Airbnb and City of Louisville Reach Tax Collection Agreement

Airbnb and City of Louisville Reach Tax Collection Agreement

A press release was sent out by the City of Louisville this morning announcing they have reached an agreement with Airbnb to collect and remit the 8.5% hospitality/bed tax on every guest reservation made through Airbnb. Under Airbnb’s current agreement with the state, taxes are added to reservations at checkout and paid by the guest. Airbnb remits to the State on the host’s behalf. 
 
The agreement with the City is expected to go into effect April 1st. Additional details will be made available as they are known. It is advised that everyone continue with current tax collection and remittance practice until further notified. And remember, this applies only to Airbnb reservations. No agreements are in place with other platforms (VRBO, Expedia, etc.) or direct placement guests. 
 
 
Here is the full release form the City of Louisville: 
 

Louisville Metro and Airbnb announced today the finalization of an agreement that will allow the company to collect and remit taxes on behalf of its hosts in Louisville and Jefferson County. Effective April 1, Airbnb will automatically collect and remit the Louisville Transient Room Tax (8.5%) for taxable bookings. The agreement allows Louisville to fully benefit from people visiting and staying longer through home sharing.

Collecting and remitting hotel taxes can be complicated, as the rules were designed for traditional hospitality providers and large hotel corporations with teams of lawyers and accountants.

That’s why Airbnb has begun partnering with governments throughout the world to collect and remit taxes, making the process seamless and easy for hosts to pay their fair share while contributing new revenue for local governments. These agreements are particularly impactful for a city like Louisville, where some homeowners may only be hosting visitors during a handful of large events such as the Kentucky Derby, and therefore are less likely to be aware of the applicable taxes associated with short-term rentals.

“I am delighted to see that the city has settled on an agreement with Airbnb. We have leisure and convention travelers requesting the option of an Airbnb. We have a growing number of Airbnb Hosts in Louisville – this will put them on the same playing field as our other accommodations in paying the transient room tax,” said Karen Williams, President & CEO of the Louisville Convention Bureau.

“We are always looking for opportunities to better serve taxpayers,” said Louisville Metro Revenue Commission Director Angela Dunn. “This agreement advances that goal by streamlining the local tax process for hosts.”

This marks Airbnb’s third tax agreement in Kentucky. In September 2017, the company announced a statewide tax agreement with the Kentucky Department of Revenue that authorized the company to collect and remit the state sales tax on all Kentucky Airbnb bookings (including in Louisville Metro). And earlier this year, Airbnb and Lexington announced an agreement authorizing Airbnb to collect and remit Lexington’s local room tax.

“We believe this agreement will unlock significant new revenue for Louisville Convention Bureau moving forward, and we’re so thrilled to have finalized it well prior to the Derby,” said Laura Spanjian, policy director for Airbnb. “With clear, fair rules to regulate home sharing and now a tax agreement to bring in new revenue, Louisville has emerged as a national model for how cities can capitalize from the sharing economy.”

The agreement comes at a time of dynamic home sharing growth in the Greater Louisville area. In 2017, Louisville-area Airbnb hosts earned $10 million in supplemental income while welcoming over 78,000 guest arrivals to the city.

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Airbnb and City of Louisville Reach Tax Collection Agreement

Airbnb and City of Louisville Reach Tax Collection Agreement

A press release was sent out by the City of Louisville this morning announcing they have reached an agreement with Airbnb to collect and remit the 8.5% hospitality/bed tax on every guest reservation made through Airbnb. Under Airbnb’s current agreement with the state, taxes are added to reservations at checkout and paid by the guest. Airbnb remits to the State on the host’s behalf. 
 
The agreement with the City is expected to go into effect April 1st. Additional details will be made available as they are known. It is advised that everyone continue with current tax collection and remittance practice until further notified. And remember, this applies only to Airbnb reservations. No agreements are in place with other platforms (VRBO, Expedia, etc.) or direct placement guests. 
 
 
Here is the full release form the City of Louisville: 
 

Louisville Metro and Airbnb announced today the finalization of an agreement that will allow the company to collect and remit taxes on behalf of its hosts in Louisville and Jefferson County. Effective April 1, Airbnb will automatically collect and remit the Louisville Transient Room Tax (8.5%) for taxable bookings. The agreement allows Louisville to fully benefit from people visiting and staying longer through home sharing.

Collecting and remitting hotel taxes can be complicated, as the rules were designed for traditional hospitality providers and large hotel corporations with teams of lawyers and accountants.

That’s why Airbnb has begun partnering with governments throughout the world to collect and remit taxes, making the process seamless and easy for hosts to pay their fair share while contributing new revenue for local governments. These agreements are particularly impactful for a city like Louisville, where some homeowners may only be hosting visitors during a handful of large events such as the Kentucky Derby, and therefore are less likely to be aware of the applicable taxes associated with short-term rentals.

“I am delighted to see that the city has settled on an agreement with Airbnb. We have leisure and convention travelers requesting the option of an Airbnb. We have a growing number of Airbnb Hosts in Louisville – this will put them on the same playing field as our other accommodations in paying the transient room tax,” said Karen Williams, President & CEO of the Louisville Convention Bureau.

“We are always looking for opportunities to better serve taxpayers,” said Louisville Metro Revenue Commission Director Angela Dunn. “This agreement advances that goal by streamlining the local tax process for hosts.”

This marks Airbnb’s third tax agreement in Kentucky. In September 2017, the company announced a statewide tax agreement with the Kentucky Department of Revenue that authorized the company to collect and remit the state sales tax on all Kentucky Airbnb bookings (including in Louisville Metro). And earlier this year, Airbnb and Lexington announced an agreement authorizing Airbnb to collect and remit Lexington’s local room tax.

“We believe this agreement will unlock significant new revenue for Louisville Convention Bureau moving forward, and we’re so thrilled to have finalized it well prior to the Derby,” said Laura Spanjian, policy director for Airbnb. “With clear, fair rules to regulate home sharing and now a tax agreement to bring in new revenue, Louisville has emerged as a national model for how cities can capitalize from the sharing economy.”

The agreement comes at a time of dynamic home sharing growth in the Greater Louisville area. In 2017, Louisville-area Airbnb hosts earned $10 million in supplemental income while welcoming over 78,000 guest arrivals to the city.

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Airbnb Hosts Accused of Price Gouging at Mardi Gras

Airbnb Hosts Accused of Price Gouging at Mardi Gras

Mardi Gras is an annual event of drinking and excess, hosted annually by the wonderfully Creole city of New Orleans. Although the celebration extends throughout the entire city, the epicenter is the French Quarter. More than 1.4 Million people attend Mardi Gras each year, 3-times the number of residents, making this a destination for travelers around the globe. And with all destination events, tourists need places to stay. And most will want to stay in the heart of the action.

On February 7th, 2018, Airbnb Watch sent out a press release tracking the nightly rental rate of twelve Airbnb hosts over Mardi Gras weekend (Feb 13-14) then compared those to the rates the same hosts posted one week after Mardi Gras, noting a significant increase in rate the week prior. The organization referred to this increase as price gouging. Airbnb Watch is a project of American Family Voices, and touts themselves as bringing together a coalition of organizations and concerned citizens dedicated to a common goal: protecting communities and travelers by exposing commercial hosts who use sites like Airbnb to run illegal hotels in residential properties under the radar and by making sure all hotel businesses play by the same rules. Under this auspice, the organization paints with a wide brush, assuming Airbnb hosts in New Orleans are operating illegal commercial business and not paying appropriate taxes. One important thing to note is that Airbnb is a property-sharing platform that allows hosts flexibility to rent unused, furnished spaces as they see fit, and for a price the market dictates.

Mardi Gras is a luxury, destination event. Visitors expect to spend more in New Orleans during that week in February, than any other time of the year. But what this press release fails to take into account is that February is a historically bad month for Airbnb hosts around the world. I am a member of many international Airbnb Facebook groups and message groups where this is widely documented. Full-time hosts drop their rates ridiculously low in order to attract guests and receive a small portion of what they get during regular season. That being said, a significant increase during one of the slowest months of the year to the busiest time in the French Quarter is not as significant as Airbnb Watch would lead to believe. A better comparison would be comparing “peak season” pricing (June-August) and Mardi Gras. The difference wouldn’t be nearly as significant [or newsworthy]. I speak from deep understanding of this. I host several properties in Louisville, KY, during the Kentucky Derby…the greatest 2 minutes in sports. Houses at this time go anywhere from $1,200 per night to $9,999 per night, depending on location, number of bedrooms, and amenities. Hotel stays at 3 and 4-star properties range from $1,200 per night to well over $3,000 per night for a single queen suite. The press release also quotes Chris Lehane, Airbnb’s Head of Global Policy and Public Affairs, as saying, “It’s pretty clear that our hosts don’t engage in gouging. When demand for Airbnb increases, supply also tends to increase.” This is true in any city that has a well-attended annual event. Louisville officially has over 1,200 Airbnb hosts. Only 220 of those hosts have their properties listed year-round, meaning a large majority are “seasonal hosts” and only list their houses for short periods of time. And my intuition tells me they are listing for the Kentucky Derby, and charging a premium.

A quick search on Booking.com found that standard single queen rooms at French Quarter-adjacent, 3-star hotels were advertised for an average of $275 per night for the same [Mardi Gras] weekend. One property on the Airbnb Watch spreadsheet (Hosted by Southern Girl Property Management) was an 8 bedroom, 5-bathroom house renting for $1,500 per night. Similar hotel accommodations with 8 beds would total $2,200 per night, an increase of $700. But comparing an entire house to a single hotel room is not an easy comparison. When traveling with a group, or wanting to relax, there is nothing like having an entire house to oneself. The kitchen is available to cook meals so not every meal has to be at a restaurant and the living room allows everyone to gather and have conversation. The entire setting allows one to “live like a local” and not just a transient guest. The experiences are unequivocal.

Below is the chart Airbnb Watch provided with their press release with select hosts:

Airbnb’s in New Orleans Mardi Gras
Feb 13-14 Rate/Night
Feb 20 Rate/Night $ Rate Increase Percent Increase
Spacious Downtown NOLA $945 $175 $770 440%
Jazzy Penthouse $1,600 $332 $1,268 382%
Hosted by Nola $1,800 $299 $1,401 468%
Hosted by New Orleans Properties $1,600 $188 $1,412 751%
Hosted by Nola Property Management $2,500 $1,000 $1,500 150%
Hosted by Angela $1,280 $380 $900 237%
Hosted by Carolyn $975 $300 $675 225%
Hosted by Sam $1,688 $800 $888 111%
Hosted by Sam $950 $310 $640 206%
Hosted by Southern Girl Property Management $1,250 $425 $825 194%
Private Bedroom $1,000 $46 $954 2,007%
Hosted by Alexander $1,000 $56 $944 1,685%
*All rates and unit availabilities subject to change per host preference

It is clear that Airbnb Watch has little interest whether or not Mardi Gras attendees have access to affordable accommodations, as they define them. What is clear is an ulterior motive to stop short-term rentals, which would completely devastate the travel and tourism industries within most major cities. Hotels alone cannot keep up with demand for travel within the US. And Americans are traveling in larger groups of friends and family, which puts many traditional hotels out of reach. If a thoughtful investor can legally take a property, well appoint it, and live up to the standards of a gracious, 5-star host, then why rain on their Mardi Gras parade?

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