With travel bans and wide-spread stay-at-home mandates, it may come as little surprise that the short-term rental market took a significant hit in 2020. In fact, according to industry research, demand for short-term rental (STR) properties shrank by 16.1 percent in 2020, and a recent study by Lending Tree shows demand still currently down in 19 out of 20 U.S. markets.
The bright side for property owners and travel seekers, however, is that it is estimated the short-term rental market will grow by over 27 percent in 2021 and will rise another 23 percent in 2022. In fact, new bookings by April 2021 had already surpassed 2019 levels.
With the uptick in travel and home rentals, let’s explore some of the steps cities can take now to manage this activity surge to smartly capitalize on potential revenue gains for communities.
Registration and taxation
One of the biggest hurdles for cities is bringing private citizens (i.e. STR hosts) into compliance with civic registration or taxation requirements. Many residents don’t consider STR hosting as a “business” that requires government participation. And they certainly don’t want to wait in line at City Hall to do the needed paperwork.
Using a multi-lingual web portal, you can empower your department to meet STR hosts where they are: online. This kind of a modern portal provides an appealing, simple and fast way for hosts to register with your municipality, when and where it’s convenient for them. Best of all, hosts can download their permit directly from the web, saving your agency time, paper and staff time.
Tax collection is a big piece of the puzzle here, a common sticking point for both cities and hosts. Online tax solutions can empower STR operators to easily upload required documentation, such as photographic evidence of neighborhood notification signage, download the registration certificate directly from the site, and automatically calculate and pay relevant fees and taxes online. A digital system can walk users through what could be a difficult process, with a workflow system that captures the necessary host information and assists with a quick and easy online payment feature. This removes barriers and the errors associated with self-calculation.
As platforms like Airbnb, VRBO, Booking.com, and HomeAway continue to expand their footprints, the proliferation of short-term rentals has presented state and local governments with substantial regulatory and compliance challenges including property rights, neighborhood impacts, taxation and revenue, and liability concerns. Lack of regulation is largely attributed to the rental registration process remaining unnecessarily complex.
To help overcome these challenges, Oklahoma City focused on enforcing correct licensing procedures and creating a streamlined registration process for short-term rental owners. They implemented Accela’s integrated, enterprise short-term rental registration solution with mobile capabilities and other supportive features.
“The issue of unregulated short-term rentals presents a delicate balance of encouraging tourism while also enforcing procedure, which can be challenging to hit,” says Lawrence Harrold, Systems Analyst II at Oklahoma City. “We selected Accela to help achieve that balance because of our positive experience with their licensing solution, which we have used for over 10 years. The ease of implementation was exemplary. We are looking forward to continuing to leverage the solution to empower our local community and encourage high host compliance with registration requirements.”
Intelligent workflows, for example, automatically funnel records and applications to the appropriate team for review. Users can set location-specific mandates to limit number of licenses available in any given geographic area, and they can collect and upload site history data and pictures, videos and other documentation with a mobile inspection app. All this helps to streamline processes and promote compliance.
Solutions for every partner in the regulatory process
Short-term rentals bring multiple city agencies to the table. From ensuring a proposed location complies with current short-term rental zoning laws, to issuing a business license or conditional use permit, to capturing taxes, technology enables every department to manage STR regulations with the right tools.
Modernized solutions support inspectors in the field, where having a do-it-all solution means being mobile. GIS-powered mobile inspection applications and functionality allow field workers to automate routing, data access and data capture functions, helping inspectors to be as efficient as possible when working in the community.
Technology also supports transparency. Back-office tools and mobile capabilities allow you to deliver automated, real-time data and maps on short-term rental activity in your jurisdiction to the public, media and other interested stakeholders.
Taken together, these digital tools can help cities make the most of the rapidly evolving STR boom. And, as the pandemic wanes, demand for travel will likely continue to climb. With the right technology in place, cities can quickly manage and regulate STR activity, while also securing relevant fees and tax revenues smoothly and accurately.
For more insight on challenges and solutions for local governments tackling short-term rental registrations, see our infographic here.