Much the same way the Amazon effect changed the way consumers shop, Airbnb, VRBO and similar online platforms have given travelers another option to book their vacation stay in a place other than a traditional hotel, inn or bed and breakfast.
The result has been an explosion of people looking to earn some extra cash by renting out an unused room, an apartment or entire house.
The new competition on the block has caught the attention of the hotel industry, chambers of commerce and local and state officials around the country including Vermont.
Airbnb has a foothold in Vermont attracting 341,000 guests in 2018 while generating $48.5 million in supplemental income for hosts, according to Airbnb. That year, the San Francisco-based booking site also passed onto the state $7.8 million in rooms and meals and local option tax revenues.
The Vermont Chamber of Commerce has no issue with giving visitors another option where they can stay.
But Chamber President Betsy Bishop said there needs to be a level playing field and currently that’s not the case.
Airbnb and other short-term rentals are not held to the exact same safety and health standards as a hotel, inn or bed and breakfast, Bishop said.
“Many of our small B&Bs across the state have invested a lot of money into compliance with those health regulations, fire and safety codes, building regulations, town zoning and they’ve done that over the years as part of their business plan,” she said.
According to Airbnb, Chittenden County hosted the most guests in the state in 2018 — 72,300 — which generated $9.1 million in host income. Rutland County was second with 51,400 guests generating $7.9 million in income for hosts followed by Lamoille, Windham and Washington counties. Grand Isle had the fewest guest arrivals with 270.
A further breakdown shows 71 towns with Airbnbs. Burlington and Rutland have the most with 490 and 480 host properties respectively, according to data shared by Airbnb with the state Tax Department. Stowe is third with 330 hosts.
Rutland and Stowe were tied for the highest median host earnings at $9,200. Burlington was second at $8,600.
Noticeably absent from the town list is Killington, home to the largest ski area in the state. DeBold said the total Airbnbs listed for Rutland include Killington.
Operators of commercial lodging establishments have to meet the state’s more stringent fire safety codes. But homeowners also have to meet minimum fire safety standards.
Someone who rents out a room or their home must meet minimum acceptable safety standards under the Life Safety Code. Since 1994, all Vermont single-family homes must have smoke detectors. Since 2005, all newly constructed single-family homes must also have carbon monoxide detectors.
In 2009, the state required a Certification of Compliance that a home is equipped with smoke and carbon monoxide detectors before a home can be sold.
“We cannot distinguish if a short-term rental poses any more of a risk than any other residential use,” Michael Desrochers, executive director, Department of Public Safety — Division of Fire Safety, wrote in an email. “We can say, if the residential occupancy is not provided with photoelectric type smoke alarms and carbon monoxide alarms, occupants are at greater risk.”
Desrochers said that to date he has not received any fire safety related complaints regarding short-term rentals.
“Last year we created a method on our data base to track complaints on short-term rentals and we have not received any since then,” he said.
Desrochers also said many short-term and long-term rentals have not been inspected because the state does not have an annual inspection program to inspect residential properties.
Last year, a law related to short-term rentals took effect that gave the state Health Department the ability to inspect short-term rentals. The law also directed the Health Department and the Public Safety Fire Division to prepare educational materials for short-term rental operators including a self-certification form.
The law (Act 10) requires rental owners to post fire and public safety contact information, post the operators’s rooms and meals tax account number in any advertisement.
Airbnb spokeswoman Liz DeBold said the booking company is committed to the health and welfare of its host guests.
“Our hosts have been certainly aware of that,” DeBold said. “We’ve made them aware of their obligations under the law and take that very responsibly,” said DeBold, the company’s Northeast press secretary.
The law also requires the various departments to collect information on the number of short-term rentals and to submit that report to the Legislature by January 2019. A second report on the number of short-term rental complaints is expected by January 2020.
Bishop said the Chamber has pushed without success to get the state to establish a mandatory registry for all short-term rentals to ensure those properties are in compliance with the state’s tax code and other regulations.
“The registry has been elusive,” she said. “That is a piece the Legislature has not yet been willing to do.”
She said cities like Boston have been more proactive than states in establishing registries.
The Chamber was successful in 2016 to get Airbnb to begin collecting the state’s 9% rooms and meals tax and any local option tax from its host lodging clients.
The voluntary agreement with the state did not require Airbnb hosts to remit back taxes prior to 2016, said Douglas Farnham, economist and director policy, outreach and legislative affairs at the Tax Department.
He said this past session Act 51 expanded the tax collection to VRBO, Home Away and other short-term rental platforms but without the tax forgiveness accorded to Airbnb.
Farnham said rentals are subject to the rooms tax if the rental is less than 30 days, the rental is available to the public, and the accommodation is rented more than 14 calendar days in a year.
More than 30 days is considered a long term rental and is not subject to the tax, he said.
In promoting its short-term rental model, Airbnb said Vermont’s “host community earned a combined $48.5 million in supplemental income while welcoming 341,000 guest arrivals to the state in 2018.”
But Bishop is somewhat skeptical of the term supplemental income.
“There is this notion that a short-term rental owner is really just renting out a room or their house a couple of times a year and just making a little bit extra money to help pay their property taxes,” she said.
In other areas of the country, she said short-term rentals have become a full-time business.
She said there’s a difference between someone who rents out their property a couple of times a year and someone who uses it as a business.
According to news reports, investors in certain markets around the country have bought up houses and apartments turning them into a business for people looking for a short-term stay.
That in turn has raised concern in some communities that short-term rentals have made housing more expensive.
Farnham said the state is tracking 3,000 short-term rental properties around the state. He said some of those properties may overlap with Airbnb or other online booking sites.
Short-term rental owners that don’t use an online platform but book directly with a customer are required to set up an account with the Tax Department, Farnham said.
The Department of Tourism and Marketing has moved to get a handle on the short-term rental market as well.
Commissioner Heather Pelham said her department expects to award a study contract in September that would gather a variety of data including the location of short-term rentals, where they’re concentrated, owner-occupied or primary residence, maximum number of guests allowed, whether a property is professionally managed.
Pelham said the goals is to obtain “the kind of data we haven’t had in the past that would help us either inform further analysis or potential policy recommendations.”
She expects the study to be completed by the end of the year.
Pelham said the health and safety of guests is of primary concern. She said the department also wants to make sure that licensed properties aren’t at a disadvantage.
“We are cognizant there are concerns about having a level playing field between licensed properties and unlicensed properties,” she said. “We also know there’s a great tradition in Vermont of homeowners opening their homes to visitors and we want to make sure going forward we’re basing our decisions on the most complete data that we can.”
Earlier this year, Airbnb attended a conference on short-term rentals held in Brattleboro that was also attended by state and local officials, DiBold said.
DeBold noted that Airbnb not only lists short-term rentals but also worldwide a growing number bed and breakfasts and boutique hotels.
And while there have been reports that Airbnb and other short-term rentals have aggravated the housing market in some cities, DeBold said Vermont should not be placed in that category. She said Vermont has a history, tied to its reliance on tourism, of short-term rentals.
The head of the Vermont Housing Finance Agency prefaced her concerns about short-term rentals saying the “tourism industry is obviously vital in the state,” said VHFA Executive Director Maura Collins. “So my concerns are not whole cloth or across the board about short-term rentals because I think short-term rentals can, will, and probably should play a role in meeting the seasonal needs of the state.”
Collins said the state has always had many seasonal homes which has always impacted the housing market.
She said the number of short-term rentals fluctuates depending on the economy. During a strong economy, she said the state sees more homes convert from primary residences to vacation homes. The reverse occurs during a weak economy, she said.
Collins said it’s balancing act between meeting the needs of the tourism economy and residents who need an affordable place to live.
“My concerns really lie when homes would be put on the market for sale but aren’t because people can earn more money through Airbnb or short-term rentals and now those homes are not in the inventory for first time homebuyers to purchase or maybe rental units,” Collins said, “that would be rented year round to people who need somewhere affordable to live but now instead are only being used as short-term rentals.”
Out of 300,000 properties in the state, Farnham said there are an estimated 6,000 short-term rental properties.
While short-term rentals are not causing a statewide housing crisis, he said “in some towns it is creating quite a bit of pressure.”
According to Farnham, Airbnb is estimated to have captured 50% of the short-term rental market which generates a significant portion of tax revenue.
“It will be interesting to see the results of Tourism and Marketing’s study because that will shed a little more light on it,” he said.
Founded in 2008, Airbnb provides access to more than 5 million places to stay in more than 81,000 cities and 191 countries.
This summer, from Memorial Day through Labor Day, 139,400 guests stayed at Vermont Airbnbs generating $20.4 million in supplemental income for Airbnb hosts. During the most recent ski season Airbnbs attracted 123,600 guests with hosts earning $22.3 million in additional income.