Red Lodge, Montana Short Term Rental Regulations Guide for Airbnb hosts

Executive Overview

Short-term rentals ARE allowed in Red Lodge, MT as of the recent regulatory framework established through Ordinance No. 948. The city has implemented a comprehensive regulatory structure with specific classifications, limitations, and requirements for STR operations. The city council has established a cap limiting STRs to 16% of total dwelling units, with projected increases from 156 to 180 STRs representing approximately 10% of the city's 1,718 total housing units. Current regulations include owner-occupied exemptions, specific response time requirements, and compliance with fire safety codes.

What do Airbnb hosts actually earn in Red Lodge?

Red Lodge hosts earn a median $30,478/year with $251 ADR and 48% occupancy.

Top performers pull in $44,899+ per year.

See the full Red Lodge market breakdown

How to Start a Short-Term Rental Business in Red Lodge

Step 1: Property Assessment and Zoning Compliance

First, determine your property's zoning classification, as different zones have varying allowances for STR operations:

R-1 & R-2 (Low Density Rural/Urban): Residential zoning with STR allowances
R-3 (Medium Density - Country Club Estates): Specifically allows single-family STRs and day care
R-4 (High Density): Multiple unit allowances
C-1, C-2, C-3, C-4 (Commercial zones): Mixed commercial/residential allowances

Important: If your property is governed by a Homeowners Association (HOA), note that HOAs may impose stricter regulations than city policies. The city policy specifically addresses residential zones NOT governed by HOA policies.

Step 2: Classification and Business Model Selection

Red Lodge has established three primary STR classifications:

Owner-Occupied: Exempt from threshold limitations
Property Manager/Property Management Company: Limited to 55% of total STR threshold
All Others: Subject to remaining cap allocation

Step 3: Application and Licensing Process

Complete annual license review/renewal process
Apply for any required permits based on your property classification
Ensure compliance with resort tax requirements
Establish management response protocols (30-minute verbal response, 60-minute on-site response)

Step 4: Compliance Implementation

Meet Red Lodge Fire Department regulations and codes
Implement noise reduction measures (10 PM through 7 AM)
Establish parking management plans
Create "Good Neighbor Policy" procedures

Required Documents, Permits, Licenses, and Guidelines

Essential Requirements:

Business License: Employee Identification Number required for licensing administration
Annual License: Subject to annual review and renewal
Resort Tax Registration: Required for all STR operations
Fire Department Compliance Certificate: Meeting all Red Lodge Fire Department regulations
Zoning Compliance Verification: Based on your property's specific zoning designation

Definition Standards:

Short-Term Rental: Defined as rentals for 29 consecutive nights
Response Requirements: 30-minute verbal response capability and 60-minute on-site response capability

Quality of Life Standards:

Noise reduction protocols during 10 PM through 7 AM hours
Parking management plans that respect neighborhood equity
Public health, safety, and welfare compliance measures

Specific Regulations for Short-Term Rentals

City-Level Regulations (Red Lodge):

Operational Limits:

Total STR cap: 16% of total dwelling units (270 STRs maximum under current capacity)
Annual cap review process
Classification-based limitations (Owner-occupied exempt, property managers limited to 55% of total cap)

Performance Standards:

Fire safety code compliance mandatory
Noise reduction requirements (10 PM - 7 AM)
Response time requirements (30-minute verbal, 60-minute on-site)
Good Neighbor Policy adherence

Grandfather Provisions:

Current STR operators are grandfathered under previous zoning provisions
Existing operators have protected status under transition regulations

Zoning District Allowances:

R-1 & R-2: Low-density residential STR allowances
R-3: Medium-density specifically permits STRs (Country Club Estates)
R-4: High-density multiple unit allowances
C-1 through C-4: Commercial zone STR operations allowed

Enforcement Framework:

Hotline system for managing complaints
City software for streamlined compliance and transparency
Annual review and renewal requirements
Accountability measures for regulatory compliance

Economic Impact Requirements:

Resort tax compliance mandatory
Annual reporting and remittance procedures
Equity in remitting required resort tax across all operators

State-Level Regulations (Montana)

Note: Specific Montana state-level STR regulations were not detailed in the provided content. The analysis focuses on Red Lodge municipal regulations as requested.

County-Level Regulations (Carbon County)

Note: County-specific regulations were not detailed in the provided content. The analysis focuses on Red Lodge city regulations as they appear to be the primary governing framework.

Contact Information for Local Authority

City Leadership:

Mayor: Kristen Cogswell

Email: mayor@cityofredlofge.com

Ward 1 Council Members:

Jenn Battles: jbattlesward1@gmail.com
Kelly Heaton: heatonward1@gmail.com

Planning Department:

Planning Director: Courtney Long

Email: clong@cityofredlodge.com

Planning Board & Zoning Commission:

Chair: Al Bloomer
Phone: 406-671-2754
Email: atbloomer@hotmail.com

Source Pages and Reference Materials

Primary Source Document:

STR Research and Recommendations Presentation: redlodgecce.org/wp-content/uploads/2024/09/str-country-club-presentation-2023.pdf

Additional Reference Materials (as cited in presentation):

Red Lodge Zoning Regulations (June 2022): Available at cityofredlodge.net/com-dev/page/zoning-regulations-map
Short Term Advisory Committee Report (December 2022)
Short Term Advisory Committee Community Survey (November 2022)
City of Red Lodge Staff – Short Term Rental Summary (January 2023)

Investment Considerations: The regulatory framework shows Red Lodge's balanced approach to STR operations, balancing neighborhood preservation with economic development. The 16% cap provides substantial opportunity while maintaining residential character. The owner-occupied exemption creates advantages for local investors, while the professional management limitation encourages local oversight. The grandfather provisions protect existing investments, and the enforcement framework provides certainty for compliant operators.

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Ask the AI Advisor about Red Lodge

Red Lodge is a small mountain town nestled in the Beartooth Mountains of southern Montana, serving as the seat of Carbon County. With a population of roughly 2,100 residents, the town carries a frontier-meets-alpine character, with restored brick storefronts lining a compact main street and a steady undercurrent of outdoor enthusiasts passing through. It is best known as the northern terminus of the Beartooth Highway, a celebrated scenic byway that climbs above the treeline into some of the most dramatic high-country terrain in the lower 48. Red Lodge sits approximately 60 miles southwest of Billings, the nearest major city and Montana's largest urban center, and roughly 130 miles southeast of Bozeman.

Just outside of town, the Beartooth Highway (U.S. Route 212) winds about 68 miles from Red Lodge up over the Absaroka-Beartooth Wilderness and back down to the northeast entrance of Yellowstone. Often cited among the most scenic drives in North America, it climbs past alpine lakes, glacial cirques, and snowfields that linger well into summer, with the highest point sitting above 10,900 feet. Because of heavy snow at elevation, the road typically opens around Memorial Day and closes in mid-October, making the summer months especially busy with travelers, motorcyclists, and road-trippers.

Following the highway to its southern end brings visitors to the Yellowstone National Park northeast entrance near Cooke City, Montana, about a two-hour drive from Red Lodge. The route offers a quieter, more wilderness-oriented gateway into the park than the busier western entrances, with excellent wildlife viewing along the Lamar Valley and access to iconic sites such as the Lamar River and Slough Creek. Many travelers use Red Lodge as a base for both the scenic drive and a day-trip into the park, returning to the relative calm of a small town in the evening.

In the winter months, Red Lodge Mountain anchors the local economy with a ski area offering roughly 1,500 acres of skiable terrain just a few minutes from downtown. The resort caters to families and powder seekers alike, with a vertical drop of about 2,400 feet and a laid-back atmosphere that contrasts with the larger destination resorts in neighboring states. Hiking, mountain biking, fly fishing on the Rock Creek drainage, and horseback riding fill the warmer months, much of it accessible directly from the edges of town.

For short-term-rental investors, Red Lodge offers a compelling combination of limited lodging supply, dramatic seasonal swings in visitation, and a strong identity tied to a nationally recognized scenic drive. Summer brings road-trippers and Yellowstone-bound travelers, while winter draws skiers to the resort outside town. The town's walkable historic core, its small-town character, and its position as the gateway to the Beartooths together create a destination that visitors are willing to plan a trip around rather than simply pass through.