Short-term rental operators in Austin, Texas are bracing for a financial curveball after the city implemented an 11% “hotel occupancy tax” (HOT) on short-term rentals like those listed on Airbnb and Vrbo.
City officials believe the lodging tax, which kicked in April 1, will help regulate the industry and generate revenue for local services.
“The issue is that we have these corporate-owned STRs that come into our city that buy up entire blocks,” Austin City council member Vanessa Fuentes said. "They’re buying up affordable housing stock and impacting our affordability levels."
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The city collects about $7 million annually from short-term rental operators — a figure expected to climb significantly with the tax hike.
But the tax has drawn concern among local homeowners who have used short-term rentals to subsidize their housing costs.
Short-term lodging tax and its ripple effects
Blake Carter, co-founder of Cribs Consulting, a company that owns and manages about 85 short-term rental properties in Austin, has already seen the impact on guests.
“It looks like the platforms are adding it to the guest side so that the guests are paying more,” Carter said in an interview with Austin ABC affiliate KVUE.
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That could force short-term rental operators to lower their rates to keep their fees steady — and avoid pushing guests away.
On the bright side, Carter added, it could shift demand for short-term rentals to the suburbs.
“They can maintain their rates and still be priced the same as if they were in Austin,” he said, appealing to more attractive to budget-conscious travellers.
If the tax ultimately causes some operators to shut down their short-term rentals, it could open up more long-term housing to local residents, who may currently be pushed out of high-density short-term rental neighbourhoods.
As the summer travel season approaches, visitors and locals will be watching to see how this new tax changes the landscape — and who the winners will be.
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