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Regulating Short-Term Rentals

November 15, 2016

 

sharing-economy

Short Term Vacation Rental Industry growth is snowballing. How will regulators keep up? How will they manage compliance and enforcement?

On one hand, we have an eager able supplier. The vacation rental property owner. Offering what appears to be an endless stockpile of inventory. On the other hand, we have the traveler, seemingly inexhaustible. In between, instant connectivity.

Most jurisdictions recognize the benefits; namely a clear economic boost.

 

Roughly $19 million injected annually per 100,000 population.

 

They also acknowledge the inherent limitations in dealing with a ‘connected’ consumer. Not to mention the onerous and expensive complications associated with compliance and enforcement.

In 2012 the US Conference of Mayors, in an effort to keep up with changing times, unanimously passed the following resolution.

NOW, THEREFORE, BE IT RESOLVED, that the U.S. Conference of Mayors urges support for economic development opportunities through the visitors industry by encouraging regulations of the short-term rental industry that (1) establish a reliable way for the municipality to identify and contact the short-term rental owner; (2) make the tax collection and remittance obligations clear to the short-term rental owner; and (3) treat short-term rental tenants the same as long-term rental tenants. Regulations that accomplish all three can achieve a high level of compliance, and are highly effective.

Yet since 2012, few cities have managed to; “achieve a high level of compliance”. 

Why is this? Could it be due to an underlying shift in commerce that has taken place over the past decade? Collaborative consumption, the sharing economy, shareconomics and so on. While opening door after door to consumers and small business people. Regulators have been slow to adapt to this new fast paced reality. Many remain painfully outdated, are perceived as punitive, uncompromising, and in some cases, outright officious.

No doubt it’s a tricky balancing act for regulators. But they must shift their thinking. The growing Short Term Vacation Rental industry is presenting a grand opportunity, not a troublesome burden as some like to suggest.

Consider this: A 2013 Short Term Rental (STR)  Economic Impact Study on behalf of the City of Los Angeles concluded that for every $100 a traveler spent on lodging, visitors spent an additional $97 on food, $69 on local transportation, $52 on recreation activities, and $28 on retail shopping in the local economy.

According to HomeAway aka VRBO in their 2014 vacation rental report, HomeAway vacation rental owners generate an average annual income of $27,260.

By combining these conclusions, an average vacation rental (VR) will contribute roughly $95,000 annually to a local economy.

Based on a wide range of estimates, there are between 400,000 and 900,000 VR properties in the United States. Let’s use 650,000 VR’s as a median figure.  The USA has a population nearing 325 million.

So if the Population to VR ratio is 325million pop/650,ooo VR’s. That would suggest there are roughly 200 short term vacation rental’s for every 100,000 people. Now multiply 200 times $95,000 and that is a whopping $19 million pumped into a small city of 100,000.

Ask your city to do the math!

This blog post is sponsored by VRSupplies.ca

Hotel Supplies for your Vacation Rental

Hotel Supplies for your Vacation Rental

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References

http://stradvocacy.org/wp-content/uploads/2015/12/LosAngeles-STR-Report-Final-v2-100214.pdf

https://www.statista.com/outlook/268/109/vacation-rentals/united-states#

https://www.portlandoregon.gov/bds/65603

https://www.austintexas.gov/str

http://www.sf-planning.org/index.aspx?page=4004

2 Comments on this Article

  • Ron

    On one hand it sure would be nice to see the bad actors out of the game. But where’s the enforcement? So far cities have all of these rules but no teeth to crack down.

    The only way to fund bylaw enforcement is with more $$$. So they may as well impose a license fee.

    on September 19, 2016   |   Reply
    • Lynne

      Keep an eye on how The City of Kelowna approaches their review of bylaws. They are in the process now. I have a feeling they will find the right balance.

      on October 4, 2016   |   Reply

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