Local leaders: how much do you know about vacation rental platforms?
by Localgov Short-Term Rental Team, on June 23, 2021 at 11:17 AM
Take this quick quiz
Local-government leaders, from city managers to clerks to finance directors, are interested in how to manage and monetize short-term rentals in their community.
Take this quick quiz about vacation rental platforms, tax compliance, and how it impacts communities.
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How many short-term rental companies operate in the United States?
C) More than 23,000.
There are tens of thousands of individual companies and dozens of short-term rental platforms across the country, some big and some small, operating in big cities, small towns—and every community in between. This is a $30 billion dollar market, predicted to rebound big in 2021 and 2022.
Which of these companies is an actual short-term rental platform?
A) OneFineStay - Upmarket homes in some of the world’s top ciites
B) Fido’s Doormat - Elite accommodations welcoming pampered pooches
C) Boomer Dorm - College dorms for rent off-season exclusively for older adults
Answer? A. But they all sound plausible!
Here’s a quick run-down of some of the other short-term rental platforms you've heard about—plus others on the rise.
- Airbnb—by far the biggest player in the transient rental industry, this platform made $4.7 billion in 2019 and completed an IPO in late 2020.
- Vrbo is the #2 company in the market, and it was acquired by HomeAway in 2015, then acquired by Expedia in 2019.
- Trip Advisor (owner of FlipKey, HouseTrip, VacationHomeRentals, etc.) has nearly 800,000 listings worldwide .
- Vacasa/Turnkey is a short-term rental platform in the U.S. and Central America, but also provides property-management services.
- Boutique-style operations such as Sonder, Kid & Coe, and Plum Guide cater to travelers with unique needs and particular tastes.
- HipCamp, GlampingHub, and Getaway offer stays in chic, nature-centric locations and properties ready for your Instagram close-up.
Short-term rentals and tax compliance is a hot issue for local governments. Can you pick out the correct statistic?
A) In Austin, Texas, 75% of properties listed on short-term rental platforms had not registered with the city—and likely weren’t paying relevant taxes, either.
B) In San Diego, 16,000 units were rented as short-term housing, but just 6,600 were paying transient occupancy taxes.
C) In Hudson, New York (pop. 6,200) dozens of properties were found to be out of compliance with short-term rental laws designed to preserve workforce housing in a town recently “discovered” by New Yorkers looking for a cute weekend getaway.
Answer? All of the above. In city after city, short-term rental companies and platforms are consistently found to be out of compliance with local laws. Not only does this cost the city much-needed revenue while still requiring services, it prevents communities from having control over a growing industry. You can’t manage what you don't know—and you can’t monetize what you can’t manage.
What is the best way for local governments to stay on top of the short-term rental market in their community?
A) Pass a law banning all short-term rentals.
B) Enact legislation tailored for your community, audit your community’s short-term rental landscape, and add an online tax and fee administration platform to make compliance easy.
C) Set up a voluntary collection agreement with the top two platforms and call it a day.
You really need a comprehensive strategy when it comes to developing markets.
- A thoughtfully designed ordinance should be developed based on what’s happening in your community.
- Then, a full audit program can reveal any rental properties not in compliance (i.e. not registered, inaccurate registration, not paying any/all taxes).
- Finally, an easy-to-use digital platform like Localgov offers vacation rental hosts an easy way to get in compliance with your jurisdictions laws and requirements. At the same time, negotiating a voluntary collection agreement with the major platforms provides a secondary flow of revenue.
Let’s get started
Local government officials, from finance directors working to make budgets balance to front-line clerks balancing constituent needs as offices reopen, are busier than ever.
Our team of local-government experts is available to work directly with your community. From ordinance development to compliance audits to technology solutions, Localgov is connecting communities with additional revenue and added oversight. Schedule a meeting today to learn more.