How to Start an Airbnb Business in Delaware

Why Delaware Is a Top Market for Short-Term Rentals

Delaware is the second-smallest state in the country, and most people outside the Mid-Atlantic wouldn’t think of it as an STR market. That’s the advantage. Delaware’s beaches serve as the summer escape for millions of residents across the Washington DC, Philadelphia, and Baltimore metro areas — a combined population of over 15 million people within a three-hour drive. When those families decide they want a beach weekend without flying, they head to Rehoboth Beach, Dewey Beach, or Bethany Beach. Your Airbnb is where they stay.

Delaware’s beach tourism generated over $3.8 billion in 2024 according to the Delaware Tourism Office. Rehoboth Beach alone attracts an estimated 7 million visitors annually, earning it the nickname “the Nation’s Summer Capital” for its popularity with DC-area families and government workers. That concentrated demand creates nightly rates that rival the Outer Banks and parts of the Jersey Shore, especially during the June-through-August peak.

Then there’s Delaware’s structural tax advantage. Delaware has no sales tax — one of only five states without one. That means guests shopping in Rehoboth Beach’s outlet malls and downtown boutiques keep more money in their pockets, which makes Delaware a more attractive vacation destination than tax-heavy alternatives. For operators, the lack of sales tax simplifies compliance and means your guests perceive better value, which supports higher occupancy.

Beyond the beaches, Delaware’s corporate hub in Wilmington draws business travelers year-round. Over 60% of Fortune 500 companies are incorporated in Delaware due to its business-friendly court system, and many maintain offices in the Wilmington metro area. Northern Delaware won’t match beach-town revenue, but it provides steady, year-round demand that complements a seasonal beach portfolio.

Property prices in Delaware’s beach towns are elevated — Rehoboth Beach median home prices sit around $600,000 — but rental arbitrage and properties in nearby towns like Lewes, Milton, or Georgetown offer more affordable entry points with strong STR revenue potential.

Delaware Short-Term Rental Laws and Regulations

Delaware’s regulatory framework for short-term rentals is evolving. The state has historically been permissive, but beach towns have increasingly adopted local regulations as STR density has grown in residential neighborhoods.

State-Level Requirements

Delaware requires all short-term rental operators to obtain a Delaware business license, which you can apply for through the Delaware One Stop Business Registration portal. The state also requires STR operators to collect and remit the 8% Delaware accommodations tax on all rentals of fewer than 30 consecutive days. This is a state-level tax, not a sales tax (Delaware has no sales tax).

All STR properties must comply with Delaware’s rental housing code, which includes fire safety requirements (smoke detectors, carbon monoxide detectors, fire extinguishers), minimum habitability standards, and occupancy limits based on square footage. Properties with pools or hot tubs must meet additional safety requirements including fencing, covers, and signage.

Key City Regulations

Rehoboth Beach: Delaware’s most popular beach town has the most detailed STR regulations in the state. Rehoboth requires a rental license for all short-term rental properties, issued by the city after a safety inspection. The city caps occupancy based on the number of bedrooms and requires properties to provide one parking space per bedroom. Rehoboth also enforces strict noise ordinances — quiet hours run from 10 PM to 8 AM, and violations can result in fines or license revocation. The city collects a 3% local accommodations tax on top of the state’s 8% rate, bringing total lodging taxes to 11%.

Dewey Beach: Just south of Rehoboth, Dewey Beach is known for a younger, more party-oriented crowd. The town requires a rental license and imposes occupancy limits tied to bedroom count plus an overall cap based on the property’s wastewater capacity. Dewey Beach has implemented a noise enforcement program with dedicated weekend patrols during summer months. Fines for noise violations start at $250 and escalate. The town collects a 3% local accommodations tax in addition to the state rate.

Bethany Beach and Fenwick Island: These quieter beach communities south of Dewey attract families and retirees. Regulations are similar to Rehoboth — rental licenses required, safety inspections, occupancy limits, and parking requirements. Both towns market themselves as family-friendly alternatives to Dewey Beach’s party scene, and their STR regulations reflect that identity. Noise enforcement is strict, and properties that attract complaint-generating guests risk losing their rental licenses.

Wilmington: Delaware’s largest city has minimal STR-specific regulations. A business license is required, and the state accommodations tax applies. Wilmington doesn’t impose occupancy limits or parking requirements specific to STRs. The city’s STR market is small but steady, driven by corporate travelers, healthcare visitors (Christiana Hospital system), and event attendees. Northern Delaware operates on completely different dynamics from the beach towns.

Recent Regulatory Changes (2025-2026)

Delaware introduced HB 248 in 2025, establishing a statewide STR registry. All operators must register their properties with the state Division of Revenue and display their registration number on all listings. The registry doesn’t impose additional restrictions but creates a tracking mechanism for tax compliance enforcement. Non-compliant operators face penalties starting at $500 per quarter of non-registration.

Rehoboth Beach amended its rental ordinance in late 2025 to require a minimum 48-hour gap between guest turnovers during peak season (Memorial Day through Labor Day). This rule effectively prevents same-day turnovers and was designed to reduce the impact of constant guest traffic on residential neighborhoods. If you’re operating in Rehoboth, factor this gap into your revenue projections for peak season — it reduces maximum annual bookable nights by approximately 10% to 15%.

Tax Obligations for Delaware Airbnb Hosts

Delaware’s tax structure is straightforward but often misunderstood because of the state’s famous “no sales tax” status. That applies to retail purchases, not accommodation rentals.

The primary tax is Delaware’s 8% state accommodations tax, which applies to all short-term rentals under 30 days. Beach towns add their own local accommodations tax — Rehoboth Beach, Dewey Beach, Bethany Beach, and Fenwick Island each add 3%, bringing the total to 11% in beach areas. Some communities may also levy a seasonal surcharge.

Airbnb collects and remits the 8% state accommodations tax automatically in Delaware. Local taxes are more variable — verify with your town whether the platform handles local collection or whether you need to file separately. In Rehoboth Beach, hosts must register directly with the city for local tax purposes regardless of platform remittance.

Delaware state income tax applies to your net rental profits at rates ranging from 2.2% to 6.6%, with the top rate applying to income above $60,000. All standard business deductions apply: mortgage interest, property taxes, insurance, utilities, cleaning, supplies, depreciation, and management expenses. If you’re operating through rental arbitrage, your lease payments are deductible as a business expense.

A key financial planning note for Delaware beach STR operators: your property taxes will be significantly higher than inland Delaware. Sussex County (which includes Rehoboth, Dewey, and Bethany Beach) assesses property values that reflect beach-town premiums. Budget accordingly — annual property taxes on a Rehoboth Beach property can run $3,000 to $8,000 depending on the property’s assessed value and proximity to the ocean.

Best Cities for Airbnb in Delaware

Delaware’s STR market is effectively two separate markets: the beach corridor in southern Delaware and the corporate corridor in northern Delaware. They share a state border and almost nothing else in terms of guest profiles, seasonality, and revenue patterns.

Rehoboth Beach

Rehoboth is the flagship of Delaware’s STR market and the primary destination for DC-area beachgoers. The boardwalk, downtown restaurants, Tanger Outlet shopping, and wide beaches create a vacation experience that generates fierce repeat visitor loyalty — many families have been coming to Rehoboth for generations.

Peak season ADRs (June through August) range from $250 to $600 for properties within a mile of the beach. Oceanfront or ocean-view properties can hit $700 to $1,200 per night during peak weekends (Fourth of July, Labor Day). Shoulder season rates (May, September, October) drop to $150 to $350. Winter is quiet — expect $80 to $150 ADRs with 15% to 25% occupancy from November through March.

Annual occupancy averages 52% to 64% due to the severe seasonal drop-off. Gross annual revenue for a well-managed three-bedroom property ranges from $48,000 to $90,000, with premium oceanfront properties exceeding $120,000. The summer months (particularly the 10-week stretch from mid-June through Labor Day) generate 65% to 75% of annual revenue.

The best investment properties in Rehoboth are within walking distance of the boardwalk or downtown. Properties further from the beach can still perform if they offer premium amenities — a pool, hot tub, outdoor kitchen, or exceptional design can compensate for a less-than-ideal location.

Dewey Beach

Dewey sits between Rehoboth Beach and the Indian River Inlet, offering ocean beaches on one side and the calm waters of Rehoboth Bay on the other. It’s smaller and more party-oriented than Rehoboth, attracting younger groups, bachelor and bachelorette parties, and twenty-to-thirty-something friend groups.

ADRs are slightly lower than Rehoboth — $200 to $500 during peak season — but larger properties that accommodate groups can command premium rates. A five-bedroom Dewey Beach house sleeping 10 to 12 guests can earn $3,000 to $5,000 per week in peak summer. Annual occupancy runs 48% to 58%, with gross revenue of $38,000 to $75,000.

Dewey’s guest profile means higher cleaning costs and more wear-and-tear compared to family-oriented Rehoboth. Budget for more frequent deep cleanings, furniture replacement, and potential damage claims. The revenue offsets these costs, but operational expenses per booking run 15% to 25% higher than comparable Rehoboth properties.

Bethany Beach / Fenwick Island

“The Quiet Resorts” — that’s how Bethany Beach and Fenwick Island market themselves, and it’s not just branding. These towns attract families with young children, retirees, and couples seeking a peaceful beach experience. The guest profile means lower damage risk, longer stays (full-week rentals are common), and higher repeat booking rates.

Peak ADRs run $200 to $450. Annual occupancy: 50% to 60%. Gross annual revenue: $40,000 to $72,000 for well-positioned properties. Bethany and Fenwick tend to book more full-week stays (Saturday-to-Saturday) during peak season compared to Rehoboth and Dewey’s higher proportion of weekend stays. This booking pattern means fewer turnovers and lower cleaning costs, which improves net margins.

Properties near the Bethany Beach boardwalk or with ocean views command the highest rates. Fenwick Island’s proximity to Ocean City, Maryland means some spillover demand from travelers who want a quieter alternative to OC’s party scene.

Lewes

Lewes offers a distinct angle — it’s a historic colonial town at the mouth of Delaware Bay with a Cape May-Lewes Ferry terminal connecting to Cape May, New Jersey. The town draws visitors for its historic downtown, craft breweries, Cape Henlopen State Park, and position as the gateway to Delaware’s beaches.

ADRs run $140 to $300, lower than Rehoboth but with potentially better margins due to lower property costs. Properties in downtown Lewes are walking distance to restaurants and shops, while Cape Henlopen-area properties attract outdoor recreation enthusiasts. Annual occupancy: 48% to 60%. Gross revenue: $30,000 to $55,000. Lewes is an excellent entry point for operators who find Rehoboth Beach property prices prohibitive.

How Much Do Airbnbs Make in Delaware?

Delaware’s STR revenue is heavily concentrated in the beach corridor. Here’s how the numbers break down across markets.

The revenue ceiling in Delaware’s beach market is high, but so is the investment threshold. The operators who generate $80,000+ annually typically have oceanfront or ocean-view properties that cost $500,000 or more. The path for new operators or those with limited capital is either targeting secondary markets (Lewes, Milton) or using strategies to profit without owning property — rental arbitrage is challenging in Rehoboth itself due to limited rental inventory and landlord resistance, but more accessible in towns like Lewes and Milford.

How to Start Your Delaware Airbnb Business

Delaware’s STR market has a short window to capture the majority of your annual revenue. Every decision in the launch process should prioritize being fully operational before Memorial Day weekend.

Step 1: Define Your Beach Market Position. Rehoboth for maximum revenue but highest investment. Dewey for the group/party niche. Bethany for family-oriented longer stays. Lewes for history/nature appeal at a lower price point. Wilmington for year-round corporate demand. Don’t spread across multiple beach towns initially — master one market first, then expand.

Step 2: Time Your Launch. Delaware beach STRs make their money from Memorial Day through Labor Day. If you can be operational by April, you capture the full shoulder season and build reviews before peak summer demand. A July launch means missing the most profitable weeks of the year. Work backward from May 1 and build your timeline accordingly.

Step 3: Navigate Permitting. Register for your Delaware business license through the One Stop portal. Apply for your town’s rental license — in Rehoboth, this requires a safety inspection, so schedule early (inspectors get backed up in spring). Register for state accommodations tax. If your property has a pool or hot tub, ensure it meets the additional safety requirements before your inspection.

Step 4: Prepare for Beach Expectations. Delaware beach guests expect a specific experience: outdoor showers for rinsing off sand, beach chairs and umbrellas (or a recommendation for rental), a well-stocked kitchen for cooking, multiple bathrooms for larger groups, and reliable air conditioning. Missing any of these basics will show up in reviews. Invest in quality mattresses, crisp linens, and a strong WiFi connection — guests increasingly work remotely during their beach vacations.

Step 5: Build Your Pricing Calendar. Delaware beach pricing follows a predictable pattern: peak rates Memorial Day through Labor Day, shoulder rates (May, September, October), and steep discounts November through March. Use dynamic pricing software calibrated for Delaware beach seasonality. Don’t underprice July and August — demand outstrips supply in Delaware’s beach corridor, and pricing below market leaves money on the table. Set minimum stays (3 to 7 nights) during peak season to reduce turnover costs.

Step 6: Establish a Local Operations Team. You need cleaners who can turn a property in four to six hours between guests (remember Rehoboth’s 48-hour turnover gap). You need a maintenance person for the inevitable AC repair on the hottest weekend of the summer. A co-hosting partner is valuable if you don’t live within 90 minutes of your property — Delaware beach STRs require hands-on attention during peak season.

Step 7: Market Beyond Airbnb. Delaware’s beach rental market has a strong tradition of direct booking through local property management companies and repeat guests. Build a direct booking website or social media presence to capture guests who’ve stayed once and want to return. Repeat guests are the backbone of profitable Delaware STR operations — they book earlier, stay longer, and cause fewer issues than one-time visitors.

Delaware STR Insurance and Liability

Coastal Delaware presents specific insurance challenges that inland operators don’t face. Wind, flooding, and storm surge from nor’easters and occasional hurricane remnants are real risks that require specialized coverage.

A dedicated STR insurance policy for a Delaware beach property typically runs $2,000 to $5,000 annually, reflecting the coastal risk premium. Inland Delaware properties (Wilmington area) are more affordable at $1,200 to $2,500. Proper Insurance, CBIZ, and Safely all offer Delaware beach-specific policies. Get quotes from at least three providers — premiums vary significantly for coastal properties.

Flood insurance is separate from your STR policy and essential for beach properties. Most Delaware beach towns fall within FEMA flood zones, and standard insurance policies explicitly exclude flood damage. The National Flood Insurance Program (NFIP) provides coverage up to $250,000 for the building and $100,000 for contents, with premiums ranging from $800 to $4,000+ depending on flood zone and property elevation. Private flood insurance may offer higher coverage limits at competitive rates.

Wind and storm damage coverage deserves special attention. Some STR policies limit windstorm coverage or impose separate, higher deductibles for wind-related claims. In Delaware’s beach corridor, wind deductibles of 2% to 5% of the insured value are common — on a $500,000 property, that’s a $10,000 to $25,000 out-of-pocket cost before insurance kicks in for a wind claim. Understand your deductible structure before purchasing. For more on what Airbnb’s own insurance does and doesn’t cover in these scenarios, see our insurance coverage guide.

Pool and hot tub liability is another consideration for Delaware beach properties. An umbrella policy ($1 million coverage for $200 to $400 annually) provides an additional layer of protection against guest injury claims that exceed your base policy limits.

Why 10XBNB Gives You the Edge in Delaware

Delaware’s beach STR market operates on razor-thin timing. You make or break your year in a 14-week window, and the operators who maximize every aspect of those summer months — pricing, occupancy, guest experience, review collection — pull ahead of competitors who leave revenue on the table through conservative pricing or operational gaps.

10XBNB teaches the exact systems for maximizing seasonal markets like Delaware’s beach corridor. From dynamic pricing strategies that capture peak-demand rates without losing shoulder-season bookings to listing optimization techniques that push your property to the top of search results during the critical January-through-March booking window (when DC and Philly families are planning their summer), the framework covers every revenue lever.

The 10XBNB community includes operators working Delaware’s beach markets who share real-time insights on regulatory changes, pricing trends, and operational strategies. That peer network is particularly valuable in a market where local knowledge — knowing which Rehoboth streets flood, which cleaners are reliable, which inspectors are backed up — makes a tangible financial difference. See how Delaware compares in our best states for Airbnb analysis.

Frequently Asked Questions