The Surprising Appalachian Hot Spots That Are ‘Very Profitable’ for Short-Term Rental Investors

The pandemic changed many things for many people, including the way they vacationed.

Instead of long flights to big-city destinations, family road trips to outdoorsy vacation rentals surged in popularity. And today, while pandemic restrictions have long since receded, it seems some of those vacation habits have lingered.

A new Realtor.com® analysis of data provided by analytics firm AirDNA reveals two of the short-term rental markets that surged in the pandemic have continued to boom even after life returned to normal. An influx of investor homebuyers have sent home prices soaring in these places.

As measured by nights booked through major short-term rental platforms, such as AirBnB and VRBO, two lesser-known nature destinations in Appalachia were the biggest pandemic winners: Ohio’s Hocking Hills and Red River Gorge in Kentucky.

Those two areas, both near sprawling state parks, saw explosive growth in vacation rental demand during the pandemic and continued to far outpace the U.S. average as society reopened. From 2019 to 2023, vacation rental demand in Hocking Hills climbed 254%, while Red River Gorge jumped 216%—the two highest growth rates of any market in the country.

“It’s kind of a surprise,” says Bram Gallagher, AirDNA director of economics and forecasting. “We expected, right after the pandemic, that people would want to be getting out into the wild. But to some extent, this has continued in these areas because the affordability is still there for homes, so you can expand the supply of rentals.”

Both Hocking Hills and Red River Gorge are “very profitable” for short-term rentals, says Brett Deas, co-founder of The Hideaways, a boutique hospitality brand that operates vacation rentals in both regions, as well as in Georgia, Colorado, and Washington.

“From a numbers perspective, if Hocking Hills and Red River Gorge were on a spreadsheet with 98 other markets averaged out, they would stand out,” he says.

Data from AirDNA shows that the Hocking Hills region's revenue per available rental—a measure of the average daily revenue per unit—was $184 last year, up 30% from 2019. Red River Gorge averaged $127 last year, up 20% from four years earlier.

Those figures pale in comparison to the most expensive markets, such as Aspen, CO; Kauai, HI; and Key West, FL, where revenue per available unit topped $300 last year. But sky-high property values in those high-demand destinations can quickly eat into profits, making Appalachia's outdoor hotspots attractive to investors.

Home prices in both Hocking Hills and Red River Gorge have roughly doubled since 2019, driven in large part by investor demand for short-term rental properties. Still, prices in both areas remain well below the U.S. median.

In 2023, the median list price in Hocking Hills was $381,704, while in Red River Gorge it stood at $281,669—compared to the national median of $426,506, according to Realtor.com data.

An analysis of deed records reveals that corporate buyers made 26% of all home purchases in the Hocking Hills area last year, up from 18% in 2019. In Red River Gorge, corporate buyer share surged to 20% last year, from 9% four years earlier.

“We saw major, major growth after the pandemic, and I think the biggest explosion has happened in short-term rental investors,” says Amanda Myers, who specializes in short-term rentals near Hocking Hills as an associate broker and team owner for Freedom Property Group.

According to Myers, most of those investors are smaller operations with fewer than 10 rental properties. Many are even newcomers to the rental market, she says; although larger multimillion-dollar properties tend to attract bigger players with sizable rental portfolios.

As for their enduring post-pandemic popularity as vacation destinations, Hocking Hills benefits from an easy one-hour driving distance from Columbus, OH, while Red River Gorge is about 90 minutes from Lexington, KY.

“Tourism is a really big repeat business," Gallagher notes. "So when you get a big event like the pandemic, it shifts people's behavior–and it may be permanent because they've got memories of good times at those places."

Hocking Hills, OH

Median 2023 list price: $381,704
List price change, 2019-2023: 110%
STR demand growth, 2019-2023: 254%
Share of corporate buyers, 2023: 26%

Situated about 50 miles southeast of Columbus, OH, the Hocking Hills region is anchored by Logan, OH, a town of about 7,300 in the foothills of the Appalachian mountains.

Nearby Lake Logan State Park offers fishing, swimming, and boating. But the area is perhaps best known for its hiking trails at Hocking Hills State Park, which feature waterfalls, caves, and scenic cliffs.

“​​There's canoeing, there's ziplining, ATV riding–all kinds of outdoor activities,” says Myers. “So it's really, really outdoor based.”

Meanwhile, the town of Logan offers plenty of restaurants, bars, and shops for travelers who don’t wish to stray too far from the grid.

According to Myers, zoning rules within the Logan city limits are tighter for short-term rentals, requiring a special variance to list homes on booking platforms. That helps keep some housing stock available for locals, she says, even as investors snap up rural properties closer to the area’s hiking spots.

Deas says The Hideaway’s vacation properties in Hocking Hills typically attract visitors from within a five-hour drive—a radius that includes Cincinnati, Columbus, and Cleveland, as well as the occasional visitor from Pittsburgh.

Red River Gorge, KY

Median 2023 list price: $281,669
List price change, 2019-2023: 98%
STR demand growth, 2019-2023: 216%
Share of corporate buyers, 2023: 20%

About 70 miles east of Lexington, Red River Gorge is a canyon system within Daniel Boone National Forest, directly adjacent to Natural Bridge State Park.

The area is locally famous for its striking rock formations, including the Natural Bridge—a 65-foot-tall, sandstone arch that is accessible to day hikers.

Rock climbers also flock to the Gorge from around the world for the area’s many sandstone cliffs and bolted routes. Their base-camp is Miguel’s Pizza, a combination restaurant and climbing-gear shop in the heart of the forest.

Homebuyer demand in the area “has just exploded since 2020, maybe due to Covid but also due to the extreme popularity of the Gorge,” says Nancy Hamann, a real estate broker at Red River Gorge Realty, who also manages vacation rentals in the area. “Covid just made mountain cabins very popular. ... Developers piled in and bought acres and acres and started building, subdividing, and selling lots. And that's still going on.”

Hamann says she’s seen strong interest from families looking to buy second homes to rent out on the side for extra income. Most are from within a three-hour drive, including the cities of Louisville, KY; Cincinnati; Dayton, OH; and southern Indiana.

“It's the first mountain range, really, for people in Indiana, Ohio, or even northern Kentucky," she says. "So that's why we get a lot of those folks here."

But for prospective investors hoping to turn a profit, Hamann warns that home prices in the area might be too high to recoup through vacation rentals, since the area is mostly known as a long-weekend destination.

“There are only so many weekends in the year,” she remarks. “If you're really looking for a great return on investment, I would say that window of opportunity has passed.”