Millions are at stake in short-term rental debate, company says
April 29, 2018
The smallest change in the lodging industry can represent millions of dollars in its overall economic impact, according to company officials with Summit Mountain Rentals, who say they're hoping to spark a fact-based conversation regarding short-term rentals as local governments consider imposing new regulations on the growing industry.
To help facilitate that conversation, the property-management company working out of Breckenridge and Frisco has produced an analysis of the towns' most recent sales tax reports related to lodging that suggests short-term rentals account for an even greater slice of the economic pie than many might think.
In Breckenridge, for example, the company notes that lodging was a $147 million industry in 2017. While this statistic includes hotels and inns, as well as short-term rental properties like the ones posted on Airbnb.com and VRBO.com, the company contends the sector had an overall direct economic impact of $442 million last year alone.
To show how important short-term rentals are to the strength of the local economy, Summit Mountain Rentals also pointed to recently released data from Airbnb.com ranking Breckenridge — with 89,000 guests paying $16.5 million in 2017 — as its second-highest market in Colorado behind Denver.
Additionally, Breckenridge reported in 2016 that vacation visitors contributed $313 million to the town's economy between lodging and other purchases, meaning that nearly one-third of all the town's taxes came from lodging, according to Summit Mountain Rentals.
"It's also important to remember this is from the town of Breckenridge so this is capturing just the lodging units that are within town limits," said Gavin Dalgliesh, the company's marketing and revenue manager, further explaining that properties just outside of town limits, like ones in Blue River, were not incorporated in the figures.
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Turning the focus to Frisco, Summit Mountain Rentals' analysis suggests that with the town collecting $380,326 in sales tax revenue from short-term rentals in 2017, they had a total impact of $228 million on Frisco's economy last year.
In the analysis, the company used the towns' sales tax reports for the baseline data before multiplying those figures by "conservative" estimates to try to determine the overall economic impact. However, those figures "are an approximate calculation" and "cannot be confirmed" by the Breckenridge Tourism Office, according to a spokeswoman for the organization. Likewise, Frisco revenue specialist Chad Most also wouldn't endorse the company's analysis on Frisco's behalf, but the accountant said he didn't want to undermine it, either.
Like many things in life, Most explained, the "devil is always in the details." Without splitting hairs on the "underlying assumptions," he wholeheartedly agreed with the idea that short-term rentals play a major role in the local economy, a fact that's clearly illustrated in Frisco's sales tax and lodging reports.
"Yeah, it's a pretty large impact," Most said. "That's for sure."
He also confirmed that company representatives sat down with him for over 45 minutes to go over the analysis, and if someone is willing to accept the assumptions, Most said the figures should be considered "valid" and thought of as "a valuable starting point for a discussion."
And that's really what the people at Summit Mountain Rentals say they want — to be included in the discussion — as towns like Frisco consider imposing new regulations on the industry.
Contrary to what some may think, Reid Tulley, marketing communications manager for Summit Mountain Rentals, said that the company actually doesn't mind rules, and in many cases welcomes them. He just hopes local governments "will consider all the facts and data that support the reason they're making these rules" when they do so.
"We're really just trying to shed some light on the situation," Tulley explained. "We want to start the conversation, make ourselves available if they need any supporting data from the professionals and put ourselves out there as the people who really have our fingers on the pulse of this industry in the local market."
According to Tulley, concerns over rowdy guests are mostly overstated, as he said he's looked over the police department's calls in Frisco regarding short-term rentals and they constitute only a small fraction of the overall number of complaints police field.
"We don't see too much of it," Tulley said of the noise complaints. "I think if we look at it on a yearly basis, it wasn't even one a month."
Another complaint often levied against short-term rentals is that they're gobbling up the available housing with long-term rental housing being converted to short-term vacation properties, further exacerbating Summit County's housing crisis. However, that's another misconception, according to David Scott, Summit Mountain Rentals marketing director.
To back up his point, Scott highlighted figures showing the number of short-term rentals in Frisco has actually fallen over the last five years at the same time the housing crunch has only gotten worse, saying that with the number of short-term rental properties in Frisco dipping from more than 1,000 in 2012 to 867 in 2016, "it's hard to maintain that short-term rentals are growing in Frisco and negatively impacting the long-term rental market."
In reality, Tulley contended professional property-management companies are "local governments' best friends and allies" in ensuring tax compliance and following local regulations.
"There's a lot of coverage about short-term rentals — 'Oh, they're bad,' and this, that and other things," he said. "But we just want everybody to take a step back and say, 'Hey, this is a huge part or our economy up here so let's get everybody in on the conversation.'"
As far as a workable model goes, Tulley points to existing regulations in Breckenridge as something other towns and counties might want to consider when looking to craft regulations of their own.
"We like Breckenridge's model," said Tulley, highlighting a recent study that found over 98 percent of the 3,526 short-term properties in town were complying with its rules and collecting the 3.4 percent lodging tax. "It works for us, it seems to work for the town and it seems to work for rentals-by-owners."