Short-Term Rental (Airbnb) Compliance and the Tourism Levy in Kenya

Short-term and holiday rentals booked through platforms such as Airbnb and Booking.com have become a significant part of Kenya’s accommodation sector, particularly in Nairobi, Mombasa and Naivasha. Many hosts treat these rentals as a purely private, informal arrangement rather than a regulated tourism business. That assumption is wrong. A short-term rental let out to paying guests falls within Kenya’s tourism regulatory framework under the Tourism Act, attracts registration and licensing obligations enforced by the Tourism Regulatory Authority, is subject to the statutory Tourism Levy, and must also satisfy county-level licensing requirements. This article sets out what hosts, property managers and landlords in this space need to know to stay compliant.

Legal Status of Short-Term Rentals Under the Tourism Act

The Tourism Act, 2011 (Cap. 381) is the primary statute governing tourism enterprises in Kenya, and it establishes the Tourism Regulatory Authority (TRA) as the body responsible for regulating, registering, licensing and grading tourism-related activities countrywide. Section 7(1)(c) is explicit that the Authority’s mandate extends to registering, licensing and grading cottages and private residences engaged in guest house services, which squarely captures the self-contained apartments, villas, cottages and spare-room lettings marketed on short-term rental platforms.

Section 98 of the Act reinforces this by requiring any person who wishes to undertake a tourism activity or service listed in the Ninth Schedule to first obtain a licence from the Authority. Operating an unlicensed short-term rental is therefore not simply a matter of county by-laws or tax administration. It engages a national licensing regime, and hosts who list a property for paying guests without TRA registration are, strictly speaking, operating outside the law even where the property is lawfully owned and zoned for residential use.

The regulatory picture has recently been sharpened. The Tourism Regulatory Authority (Tourism Enterprises) Regulations, 2025, gazetted as Legal Notice No. 200 of 2025 (Kenya Gazette Supplement No. 213 of 16 December 2025), now expressly list homestays, guest houses, holiday cottages, villas, beach cottages and service flats or apartments as licensable “Class A” tourism enterprises alongside hotels and lodges, putting to rest any argument that short-term rentals fall outside tourism regulation.

Registration and Licensing Obligations for Hosts

Under the 2025 Regulations, a host operating a homestay, guest house, holiday cottage, villa or serviced apartment on a short-term basis must apply to the Tourism Regulatory Authority for registration and a licence before commencing operations. The Regulations set tiered application and annual licence fees by category and size. Homestays attract a modest one-off application fee and a low annual fee that varies by grade (economy, standard or executive), while guest houses and serviced apartments are charged on a sliding scale that rises with the number of beds or units.

Licensed hosts must display their licence prominently at the premises, and enterprises marketed online must display their licence identification, such as a serial number or QR code, on the listing itself. A compliant Airbnb-style listing should therefore visibly reference a valid TRA licence number. Licences expire on 31 December each year and must be renewed; a renewal submitted after expiry attracts a penalty of ten percent of the applicable fee for every month of default. Licensees must also keep guest records for at least five years and submit monthly occupancy, visitor-origin and revenue data to the Authority, with penalties under section 112(2) of the Tourism Act for non-compliance, including suspension or cancellation of the licence. A host with multiple units, such as a portfolio of serviced apartments, should treat each qualifying unit as falling within the licensing regime rather than assume that one registration covers an entire building.

The Tourism Levy: Rate, Collection and Remittance

Separately from the licensing fee, operators falling within the regulated tourism activities listed under the Tourism Act are liable to the Tourism Levy, established under the Act and the Tourism Levy Order. According to the Tourism Fund, the statutory body established under the Act to administer the levy, the Tourism Levy is charged at the rate of two percent (2%) on revenue from accommodation (including bed and breakfast and full or half board arrangements), food and drink sold by regulated tourism enterprises.

The obligation to collect the levy falls on the owner or operator, who must add it to the guest’s bill, collect it, and remit it to the Tourism Fund on or before the 10th day of the following month. Late remittance attracts a monetary penalty plus interest. The Tourism Fund channels collected levies toward tourism marketing, training at institutions such as Kenya Utalii College, and broader sector development. For a host, this means that alongside ordinary income tax and any applicable VAT position, a short-term rental business must separately account for, collect and remit the 2% Tourism Levy on its qualifying turnover, and keep records capable of supporting a Tourism Fund audit.

County-Level Regulation: Nairobi and Beyond

National licensing and the Tourism Levy do not exhaust a host’s compliance obligations. Counties retain constitutional authority over trade licensing, land use, planning and public health within their boundaries, and a short-term rental operator will typically still need a county Single Business Permit to operate lawfully, in addition to complying with zoning, noise, waste management and public health rules that apply to residential and hospitality premises generally.

Nairobi in particular has been moving toward more specific regulation of the sector. In September 2024 the Nairobi City County Assembly approved a motion calling on the County Executive to work with the national Ministry of Tourism to develop dedicated rules on the establishment, licensing, operation and management of Airbnb-style properties within the county, citing security concerns linked to unregulated short-term lets. As at the time of writing, this has produced a policy direction rather than a finalised, gazetted Nairobi-specific by-law, so hosts in Nairobi should expect a dedicated county regime in due course, on top of existing Single Business Permit requirements, and should monitor County Assembly publications for the specific rules once enacted. Other counties with significant short-term rental activity, such as Mombasa, Kwale and Nakuru, likewise require a Single Business Permit and compliance with county planning and public health by-laws.