The Impact of Short-Term Vacation Rentals on Communities in Six Ways

Since its inception almost a decade ago, short-term holiday rentals have generated a great deal of controversy and have continued to rise at an astounding rate. Although short-term holiday rentals are becoming less of a secret, there are still many things to take into account when creating new laws or revising old ones. These are six significant ways that short-term holiday rentals affect local communities.

1. Advantageous Economic Effect

A city or county may benefit economically from short-term vacation rentals in a number of ways. For instance, through tax revenues, they might provide a city extra money. In addition, the city as a whole stands to gain economically from short-term rental guests as they will spend their money at other visitor-related establishments like restaurants, bars, and museums. Research conducted in San Diego revealed that guests staying in short-term vacation rentals spent $86.4 million on these kinds of activities. An estimate of $285 million has been put on the overall economic effect in San Diego. It can also assist locals make ends meet or allow young families to take a vacation while retirees remain in their homes.

2. There Are Fewer Long-Term Rental Options

The scope of short-term holiday rentals is expanding constantly and is no longer limited to major cities. In more than 1500 towns and counties around the country, there are already more than 100 distinct short-term holiday rentals available.

Travelers who rent short-term holiday rentals are utilizing space that might be utilized for dwelling, as most short-term vacation rentals are found in residential neighborhoods. This is leading to a reduction in the supply of long-term housing in some areas. Large cities like New York and San Francisco, which already struggle with a shortage of affordable housing, are particularly affected by this effect. There are increasing reports around the country of renters being evicted from their apartments and then learning that their home was converted to long-term short-term holiday rentals. Three students were compelled to leave their flat in Burnaby, Canada, so that the landlord could operate a full-time Airbnb rental company. Several renters in Los Angeles have been suing their landlords and Airbnb for evicting them from their properties.

The resulting shortage may eventually drive up the cost of real estate and rental income. The correlation between Airbnb listing density and lower rental vacancy rates and higher rental costs has been observed in Los Angeles, according to a paper on the relationship between short-term rentals and the city’s affordable housing issue. Short-term vacation rentals in New York decreased the quantity of available dwellings by at least 10%. In addition to these larger towns, a number of smaller coastal and mid-size cities, such as Madison and Long Beach City, are beginning to voice concerns about this problem.

3. Neighborhood Shifts

The effects of residing next to a short-term vacation property might range from somewhat unsettling to drastically changing one’s life. Since guests often only stay for a few days, neighbors frequently witness newcomers moving in and out of their homes, particularly in areas with a high concentration of short-term holiday rentals. Local governments are nevertheless concerned about related concerns like noise disruption, parking problems, and waste. This is best shown by a recent Los Angeles piece that tells tales of how party houses are converted from short-term holiday rentals, leaving neighbors with terrifying aftermaths.

Simultaneously, locals fear that the influx of short-term holiday rentals would alter the neighborhood’s character and lower the standard of living. In the past, this has sparked large-scale protests in major cities like New York and San Francisco.Similar issues are also being handled by smaller communities like Santa Monica. Local governments are now faced with the extremely challenging challenge of figuring out how to control short-term holiday rentals in a way that balances the property rights of homeowners with the protection of neighborhoods.

4. A rise in travel-related activities

In certain places, the local tourism industry may be strengthened by the use of Airbnb and other short-term rental websites. The introduction of short-term vacation rentals makes less well-known tourist locations more alluring due to their cost advantage. Recently, the City of Brevard stated that it will permit short-term vacation rentals in an attempt to draw tourists, as there aren’t enough hotels in the area. And short-term holiday rentals are helping even places with a well-established tourism sector. A research conducted in Idaho on the impact of the sharing economy discovered a clear link between the growth of jobs in the tourist industry and short-term rentals. Short-term vacation rentals contribute approximately 1,842 employment in San Diego.

5. An Unfair Advantage for Conventional Lodging Partners

On the other hand, others argue that short-term holiday rentals pose a threat to the established accommodation sector. The short-term vacation rental companies’ business methods, according to the hotel sector, give unfair economic advantages in two different ways. First of all, unlike hotels, which have regulations and must pay for employees, short-term vacation rentals are exempt from these requirements, which significantly raises expenses. Because of this, short-term rentals are able to charge less than more conventional lodging for tourists. The fact that short-term vacation rentals are typically exempt from tourist fees is another aspect that exacerbates the unfair competition. According to a research by the American Hotel & Lodging Association, the number of hosts with multiple apartments and revenue from Airbnb-style rentals have skyrocketed in areas like Portland. The hotel sector may face a challenge if short-term holiday rentals are not viewed as comparable enterprises. Researchers from Boston University and the University of Southern California found that the rise in short-term vacation rental listings is already negatively affecting Texas’s higher-end hotels.

6. Overdue Tax Income

Many localities do not impose taxes on short-term holiday rentals, which means local governments are losing out on millions of revenue. Municipalities that accept and regulate short-term holiday rentals can raise more money through taxes, business licenses, and permits. For instance, Mill Valley, a tiny municipality in California and a customer of Host Compliance, mandates that hosts pay a registration fee and acquire a business license. As a result, in addition to registration fees, the city has received around $96,000 in taxes since the program’s inception. Conversely, it is believed that Boston is now losing out on tax income of $4.5 million.

In summary

It’s critical to understand the effects short-term vacation rentals have on your neighborhood. Although uncontrolled Airbnb-style rentals can put strain on towns and the lodging sector, they also provide significant economic advantages to localities. The prevalence of short-term vacation rentals in every town has made it impossible to ignore their effects, both good and bad. Effective and enforceable laws are what local governments must strive for in order to safeguard neighborhoods, local economies, and housing supply.s.

Granicus offers a comprehensive suite of solutions that local governments around North America utilize to manage their short-term vacation rental challenges if you’re seeking for strategies to detect and control short-term vacation rentals in your region.