As a child, Rob Knauer walked to the beach from his grandfather’s trailer home and fished off the pier in Ocean City. Even though he was from Delaware, he always preferred Maryland’s preeminent vacation town.

Many years later, the career Delaware National Guardsman sought to give his children the same experience — and, eventually, to retire here with his wife. In 2019, they knocked down the trailer they bought years earlier in his grandfather’s old neighborhood to build their dream house. It features an open floor plan, pastel walls and typical coastal decor, including a sign adorned with starfish and shells that reads, “The beach fixes everything."

To help pay the mortgage, Knauer did what a growing number of property owners in Ocean City’s residential neighborhoods were doing: He listed it on Airbnb.

What Knauer saw as a harmless form of income in a tourist town, others saw as an invasion. They claimed that their communities were changing. They complained of rowdy parties. Of overflowing trash cans. Of strangers walking their streets.

The issue of short-term rentals would snowball into one of the biggest controversies in a generation for the beach town. For opponents, the identity of Ocean City’s quietest neighborhoods is at stake. Should they be open to tourists like the towering oceanside condominiums, or remain enclaves for full-time residents who want calm amidst summer’s chaos?

It’s a debate playing out in tourist destinations around the globe, from mountain villages to lakefront communities. Across the Bay Bridge, Annapolis has been struggling with how to wrangle short-term rentals in its charming historic district. Maryland’s capital recently stopped the issuance of new licenses for a year.

In Ocean City in March 2025, the mayor and City Council passed a law restricting short-term rentals in neighborhoods zoned for mobile and single-family homes and halting new rentals in those communities. The regulations applied to only about 3% of the town’s roughly 9,000 short-term rentals, a Banner analysis found.

“I took it very personal that it was a direct attack on me and people like me who did nothing wrong,” Knauer told The Banner, explaining why he and a local Realtor organized a campaign to overturn the new regulations.

The next year would be a fractious one for the aging town of roughly 7,000 full-time residents that grows to as many as 300,000 in summer.

Dueling factions of residents took out ads in the local newspaper accusing others of lying. They called each other names. Relationships between neighbors were broken. Council meetings on the issue were packed. Conspiracy theories spread. Residents involved lost faith in their government.

The council would later propose identifying short-term rentals with yard signs, igniting further outcry.

“People felt very strongly on both sides,” City Manager Terry McGean said. “It was a very contentious issue.”

Knauer’s group went door-to-door in town, gathering enough signatures to force a vote on the new regulations. The issue was decided by 34 votes at the ballot box last summer.

The fight was only beginning.

The origins

The upscale community of Mallard Island, built on dredge material, sits less than a mile from Ocean City’s Boardwalk.

An old neighborhood covenant barred, among other things, rentals. After it expired, a Gaithersburg woman bought and renovated a six-bedroom house. She put it up for rent in 2014.

“Next thing you know we see an ad for it and it said, ‘Sleeps 18,’” said Stewart Dobson, editor of the local paper, OC Today-Dispatch, and a Mallard Island resident.

Neighbors called the police on the home’s first renters because they were riding scooters, according to news articles from the time, and soon went to the City Council, enraged.

“They sounded the alarm. It just wasn’t answered,” said Dennis Dare, a former city manager who served on the City Council from 2012 to 2020.

About five years later came the coronavirus pandemic and, with it, changing vacation habits. Tourists, by and large, didn’t want to stay in hotels.

“A lot of people want to be in a home or a condo,” said Terry Miller, a lifelong Ocean City resident and longtime real estate agent. “They want a kitchen. They want to be able to congregate.”

That change coincided with the increased popularity of third-party rental platforms like Airbnb and Vrbo — and it stuck. Town officials say there has been an approximately 30% increase in short-term rentals in single-family and mobile home neighborhoods since the pandemic.

Those communities were long considered enclaves of full-time residents.

“As a resort town, you don’t want to tell visitors that they’re not welcome in some areas — and especially when it’s 25% of the town" landmass, said Miller, who organized the campaign against the restrictions with Knauer. “I think that’s a horrible message: ‘Come bring your family, stay in town, but you can’t stay next to me.’”

Gordon Kretser, born in nearby Salisbury, grew up visiting Maryland’s popular beach town. As a college student at Virginia Tech, he worked for the Ocean City Beach Patrol in the summers.

He started a local seeding business and serves as an Ocean City zoning commissioner. Around 2017, he left his oceanside condo to move in with his wife on Mallard Island.

Two summers ago, with two young children and two dogs, he started noticing changes. Compared to one short-term rental when they moved in, there are now about 13, including one across the street, he said.

“We’re trying to raise a family, and if I have to pull them out of the yard because the pool party next door is using certain language or carrying on in a certain way, we have to leave. There’s nothing you can do,” Krester said. “At that point, it’s restricting our property right.”

Miller has a different take on property rights. And she said being able to rent homes on Airbnb and Vrbo is a selling point in Ocean City’s quiet neighborhoods.

“Even if they don’t want to, they don’t want to lose the right to,” Miller said. “Because none of us have the crystal ball to show what the future holds. Renting a home could be the difference between staying in it and losing it.”

Dueling factions and a vote

Mayor Rick Meehan said the issue came to a head after the town’s last election, in 2024.

“We heard a lot from our residents about what we were going to do about how to mitigate, modify, regulate short-term rentals,” said Meehan, who has held the town’s top job for two decades.

In March 2025, the City Council passed a law requiring short-term rentals in single-family and mobile-home neighborhoods to have a five-night minimum stay, increasing to a month minimum in 2027. The council also halted the issuance of new rental licenses in those communities.

Grant Fritschle, a real estate agent and lifelong Ocean City resident, took over his dad’s rental company, which manages about 400 short-term rentals. He said the council overreacted to complaints as minor as trash.

“Is that a problem that should ban rentals? How about we make that property owner pay $300 for an extra trash can?” Fritschle said.

Competing groups formed.

Proponents of short-term rentals called those against them elitists; those against rentals called proponents greedy investors. Their back-and-forth played out in the pages of OC Today-Dispatch with op-eds and advertisements.

Dobson, the editor, likened the fight to that over the median strip eventually placed on Coastal Highway, the town’s main road.

“People were saying, ‘No, that’ll be the end of Ocean City as we know it,’” he said. “But I don’t think that was as divisive as this.”

The irony, said Dobson, was that “the bulk of the population” didn’t have any skin in the game.

Each side speculated about town lawmakers’ motives.

Councilman Jake Mitrecic told The Banner he supported short-term rental regulations because he saw neighborhoods like the one he grew up in changing.

“In my mind, it’s always been about protecting our residential neighborhoods,” he said. “Anything beyond that is just all people talking. I know we did what we did for the right reason.”

Knauer and Miller’s property rights group circulated a petition to force a referendum on the new short-term rental regulations.

By the end of last April, they submitted enough signatures to put the issue on the ballot. In July, residents rejected the regulations, 834 to 800.

Not willing to let the issue drop, the City Council revived the new license moratorium. During the bitter cold of December and January, the property rights group again began canvassing — again gaining enough signatures to force a vote.

Faced with the prospect of losing at the polls again, the City Council withdrew the moratorium. It also tabled proposals for a cap on short-term rentals and mandating that properties used that way have yard signs.

The mayor, a proponent of stronger regulations, said elected officials must respect the will of the voters.

Will you be able to book an Airbnb this summer?

Now, Ocean City has resolved to better enforce its rental laws — an option it had largely ignored over the years.

The town created a rental division and hired inspectors to evaluate whether short-term rentals are abiding by current regulations, which include having a license and someone who can respond to issues at a property within 24 hours and abiding by strict occupancy limits.

Town staff began short-term rental inspections last fall and have completed 839, said McGean, the city manager. Of those, 85 properties failed but were given opportunities to fix their issues.

Fritschle, the Realtor and short-term rental manager, accused the town of “back-dooring” restrictions. He said inspectors are telling property owners they can’t host as many people as they had been for years.

That’s problematic because the short-term rentals he manages are often booked as far as a year in advance. He wonders what happens if someone books a vacation for 12 people and the town subsequently says that unit can sleep only eight.

“If someone has rented their property exceeding the occupancy limits and we discover it, they will be cited,” McGean said. “It is up to the owner if they want to cancel the reservation or risk the violation.”

In a statement, Kathy Burcher, a spokesperson for Airbnb, said short-term rentals “are critical to the city’s economy and to the pocketbooks of everyday families and small business owners who rely on visitor dollars.”

“Families return year after year because of the flexibility and affordability that short-term rentals provide,” Burcher added. “We look forward to continuing to work with city leaders to ensure home sharing remains a reliable economic lifeline for residents and a sustainable driver of local tourism.”

Vrbo did not respond to multiple requests for comment.

Dare, the former city manager, is not happy with the pivot to enforcement, which he described as “useless regulations to make people feel good.”

In Knauer’s case, inspectors told him he couldn’t have bunk beds in two rooms, so he’s replacing them with Murphy beds, which he said are allowed. His house can sleep up to 13 people, with a maximum of eight adults, according to city regulations.

Knauer said he aims to retire from the military in 2030, when he’ll move into his Ocean City property.

Until then, he said, he has come to enjoy hosting it on Airbnb and has no plans to stop, though he said he tries to screen out senior week and bachelor party groups.

A listing on Airbnb describes his waterfront home as “one of the best kept secrets in Ocean City.”