Kentucky's Bourbon Trail drew a record 2.7 million visits in 2025 — roughly 80% of them from out of state, and about 62% from households earning $100,000 or more. Bardstown didn't get its first purpose-built bourbon-tourism hotel until May 2025. Heaven Hill's $135 million “Project Phoenix” distillery expansion, along with ten-plus other distillery projects, is landing right now. And as of this writing, essentially no real estate brand in Kentucky has built a dedicated short-term-rental investment practice around this region.
That's the opportunity. This guide breaks down real listing data for the five Bourbon Trail counties where short-term rental demand is running well ahead of lodging supply, what the local regulations actually require, and how the numbers pencil for an investor buying today.
Why the Bourbon Trail Is the Most Wide-Open Airbnb Market in Kentucky
Most Kentucky short-term rental content is written about Louisville and, to a lesser extent, Lexington. Almost none of it is written specifically about the small towns strung along the Bourbon Trail — Bardstown, Lawrenceburg, Frankfort, Versailles, and Loretto — even though these towns are absorbing a disproportionate share of the state's fastest-growing tourism traffic. Hotel supply in most of these towns is genuinely limited, which is exactly the condition that makes short-term rentals valuable to both guests and owners.
The distillery investment underway right now compounds the case: Heaven Hill's Project Phoenix and a wave of other expansions mean the visitor numbers driving this market are not a peak, they're a floor that's still being built out.
The Numbers, County by County
Bardstown / Nelson County
76 active short-term rental listings, averaging a $204 nightly rate at roughly 26% occupancy — a blended average of about $35,300 per year. Larger homes do meaningfully better: 5-bedroom properties in the Bardstown area are averaging closer to $76,800 per year. Bardstown requires a Conditional Use Permit and Tourist Commission registration, and has generally allowed short-term rentals only in detached single-family homes. Nelson County has previously considered a CUP moratorium; confirm the current status directly with the county before making an offer contingent on STR use.
Anderson County / Lawrenceburg
Lawrenceburg requires a Conditional Use Permit plus separate city and county permits. One detail investors miss: Airbnb only remits Kentucky's state lodging tax on a host's behalf here — the owner is responsible for self-remitting the local 3% transient room tax directly to the county. Listing density here is lower than Bardstown or Versailles, which cuts both ways: less competition, but also less public performance data to underwrite against. Worth a direct call to the county before assuming numbers.
Frankfort / Franklin County
113 active listings — the highest count of the five — at a lower $95 average nightly rate but a much higher 68% occupancy, averaging around $16,000 per year. Frankfort trades ceiling for consistency: it's a steadier, lower-volatility STR market than Bardstown or Versailles. Owners need an annual registration (due May 1) and a mandatory annual inspection, and Frankfort's local tax stack is one of the heavier ones on the Trail: state tax plus city, county, and a 2% Fine Arts Tax.
Versailles / Woodford County
45 active listings averaging a $250 nightly rate — the highest ADR on the Trail — at about 24% occupancy, averaging roughly $34,800 per year. Most residential districts require a Conditional Use Permit, and short-term rentals in R-2/R-3 zoning are generally limited to within Versailles city limits (R-3 is also allowed in Midway). Woodford County's blend of Keeneland-adjacent horse country and bourbon tourism gives it a somewhat different guest mix than the other four counties.
Loretto / Marion County
Marion County, home to Maker's Mark, is the least-documented of the five markets in public short-term rental data — which is itself the point: it's the least-picked-over county on the Trail. Regulations here should be confirmed directly with the county before buying; there isn't enough public listing data yet to publish reliable performance averages, and we'd rather tell you that plainly than make up a number.
Seasonality and the regional picture
Bourbon Trail seasonality is real and worth underwriting for: October revenue in Bardstown and Versailles runs roughly 3.8–4x what the same properties earn in February. The bourbon industry itself contributes an estimated $10.6 billion a year to Kentucky's economy and supports about 24,000 jobs — the demand underneath these numbers isn't a fad, it's tied to one of the state's largest and fastest-growing industries.
What Actually Changed in 2025–2026 That Makes This the Moment
Senate Bill 110, a 2025 attempt to preempt local short-term rental regulation at the state level, died in committee — which means the patchwork of county-by-county rules described above holds for now, rather than being overridden by a single statewide standard. Combined with the current wave of distillery expansion investment and 2025's record visitor numbers, the underlying demand for Bourbon Trail lodging is growing faster than the regulatory environment is tightening.
The Tax Angle Most Investors Miss
A short-term rental can qualify for a very different tax treatment than a standard long-term rental. If a property's average guest stay is 7 days or less, the IRS generally treats it as a trade or business rather than a passive rental activity — a much lower bar to clear than the 750-hour Real Estate Professional Status test most investors have heard of. That opens the door to cost segregation: an engineering study that reclassifies a meaningful share of a furnished STR's value (commonly 20–35%) into categories that depreciate far faster than the building itself, combined with 100% bonus depreciation, which is back and permanent for property acquired after January 19, 2025.
This isn't tax advice, and every situation is different — talk to your CPA about whether cost segregation makes sense for a specific property before you buy. If you want to see roughly what the numbers could look like on a property you're considering, our free STR cash flow calculator includes an illustrative cost-segregation estimate alongside the standard cash-on-cash and cap rate numbers.
How to Actually Buy Here
Every one of these five counties treats short-term rentals differently — permit type, owner-occupancy rules, tax remittance, even which residential districts allow it at all. That's the single biggest way an out-of-town buyer gets burned: closing on a property before confirming it can legally operate as an Airbnb under current zoning. Financing matters too — many conventional lenders underwrite STR income differently than long-term rental income, and a knowledgeable agent can help you structure an offer around that from the start rather than discovering a problem at underwriting.
Winner Realty works with investors across Louisville, Southern Indiana, Lexington, the Bourbon Trail, and Indianapolis who are buying short-term rentals specifically — not as a side note to a general residential practice. If you're looking at a property in any of these five counties, schedule a time to talk through it before you write an offer.
Frequently asked questions
Are Airbnbs legal on the Bourbon Trail?
It depends entirely on the county and, in some cases, the specific residential district. Most of the five Bourbon Trail counties require a Conditional Use Permit or annual registration, and several restrict short-term rentals to detached single-family homes or specific zoning districts. Always confirm current rules with the specific county before making an offer contingent on short-term rental use.
Which Bourbon Trail town has the best Airbnb returns right now?
It depends on what you're optimizing for. Bardstown and Versailles post the highest average nightly rates ($204 and $250) but lower occupancy (24–26%). Frankfort trades rate for consistency, with a lower $95 average nightly rate but 68% occupancy and steadier year-round income. Larger homes (5+ bedrooms) meaningfully outperform smaller ones across all five counties.
Do I need to live in Nelson County to run an Airbnb in Bardstown?
Generally no — most Bourbon Trail jurisdictions don't require owner-occupancy for a detached single-family home operated as a short-term rental, but this varies by county and can change. Always verify current zoning and permit requirements before buying.
What's the tax benefit everyone talks about with Airbnbs?
If a property averages 7-day-or-shorter guest stays, it can be treated as a trade or business rather than a passive rental, which opens the door to cost segregation and 100% bonus depreciation on the portion of the building reclassified into faster-depreciating categories. This is a meaningful potential benefit, but it's not automatic and it's not tax advice — talk to your CPA about your specific situation.
Is the Bourbon Trail STR market at risk of new bans?
A 2025 bill (SB 110) that would have preempted local short-term rental regulation at the state level died in committee, so county-by-county local control holds for now. It's worth keeping an eye on future legislative sessions, but there's no active statewide ban or preemption in effect.
How do I get started?
Reach out to Winner Realty and we'll walk through your target county's regulations, run real numbers on specific properties, and help you structure financing around STR-specific underwriting. Schedule a time here.