“Tourism Among the Least Profitable Industries for Municipalities to Invest In,” Says Arctic Mayor

Northern Norway has become a hot spot for tourism in the last decade. Airbnb predicts Tromsø to be one of this year's most popular destinations and Lofoten accounts for three of the ten most profitable municipalities to own short-term rentals.

Short-term rentals have become Northern Norway's Klondike and rental platforms have created good opportunities for local entrepreneurship and increased tourism. At the same time, tourism puts pressure on infrastructure, services and not least nature. The municipalities report major issues in finding houses for residents and seasonal workers.

Who really benefit from the short-term rental boom? Does it benefit the local population in the strained municipalities?

The mayor of Vågan municipality, Vidar Thom Benjaminsen, says to High North News that tourism is not a good industry to invest in.

"For the municipal economy, tourism is among the least profitable industries to invest in."

Tourism boom in Tromsø and Lofoten

A new analysis conducted by Kunnskapsbanken Bodø (KBB) for Kunnskapsparken Nord-Norge shows an enormous growth in short-term rentals via the Airbnb platform in the North.

Platforms such as Finn.no and Booking.com are also widely used, with the latter especially popular among foreign tourists; however, no figures are available for these.

In Northern Norway, Tromsø largely attracts winter tourists, while the Lofoten municipalities of Moskenes, Flakstad, Vestvågøy, and Vågan attract summer tourists. However, the seasons are expanding toward year-round tourism, especially in Lofoten.

The figures show that the number of overnight stays in Tromsø nearly tripled from the first quarter of 2023 to the first quarter of 2025,  rising from 63,769 to 186,280.

In Lofoten, the number of overnight stays increased from 26,475 in the second quarter of 2023 to 50,220 in the second quarter of 2025. 

In January 2025, 3,382 unique units were booked in Tromsø, the highest number ever recorded. At the start of the summer, 1,559 different units were booked in Lofoten.

Much-needed income for the municipalities?

As increased tourism in the northern municipalities continues to strain both the local population and the environment, claims about the extent of tourism's contribution to the municipal economy have proliferated.

KBB has examined how much of the Airbnb income goes to the municipality.

In 2024, the Airbnb turnover in Tromsø was a whopping NOK 665 million.  Of the NOK 110 million in tax, about 65 million goes to Tromsø municipality. 40 million goes to the state, while the remaining 5 million goes to the county.

The tax revenues for Tromsø municipality are estimated at NOK 3,256 million in 2025. This means that tax revenues from Airbnb account for about 2.3 percent of total revenues.

However, the mayor of Vågan municipality believes that the development creates other problems that negatively affect the municipal economy.

"In recent years, we have seen that it is becoming increasingly difficult to find housing in the rental market, but in the past year, this has completely spun out of control. The rental market is well on its way to collapse," he says and continues:

"In a smaller scope, short-term rentals can contribute positively to the municipality's income. In some cases, the tax goes to the municipality. However, the economic downside of not being able to provide housing for our residents is also significant. Therefore, it is very uncertain what the actual economic effects are."

Wants regulation

Municipalities have long requested the authority to regulate short-term rentals directly.

What opportunities do municipalities have to regulate short-term rentals themselves?

"As with so many other things, municipalities are checkmated and relegated to the spectator's seat," says Benjaminsen.

However, the Ministry of Local Government and Regional Development has now announced that it will make it easier to regulate and monitor illegal short-term rentals.

"Homes are meant as residences and not hotels," the ministry writes in a press release.

The Minister of Local Government and Regional Development, Bjørnar Skjæran, writes to High North News that the challenges with short-term rentals primarily relate to situations where homes are purchased to systematically operate short-term rentals, which, in practice, means that hotel operations are taking place in residential areas.

"This can present a number of challenges. One is that desperately needed homes are removed from the rental market. The other is increased traffic, noise, and a sense of insecurity among residents of the local community. Renting out your home while you are on holiday has, as far as we know, not been highlighted as a problem."

The ministry will now examine measures to curb the purchase of homes for systematic short-term rentals.

"One single measure cannot solve the housing shortage situation in small tourism municipalities," says Skjæran and continues:

"Building more homes is part of the solution. At the same time, we must take the challenges that municipalities point out seriously and provide them with the tools they need to crack down on homes that are practically used as 'shadow hotels' in residential areas."

The Norwegian State Housing Bank has been tasked with cooperating with municipalities with a high rate of short-term rentals, in order to get an overview of the need for improved guidance and potential new measures. This work is to be ready in March 2026.

"Preliminary feedback shows that a majority of municipalities reporting challenges with short-term rentals highlight that they need clearer guidance on the boundary between residential and commercial use, the ability to collect rental data from rental platforms, and the ability to regulate short-term rentals locally. We are addressing this."

Municipalities must take action

The ministries are developing a guide for municipalities on the boundary between residential and commercial use. It is scheduled to be completed before Easter. 

In addition, changes to the Planning and Building Act will be considered to clarify and improve current regulations, allowing municipalities to more easily curb illegal short-term rentals.

"We are looking, among other things, at the possibility of giving municipalities clear authority to request information from rental platforms and landlords about the number of rental agreements and days in case of suspected illegal short-term rentals."

"We are also considering proposals that could give municipalities the right to regulate short-term rentals locally."

Finally, Skjæran adds that regardless of the regulations introduced, municipalities must be prepared for the fact that monitoring and enforcing illegal short-term rentals will be resource-intensive.