The Impact of Short-Term Vacation Rentals on Communities: A MistrPM Analysis

Aug 31

Short-term vacation rentals have been a point of contention since their inception approximately a decade ago. Their growth has been exponential, making it essential for communities to update regulations and ordinances. This report by MistrPM presents six critical ways that short-term vacation rentals impact communities, focusing on vacation property services.

1. Economic Benefits

Short-term vacation rentals can be economically beneficial to communities. They generate additional tax revenue and contribute to local businesses. Guests frequent local restaurants, bars, and attractions, infusing money into the economy.

A study in San Diego revealed that guests in short-term rentals spent $86.4 million on local amenities, generating an estimated total economic impact of $285 million. Moreover, these rentals can assist residents in supplementing their income or going on vacations while their homes are rented out.

2. Diminishing Long-Term Rental Availability

Long-term housing availability is diminishing due to the proliferation of short-term vacation rentals across more than 1,500 U.S. cities and counties. The effects are particularly stark in large cities with pre-existing affordable housing crises, such as New York and San Francisco. Cases of tenants being evicted to make way for short-term vacation rentals have been reported, exacerbating housing scarcity and contributing to rising housing costs.

3. Neighborhood Transformations

Residential areas with a high density of short-term vacation rentals often experience neighborhood character and quality of life changes. Issues such as noise disturbances, trash, and parking have been reported.

Moreover, residents worry that the influx of short-term rentals alters the communal fabric, leading to protests and community tension.

4. Boost to Local Tourism

Short-term vacation rentals have stimulated tourism in many cities. Lower prices make less popular destinations more attractive, thus fostering local tourism. For example, Brevard City approved short-term rentals to bolster its tourist sector and even established tourism destinations benefit. A study in Idaho found a positive correlation between short-term rentals and job creation in tourism.

5. Challenges for Traditional Lodging

The traditional hotel industry has voiced concerns that short-term vacation rentals offer an unfair competitive advantage. The key issues are the need for more regulations for short-term rentals and the absence of tourist taxes, which skews the competition in their favor. This disrupts the lodging industry, mainly affecting lower-end hotels, as shown by Boston University and the University of Southern California research.

6. Lost Tax Revenue

Many cities must pay more attention to potential tax revenue from unregulated short-term rentals. However, cities that regulate these rentals can benefit financially. Mill Valley, California, for instance, collected nearly $96,000 in taxes and registration fees, while Boston is estimated to be losing out on $4.5 million in potential tax revenue.

Conclusion

Understanding the impact of short-term vacation rentals on communities is imperative for shaping effective regulations. While they offer significant economic benefits, unregulated rentals can strain communities and the traditional lodging industry. Hence, there is a pressing need for local governments to establish enforceable regulations to balance these competing interests.

For local governments seeking ways to identify and regulate short-term vacation rentals, MistrPM provides a comprehensive suite of vacation property services and solutions, which various North American local governments are currently using to address the challenges posed by short-term vacation rentals.

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Jeremy Ashburn