature lovers who want to visit the Great Smoky Mountains National Park or enjoy a vast array of activities designed to highlight different recreational elements in the region.
“With the formation of the Great Smoky Mountains National Park [in 1945], tourism began to boost the area’s economy,” explained the Gatlinburg Convention & Visitors Bureau on their official Gatlinburg timeline. The group continued, “[Gatlinburg] has since developed into a four-season resort and convention setting.” The area is home to many artists’ communities thanks to investments around the same time into the Arrowmont School of Arts and Crafts and Pi Beta Phi’s public school, the first of its kind in the area, which was founded in 1912 and dedicated to “practical and academic education” and “the rebirth of Appalachian culture through arts and crafts and the ‘cottage craft industry’ movement.”
A “Land of Paradise” for the Short-Term Rental Investor
Today, those 12 million annual visitors not only spend heavily in the area during their stays; they support a vast real estate sector dominated by short-term rental options. “The combination of low property taxes, easy accessibility, and a supportive community makes Gatlinburg an ideal destination for short-term rental property owners,” according to a 2023 report published by local brokerage Colonial Properties.
According to short-term rental resource hub Chalet, average property taxes in Gatlinburg hover just over 2.5%, lower than both state and national averages, and local short-term rental regulations are relatively permissive. Gatlinburg does have regulations in place governing noise and occupancy, but short-term rentals are permitted in nearly all residential zoning districts. Furthermore, at present, the city does not limit the number of rental properties owned by any one person or business entities, nor does the city restrict length of stay for short-term renters. The average daily rate (ADR) in Gatlinburg is higher than $300, and seven-bedroom houses post ADRs of nearly $600.
“The town’s proximity to the Great Smoky Mountains National Park ensures a constant influx of tourists, driving demand for short-term rentals,” wrote Mashvisor analysts earlier this year. “[Proximity to the park] has led to a 15% increase in rental income for vacation homes compared to the previous year,” they continued. At time of publication, Gatlinburg’s average Airbnb occupancy rate was roughly 70%, with summer and fall occupancy rates exceeding 80%. Those numbers held firm across room counts from studio to 5+ rooms.
“It is just explosive popularity,” said Airbnb spokesperson Ben Breit of the massive influx of tourists into the Gatlinburg and nearby Pigeon Forge areas. “The weather is perfect; you’re up in the mountains…I just can’t imagine a better place to be.”
Investors should note Gatlinburg is also a hotbed for exotic, adventure-based short-term rentals, including treehouses. Treehouse rentals flourish in the area, with some investors reporting generating hundreds of thousands of dollars in annual revenue with these assets.
However, investors must remember treehouses and “tree forts” come with many additional factors including zoning and safety ordinances that might not apply elsewhere.
“Treehouse maintenance is required every year to ensure the structure and the tree(s) remain safe and secure for years to come and, more importantly, that its users are not put at risk,” explained Pete Nelson, master treehouse builder and host of Animal Planet’s “Treehouse Masters.” Owners of all treehouses, but particularly those who own short-term rental treehouses and may not be in regular, on-site contact with their properties, must be aware that treehouse hardware can shift over time, thus changing the load-bearing abilities of the massive treehouse attachment bolts (TABs). Vigilant monitoring is the only thing that can prevent disaster.
A Booming Market Leaves Locals Concerned About a Correction
At present, the Gatlinburg market does appear to be veering into a buyers’ market, with most homes selling below list price (see “By the Numbers” sidebar) and local housing inventory rising. Of course, this does not necessarily mean a crash is imminent. However, as pandemic-era investors who may no longer be able to work remotely or who find Sevier County’s decision to classify some short-term rentals as commercial properties (resulting in higher tax rates on related income) does not work within their budget leave the area, there will likely be a significant slide in investment-property prices.
“The tourists are leaving the industry and the professionals are coming in and making the market better,” observed New York-based short-term rental operator Paul Kromidas in July 2023. At the time, he predicted this shift would happen “over 24 months.” This certainly could represent a substantial opportunity for investors looking for discounted rental properties later in 2024 or 2025.
Mashvisor analysts recommend investors remember the Gatlinburg area has a strong longer-term investment market also despite the headline domination by short-term properties. “[The market] is buoyed by local demand and a growing number of people seeking to experience Gatlinburg’s charm year-round,” they wrote, noting long-term rental properties posted occupancy rates higher than 90% in the area.
“The blend of short-term and long-term rental potential makes Gatlinburg’s rental market attractive for a range of investment strategies,” they concluded. Much like the city itself, Gatlinburg investors must remain open to the beautiful and varied potential hiding in the mountains of eastern Tennessee.
SIDEBAR 1
By the Numbers
$2.1 Billion — amount of money spent by visitors to the Great Smoky Mountain National Park in 2022 (Gatlinburg is a gateway town for the park)
National Parks Service
$23.9 Billion — estimated volume of direct spending by Great Smoky Mountain National Park visitors in 2022 in gateway communities
National Parks Service
3,636 — volume of the year-round population in Gatlinburg
U.S. Census, 2022
$559,000 — median sold home price in Gatlinburg in June 2024 (vs. $440,000 in June 2023)
Realtor.com
$750,000 — median listing price in Gatlinburg in June 2024 (vs. $788,250 in June 2023)
Realtor.com
5.4% — housing inventory had risen 5.4% year-over-year in Gatlinburg as of July 2024
RocketHomes.com
SIDEBAR 2
Wildfire Fallout & Recovery in Gatlinburg
In 2016, Gatlinburg made headlines for all the wrong reasons as wildfires decimated the town, killed 14 people, shut down hundreds of businesses and thousands of jobs, and actually locked residents and workers out of the area for more than a week. Even then, locals looked at the destruction and predicted the area would bounce back. They were right.
Between 2016 and 2018, Gatlinburg issued 335 new business licenses and the Great Smoky Mountains National Park broke visitor records annually. Those numbers were ultimately dwarfed during the COVID-19 pandemic, when the entire country seemed to head outdoors to places exactly like Gatlinburg. By 2021, there was new growth on the mountains and tourism was booming. “We knew if we stayed strong and worked together as a team, things would ultimately be for the better,” Marcus Wilson, marketing director for the local SkyLift Park attraction, observed at the time.
In 2016, the wildfire actually hampered Sevier County’s ability to send alert and evacuation notices. In 2021, the Emergency Management department reported both the county and the city can send mass notifications via multiple routes and warning sirens have been installed throughout the area. In 2022, that system worked successfully to send out evacuation notices when a mountainside cabin caught fire.
