As the Sundance Film Festival prepares to make its debut in Boulder, Colorado, on January 21, 2027, the city is bracing for an influx of filmmakers and cinephiles. This major event brings a familiar challenge to host cities: accommodating a surge in visitors requiring temporary lodging.
Boulder’s stringent short-term rental regulations have traditionally limited such accommodations. However, in April 2026, the city introduced a new rental license that temporarily expands the pool of properties available for short-term stays during the festival.
This policy allows owners of second homes and tenant-occupied residences to offer their spaces for short-term lodging, potentially distributing the economic benefits of visitor spending across more neighborhoods in Boulder.
As an urban and regional economist residing in Colorado, I have a keen interest in housing policy and the fiscal operations of local governments. I am particularly intrigued by how these governments act as experimental grounds for democracy, assessing who gains and who bears the costs of innovative policies.
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Lodging Policy for a Predictable Demand Spike
The annual Sundance Festival is an 11-day celebration of independent films, featuring a variety of screenings and discussions. Having spent over four decades in Utah, the festival is now relocating to Boulder.
In 2025, Sundance attracted 85,472 attendees in Utah, with nearly 28,000 coming from out-of-state, according to a festival report. While not all attendees seek accommodation simultaneously, the demand far surpasses Boulder’s current lodging capacity.
Boulder City Council documents reveal that the city has about 2,900 hotel rooms and 685 standard short-term rental licenses.
Hotels are typically built for consistent or seasonally recurring demand, which means constructing additional rooms for Sundance would lead to unused capacity for much of the year. Conversely, homes can temporarily serve as lodging and then revert to residential use.
Under Boulder’s standard short-term rental policy, properties must be the owner’s primary residence, occupied for more than half the year to prevent conversions into perpetual tourist accommodations.
The newly introduced Festival Lodging Rental License allows various property types, including nonprimary residences, to qualify. Owners can rent entire homes, individual rooms, or secondary living spaces like backyard cottages.
Festival rentals are limited to 29 days per year, operational only around the event’s timeframe. The policy aims to bolster Boulder’s economy and minimize traffic and emissions by reducing the need for accommodations outside the city, while primarily keeping homes for residents.
City officials anticipate the policy could add over 1,000 festival rentals by 2027, supplementing current licenses. Participation will depend on factors like pricing, owner consent, and local regulations.
Who Benefits from the Festival
Sundance’s transition to Boulder was incentivized by significant public support, including a Colorado law offering up to US$34 million in refundable tax credits from 2027 to 2036. This tax credit reduces state revenue, making its economic justification contingent on Sundance generating sufficient new wages, business income, and tax revenue in Colorado.
A 2025 Sundance report estimated that out-of-state visitors spent over $160 million in Utah. However, as tourism economists caution, gross spending indicates activity scale, not the host city’s net benefit.
Benefits to Boulder would include wages for local workers, profits for local businesses, and increased tax revenue. Not all visitor spending benefits the local economy, as some revenue flows to nonlocal suppliers or displaces other potential tourists.
Studies indicate that short-term rentals provide significant consumer and host value during major events. For instance, Airbnb generated substantial economic benefits during peak demand periods like New Year’s Eve in New York City and around Austin’s SXSW Film & TV Festival, by reducing hotels’ pricing power.
Boulder’s new rental policy primarily benefits hosts, shifting some lodging income from hotels to homeowners, second-home owners, and consenting tenants.
Beyond lodging, local businesses could benefit from the festival. Research in New York City suggests increased Airbnb activity boosts restaurant employment, as guests spend near their accommodations. This implies festival rentals could distribute attendees throughout Boulder, rather than concentrating them near hotels and screening venues.
Do Policy Guardrails Matter?
While short-term rentals can alleviate lodging shortages during high-demand periods, they may exacerbate housing issues if they remain in the tourist market. National research links Airbnb growth to shifts from long-term to short-term rentals and rising rents and home prices.
Evidence from the 2017 solar eclipse suggests that even temporary spikes in short-term rental demand can lead to lasting increases in local listings. Nonetheless, Boulder’s Festival Lodging Rental License mitigates this risk by limiting rentals to a city-sanctioned event window.
Following the 2027 festival, Boulder officials will assess the policy’s effectiveness in increasing lodging capacity, distributing economic benefits, and safeguarding the long-term housing supply.
If comprehensive data is published, it could inform other jurisdictions facing similar short-term demand surges.
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