How to Start an Airbnb Business in Rhode Island

Rhode Island is the smallest state in the country — 1,214 square miles — but its shoreline stretches over 400 miles, and that coastline is where the money is. Newport alone draws 3.5 million visitors annually. Providence’s culinary and arts scene pulls convention attendees and weekend travelers from Boston and New York. Block Island operates as one of the most exclusive vacation destinations on the East Coast, with summer ADRs that rival Cape Cod and the Hamptons.

The math is simple: concentrated tourist demand plus severely limited land supply equals premium nightly rates. Rhode Island hosts in prime coastal locations command some of the highest per-night rates in New England. A three-bedroom in Newport’s waterfront area can gross $80,000-$120,000 in a strong summer season. Even modest properties in Narragansett or Westerly pull $40,000-$60,000.

But Rhode Island also has some of the region’s tightest STR regulations, and the tax environment is more complex than neighboring Connecticut or Massachusetts. This guide covers the full picture — where the money is, what the rules are, and how to build a compliant, profitable short-term rental business in the Ocean State. If you’re evaluating rental arbitrage or purchase opportunities, you’ll need every detail here.

Why Rhode Island Is a Top Market for Short-Term Rentals

Rhode Island’s STR opportunity comes from a rare combination of coastal scarcity and concentrated demand:

• Coastal premium pricing. Rhode Island’s 400+ miles of coastline create waterfront and water-view inventory that commands exceptional nightly rates. Properties within walking distance of the beach in Narragansett, Westerly (Misquamicut), or Watch Hill regularly command $250-$500/night during summer.
• Newport’s year-round tourism. Unlike many New England coastal towns that shut down after Labor Day, Newport maintains significant off-season demand. The Cliff Walk, mansion tours, sailing events, and a robust restaurant scene draw visitors October through May. Several major events — the Newport Jazz Festival, Newport Folk Festival, and Newport Flower Show — create demand spikes outside peak summer.
• Block Island exclusivity. Block Island operates as a premium destination with extremely limited accommodation inventory. Hotels fill quickly, pushing overflow demand to vacation rentals at premium rates. Summer ADRs for Block Island properties range $300-$800/night for modest cottages.
• Proximity to major metros. Providence sits 50 minutes from Boston and 3 hours from New York City. The entire Rhode Island coast is within easy driving distance of 20+ million people in the Boston-NYC corridor.
• University and hospital demand. Brown University, RISD, the University of Rhode Island, Providence College, and major hospital systems (Lifespan, Care New England) generate steady non-tourist demand for parent weekends, graduations, medical appointments, and visiting faculty.

Rhode Island’s compact size is actually an advantage for STR operators. You can manage multiple properties across the state without excessive drive times. Newport to Westerly is 45 minutes. Providence to Narragansett is 35 minutes. A portfolio scattered across three coastal towns is still operationally manageable from a single home base.

Rhode Island Short-Term Rental Laws and Regulations

Rhode Island’s regulatory environment for short-term rentals is stricter than most New England states. The state enacted comprehensive STR legislation in 2021 (Rhode Island General Laws 34-18.1), creating a statewide framework that municipalities build upon. Understanding both state and local rules is essential before listing.

State-Level Requirements

• Mandatory registration. Rhode Island requires all short-term rental operators to register with the state through the Rhode Island Division of Taxation. You receive a tax registration number that must appear on your listings.
• State hotel tax collection. STR operators must collect and remit the state’s 5% hotel tax plus a 1% statewide surcharge on all stays under 30 days. Register through the Rhode Island Division of Taxation.
• Fire safety compliance. Properties must meet Rhode Island’s fire code, including smoke detectors in every bedroom, carbon monoxide detectors on every level, and a fire extinguisher in the kitchen area. Properties with three or more rental units may require a fire safety inspection.
• Annual compliance reporting. The state requires STR operators to file annual reports confirming continued compliance with safety and tax requirements.

Key City Regulations

Newport: Newport has among the strictest STR rules in Rhode Island. The city requires a Short-Term Rental Certificate, which involves an application to the Building Official’s office, a fire and safety inspection, proof of insurance, and a $300 annual fee. Newport caps the number of non-owner-occupied STR certificates in residential zones, creating a limited permit system. Properties must meet minimum parking requirements (one space per bedroom). The city actively enforces against unpermitted rentals — fines start at $500 per day. If you’re serious about Newport, apply for your certificate well before peak season, as the review process can take 6-8 weeks.

Providence: Providence requires STR registration through the city’s Department of Inspection and Standards. The registration fee is approximately $150 annually. Providence distinguishes between hosted (owner-present) and unhosted (owner-absent) rentals, with additional requirements for unhosted properties including a local contact person within 30 minutes. The city’s approach is more moderate than Newport’s — there are no caps on permits, but compliance with zoning, parking, and safety standards is enforced.

Narragansett: This beach town has tightened STR rules significantly. Narragansett requires a Short-Term Rental License ($200/year), limits non-owner-occupied STRs to specific zones, and enforces strict occupancy limits based on septic capacity and bedroom count. Noise complaints trigger reviews, and repeat violations can result in license revocation. The summer party-house crackdown has been aggressive — properties marketed to large groups face particular scrutiny.

Westerly / Misquamicut: Westerly requires STR registration and compliance with town zoning. The Misquamicut beach area is prime STR territory but faces seasonal noise and parking enforcement. Westerly’s regulations focus on parking (minimum one space per bedroom), trash management, and occupancy limits. Registration fees are modest ($100-$150). The town has not implemented caps but monitors STR density in residential neighborhoods.

Recent Regulatory Changes (2025-2026)

Rhode Island’s legislature considered additional STR regulation in 2025, including proposals for a statewide STR registry database and increased penalties for tax non-compliance. The registry proposal passed and is being implemented through 2026. Newport has reduced its non-owner-occupied STR cap slightly, making permits more competitive. South Kingstown (which includes Narragansett Pier) continues to refine its STR zoning approach.

The regulatory trend in Rhode Island leans toward tighter municipal control, particularly in high-demand coastal communities. Operators who secure permits early and maintain compliance records have a significant competitive advantage — as permit caps tighten, existing licensed operators become more valuable.

Tax Obligations for Rhode Island Airbnb Hosts

Rhode Island’s tax burden on STR operators is moderate but involves multiple components that add up.

State hotel tax (5%): All short-term rental stays under 30 consecutive days are subject to Rhode Island’s 5% hotel tax. This applies to the entire rental amount including cleaning fees in most cases.

Statewide local hotel surcharge (1%): An additional 1% surcharge applies to all hotel and STR stays statewide. This is collected and remitted alongside the 5% state hotel tax, for a combined state-level rate of 6%.

Local hotel tax (up to 6%): Municipalities can impose additional local hotel taxes up to 6%. Newport charges the full 6% local tax. Providence charges 5%. Warwick charges 5%. Narragansett charges 4%. When combined with the state 6%, total accommodation taxes can reach 12% in Newport — one of the highest in the region.

State sales tax (7%): Rhode Island’s 7% sales tax generally does not apply to room rentals that are already subject to the hotel tax. However, if you provide additional taxable services (equipment rental, etc.), sales tax may apply to those services separately.

State income tax: Rhode Island has a graduated income tax with a top rate of 5.99% on income over $166,950. Net rental profits are subject to state income tax. For most STR operators, the effective rate will be 3.75-4.75%.

Platform tax collection: Airbnb collects and remits state and local hotel taxes in Rhode Island for stays booked through their platform. VRBO has similar arrangements. Verify your platform’s tax collection status, especially for local municipal taxes — some platforms don’t collect city-level taxes in smaller Rhode Island municipalities.

Best Cities for Airbnb in Rhode Island

Newport

Newport is Rhode Island’s crown jewel for STR operators — and its most challenging regulatory environment. The city’s unique combination of Gilded Age mansions, sailing culture, and walkable downtown creates year-round demand that most coastal New England towns can’t match. ADRs for a well-located two-bedroom average $225-$400 in summer and $150-$225 in the off-season. Occupancy runs 70-80% during summer months and 45-55% annually when you account for winter. A permitted two-bedroom in a good Newport location can gross $45,000-$65,000 annually. Waterfront properties and those near Thames Street or the Cliff Walk command the highest premiums. The barrier to entry is the permit system — once you have a Newport STR certificate, you hold a valuable and increasingly scarce asset.

Providence

Providence offers Rhode Island’s most consistent year-round demand. Brown University’s parent weekends, RISD events, convention traffic at the Rhode Island Convention Center, and WaterFire Providence (attracting 40,000+ per event night) create demand across all seasons. The city’s restaurant scene — Providence was named one of the top food cities in America by multiple publications — attracts culinary tourists from Boston and NYC. ADRs for a two-bedroom in desirable neighborhoods (Federal Hill, College Hill, East Side) average $140-$210. Annual occupancy runs 62-72%. Gross revenue for a well-managed two-bedroom: $35,000-$50,000. Arbitrage is viable in Providence — two-bedroom apartments in Federal Hill and Elmhurst lease for $1,400-$1,900/month.

Narragansett / South Kingstown

Narragansett Beach is one of Rhode Island’s most popular summer destinations. The town draws families, surfers (Narragansett has consistent breaks), and URI students’ families. ADRs during summer peak hit $250-$450 for a two-bedroom near the beach. The season is concentrated — June through August drives 60-70% of annual revenue. Off-season occupancy drops to 25-35%, though URI events and fall beach weekends help. Annual gross for a quality two-bedroom: $35,000-$55,000. The challenge is Narragansett’s tighter regulations and the seasonal concentration of revenue.

Westerly / Watch Hill / Misquamicut

Westerly encompasses some of Rhode Island’s most valuable coastal real estate. Watch Hill (made famous by Taylor Swift’s summer residence) commands ultra-premium rates — $500-$1,000+/night for quality properties. Misquamicut Beach offers more accessible pricing with ADRs of $200-$400 for a two-bedroom. The entire Westerly area benefits from proximity to the Connecticut border, which expands the feeder market. Seasonal concentration is even more pronounced than Narragansett — roughly 70% of annual revenue comes from June through August. A well-positioned Misquamicut two-bedroom can gross $30,000-$50,000 annually; Watch Hill properties significantly more.

Block Island

Block Island is Rhode Island’s most exclusive STR market. Accessible only by ferry or small plane, the island draws visitors willing to pay premium rates for its unspoiled beaches and car-free atmosphere. Summer ADRs for a two-bedroom cottage range $350-$700/night. The season is short (late May through September), and winter occupancy is essentially zero. Annual gross revenue depends entirely on summer bookings — a strong property can gross $40,000-$65,000 in those four to five months. Acquisition costs are high (even modest cottages start at $500K+), but the exclusivity creates pricing power that mainland properties can’t match. Limited STR supply on the island (there’s physically not much land) protects against competition.

How Much Do Airbnbs Make in Rhode Island?

Rhode Island’s per-night rates are among the highest in New England, but the seasonal concentration of demand means annual gross revenue depends heavily on how well you maximize the summer window.

A two-bedroom Newport property with a good location and professional management can gross $45,000-$65,000 annually. That breaks down roughly as: $25,000-$35,000 from June-August peak, $12,000-$18,000 from shoulder seasons (May, September-November), and $8,000-$12,000 from winter months (December-April). Newport’s ability to generate meaningful off-season revenue is what sets it apart from other Rhode Island coastal markets.

Pure beach towns like Narragansett and Misquamicut concentrate revenue more heavily. A Narragansett two-bedroom might gross $45,000 total, but $30,000 of that comes in the 12 weeks between Memorial Day and Labor Day. Hosting 10-12 weeks at $2,500-$3,500/week during summer is the business model — and it works, provided you don’t overpay for the property.

For operators who don’t own property, Providence offers the best arbitrage opportunity in Rhode Island. A two-bedroom in Federal Hill leased at $1,600/month and listed at $165/night with 65% occupancy generates approximately $39,100 in gross revenue. After the $19,200 annual lease, cleaning, supplies, taxes you handle directly, and platform fees, net profit per unit runs $6,000-$10,000. That’s solid for a state with this level of ADR.

Block Island represents the ceiling. A three-bedroom cottage grossing $60,000 in four months of summer rental sounds incredible until you factor in $600,000+ acquisition costs, high maintenance expenses for a saltwater-exposed island property, and the logistical challenges of managing a property accessible only by ferry.

How to Start Your Rhode Island Airbnb Business

Step 1: Choose your market strategy. Rhode Island’s compact geography means you’re choosing between coastal seasonal (Narragansett, Westerly, Block Island), coastal year-round (Newport), or urban year-round (Providence). Each has different revenue patterns, regulatory requirements, and capital needs. Providence arbitrage offers the lowest barrier to entry. Newport ownership offers the highest long-term value.

Step 2: Understand your municipality’s STR rules. This is not optional in Rhode Island. Newport requires inspection-based certificates with caps. Providence requires registration. Narragansett limits non-owner-occupied STRs in certain zones. Contact your city or town’s building department and get specific guidance in writing before committing capital.

Step 3: Register with the Rhode Island Division of Taxation. Apply for your tax registration number, which you’ll need for collecting the 5% state hotel tax, 1% surcharge, and any applicable local hotel taxes. This is a state requirement regardless of your municipality.

Step 4: Obtain local permits and inspections. In Newport, schedule your fire and safety inspection early — the inspection queue backs up before summer. In Providence, complete your city registration through the Department of Inspection and Standards. In beach communities, verify parking compliance and occupancy limits before furnishing.

Step 5: Form your business entity. File an LLC with the Rhode Island Secretary of State ($150 filing fee). Rhode Island also requires a $400 annual report filing for LLCs — factor this into your operating costs. The annual report is due between February 1 and May 1 each year.

Step 6: Secure appropriate insurance. Rhode Island’s coastal exposure demands robust coverage. More details in the insurance section below.

Step 7: Furnish for your target guest. Newport guests expect refined aesthetics — nautical-chic done well, not tacky. Narragansett guests want beach functionality — outdoor showers, beach gear, easy cleanup. Providence guests want modern urban convenience — walkability info, restaurant recommendations, quality coffee setup. Block Island guests want island charm and self-sufficiency (grocery stores are limited).

Step 8: Price aggressively for summer, strategically for off-season. Your pricing strategy should maximize every summer week while keeping occupancy alive in shoulder and winter months. In Newport, lower winter rates to capture off-season visitors who’d otherwise book hotels. In beach towns, consider weekly-only minimums in July and August (Saturday-to-Saturday), then switch to flexible minimums in fall.

Step 9: Build your review base before peak season. If you’re launching a new listing, go live in April or May with competitive pricing to accumulate 5-10 reviews before summer demand peaks. A listing with no reviews during the busiest weeks of the year leaves thousands of dollars on the table.

Rhode Island STR Insurance and Liability

Rhode Island’s coastal location creates specific insurance requirements that inland operators don’t face.

Hurricane and wind coverage: Rhode Island is exposed to Atlantic hurricanes and nor’easters. Your STR policy must include wind and named-storm coverage. Many standard policies have separate hurricane deductibles (typically 2-5% of the insured value). Review this carefully — a $500,000 property with a 5% hurricane deductible means you’d pay the first $25,000 of any hurricane-related claim.

Flood insurance: Many Rhode Island coastal properties sit in FEMA-designated flood zones. If you’re in a Special Flood Hazard Area, lenders require flood insurance. Even if you’re not in a designated zone, the proximity to the coast makes flood coverage strongly advisable. NFIP policies cover up to $250,000 in building coverage. Private flood insurance may be necessary for higher-value properties.

Coastal erosion: Some Rhode Island shoreline properties face long-term erosion risk. Standard policies may exclude erosion damage. If your property is near an eroding coastline (common in parts of Narragansett and Block Island), discuss erosion coverage specifically with your insurer.

Liability for water activities: If your listing promotes beach access, kayak use, or any water-adjacent activities, your liability exposure increases. Ensure your policy covers guest injuries related to water activities, even if they occur off your property.

STR insurance premiums in Rhode Island run higher than the national average — expect $2,000-$4,500 annually for a coastal property. Companies with Rhode Island experience include Proper, CBIZ, and Foremost. For a full breakdown of what’s covered, read our guide on insurance and Airbnb coverage.

Why 10XBNB Gives You the Edge in Rhode Island

Rhode Island’s STR market rewards precision. The margins are excellent in the right locations, but the regulatory complexity, high property costs, and seasonal demand concentration mean there’s very little room for error. A miscalculation on permit requirements, tax compliance, or pricing strategy can turn a profitable property into a money pit.

10XBNB equips you with the analytical framework to evaluate markets like Rhode Island with confidence. Our students learn to model seasonal revenue accurately (not just project summer rates across 12 months), navigate complex regulatory environments, optimize pricing across peak and off-season periods, and scale strategically through co-hosting arrangements that don’t require massive capital outlays.

The hosts who win in Rhode Island are the ones who operate professionally from day one. They secure their permits, price dynamically, deliver exceptional guest experiences, and reinvest in their properties. That systematic approach is exactly what 10XBNB teaches. See where Rhode Island ranks among the best states for Airbnb nationwide.

Frequently Asked Questions