Updated on January 20, 2026
Across the country, bans or “effective bans” (rules so strict the activity can’t continue) on short-term rentals have reshaped visitor economies, shifted millions in spending, and triggered years of administrative and legal battles. In some cases, promised housing gains never materialized, while hotel rates soared and small businesses suffered. As Dana Lubner, Rent Responsibly’s Director of Community Development, noted in a 2025 RR Network post, the reasons behind these policies often follow the same chorus from city to city: regulations framed as safety or housing measures ultimately protect hotel markets.
In this article, we’ll examine five cities that imposed total or effective STR bans and the consequences that came in their wake.
New York City: 90% surge in hotel occupancy
When New York City’s Local Law 18 took effect in late 2023, the results were far from intended. The law requires hosts to register with the city, bans whole-home short-term rentals under 30 days unless the host is physically present, and prohibits more than two guests at a time—rules that effectively shut down most Airbnb-style rentals in the five boroughs. Airbnb listings plummeted 85%, dropping from more than 38,000 to roughly 6,800, according to an American Enterprise Institute (AEI) analysis. The city had registered just 417 legal STRs by mid-2025 despite enormous demand from families, budget travelers, and visitors needing kitchen-equipped stays.
The hotel industry has been the prime beneficiary of the law. As the AEI report notes, hotels had actively pushed for Local Law 18, framing it as a safety measure. The impact was immediate: hotel occupancy surged above 90%. Average nightly rates climbed into the high $300s and above $400 in many districts, even as supply constraints were supposedly easing. Neighborhoods that once benefited from STR guest spending saw their visitor flows collapse.
Critically, the anticipated housing benefits never materialized. STRs had represented just 1.4% of NYC’s housing stock, a sliver too small to significantly impact affordability. Studies cited by AEI found no clear evidence that the ban increased long-term housing availability or lowered rents.
What did increase? Complaints from travelers priced out of the city, and the administrative costs of enforcing a law that still has thousands of illegal listings to police.
Dallas: Legal fight leaves everyone in limbo
Dallas’s 2023–24 ordinances didn’t outlaw STRs outright, but they came close. The city prohibited STRs in single-family zones, effectively most residential neighborhoods, and capped STRs in multifamily buildings. Enforcement, however, became its own saga.
Legal challenges quickly piled up, leading a district court to block the city from enforcing the ban. Ironically, as Dallas was gearing up to host the 2026 FIFA World Cup, an event expected to put immense pressure on hotel capacities, city officials were petitioning the Texas Supreme Court by fall 2025 to lift the injunction. The timing highlights a crucial conflict between regulatory ambitions and infrastructural needs, underlining the drama of a city caught between policy intentions and global commitments. The city faces a paradox familiar to many local governments: officials argue that STRs disrupt neighborhoods, yet STRs often serve groups that hotels underserve, including traveling medical workers, families between homes, and people needing flexible, temporary lodging, as noted by the Dallas STRA.
Meanwhile, with enforcement stalled, hosts are operating in a state of limbo. The city spends heavily on legal fees, planning staff time, and enforcement infrastructure, and Dallas stands to lose thousands of rooms just as global tourism is set to arrive.
Whether STR reductions improve neighborhood conditions remains contested, but one cost is clear: The city’s regulatory strategy has created years of uncertainty for operators, travelers, and the city’s own economic planning.
Santa Monica: “Effective ban” fails to lower housing prices
Santa Monica’s Home Sharing Ordinance is often held up as the blueprint for an “effective ban,” and the data backs that up. Its provisions effectively prohibit whole-home rentals under 30 days unless the homeowner lives on-site, a requirement that wiped out much of its STR market.
A study from the Center for Growth and Opportunity found that once the city’s Home-Sharing Ordinance took effect, entire-home listings fell nearly 60% in just two years. Economist Cayrua Chaves documented the same drop, noting that the ordinance preserved only a tiny niche of owner-occupied home-shares. The result was a dramatic shift: families and larger travel groups who once stayed in neighborhood rentals were funneled either into hotels or across the border into Los Angeles, taking their spending with them.
Yet perhaps the most important outcome is what didn’t happen.
Multiple studies, including research cited by the Center for Growth and Opportunity study, found little to no significant drop in residential rents after Santa Monica reduced STR supply. The promised affordability improvements simply did not materialize at scale.
What did materialize were legal costs, lost visitor spending, and a concentration of remaining tourism in traditional hotel zones, exactly the dynamic critics warned about.
New Orleans: Hotels gain dominance
New Orleans has long been a flashpoint for STR policy. By 2025, the city was enforcing some of the strictest rules in the country, including:
- A one-per-block cap on STR licenses
- Primary-residence requirements
- On-site occupancy requirements
- Bans in parts of the French Quarter and other cultural districts
Airbnb removed more than 1,000 unlicensed listings in a single enforcement sweep, a shift that reshaped where visitors could stay and reduced the supply of STRs in the city.
Airbnb and local hosts sued New Orleans, arguing that its rules, including permit verification and density limits, violate property rights and unlawfully require platforms to enforce regulations.
And while specific business closures haven’t been widely chronicled in local press, a 2025 economic analysis commissioned by Airbnb and Charles River Associates estimated that strict STR regulations in cities like New Orleans are associated with billions in unrealized annual economic activity, including an estimated $1.6 billion in local guest spending that might have benefited restaurants, shops, and entertainment venues, highlighting the potential impact of shrinking visitor lodging options on neighborhood economies.
Maui, Hawaii: Zone-specific ban
Maui’s law to phase out several thousand vacation rentals doesn’t take effect until 2029, but its economic and legal consequences are already making waves. In 2025, the Maui County Council adopted Bill 9 to ban all “transient vacation rentals” in apartment-zoned districts over a period of five years. The policy’s proponents argued it would restore long-term housing to residents. In reality, it immediately prompted legal challenges, council gridlock, and a study warning of severe economic losses.
Phasing out these short-term rentals would remove over 6,000 units from Maui’s lodging supply, according to a University of Hawaii Economic Research Organization analysis commissioned by the county. This would lead to projected annual losses of $900 million in visitor spending, a reduction of 1,900 jobs, and a $75 million shrinkage in state and county tax revenues. While the report found that some housing units might eventually convert to long-term use, the economic loss would outweigh any housing gains.
In December 2025, the Maui County Council deadlocked on rezoning legislation that would exempt certain short-term rentals in tourist hotspots from the phaseout, according to Honolulu Civil Beat. Meanwhile, short-term rental owners sued the county, arguing that Bill 9 violates their constitutionally protected property rights.
The legal quagmire risks years of litigation with an uncertain outcome and the expenditure of vast sums of public tax dollars to defend a policy that may never be implemented.
“Some say the economic impacts will come later, but I already see and feel the effects in my district,” wrote Council Member Tom Cook in an op-ed in Maui Now, explaining why he voted against Bill 9. “I’ve spoken with housekeepers, landscapers, maintenance workers, cleaners, small business owners, and property managers who have had their hours cut, their contracts canceled, their positions eliminated, and their clients pulled back out of fear. These impacts are happening today, and many of the workers losing income are the same local families we all say we want to help.”
Maui’s experience reinforces the need for local governments to realistically weigh housing benefits against economic losses and to pressure test proposals likely to draw constitutional challenges before passing such policies.
Many regulations framed as “protecting housing” ultimately reshaped tourism more than residential markets and often benefited hotel operators most.
As the AEI report highlighted, STRs are frequently scapegoated, while entrenched industries quietly shape the rules to their advantage.
Cities have every right and responsibility to manage STRs thoughtfully. However, these case studies illustrate what happens when lawmakers choose bans: communities lose economic vitality, lodging diversity, and local entrepreneurship for housing gains that fail to compensate for the losses.
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