Op-Ed: The long-term effect of short-term rentals

As we all know, Airbnb, along with the other internet based “short-term rental” sites, sells itself as a way for struggling homeowners to make a few extra bucks “sharing” their living space with the traveling public. Sounds like a very appealing business model. The “boarding houses” of recent memory. In a recent piece in VermontBiz, Airbnb boasted that their “hosts” in Vermont’s ski country would bill $22.3 million this ski season. The average host, of which Airbnb claims there are 3,000 in Vermont, would collect approximately $3,400. Sounds great for them, but as with all “bait and switch” operations, you have to read between the lines for the real story.

The problem with this “business” model in vacation communities like ski country in Vermont is that’s not the reality. A cursory look at any of these internet sites shows that well over 75 percent of the rentals available are houses, condos, etc. Very few are extra rooms in someone’s permanent residence. What this means is most of these rentals are the vacation homes of people whose permanent residence is outside of Vermont or the properties of real estate speculators who are buying up distressed properties throughout the state. The impact of these unregulated, unlicensed commercial enterprises on Vermont’s small communities will be devastating.

For the past 80-plus years many of the visitors to ski country stayed in the small B&Bs and country inns that dotted Vermont’s small towns. Think of the Columbia Inn in the movie classic “White Christmas.” Usually family-owned and operated, these institutions were as important to Vermont’s success as a vacation destination as its bucolic landscape and small family-owned dairy farms. After a while, the state realized it needed to regulate these businesses so visitors to Vermont could take comfort in knowing they met a minimum standard of safety and cleanliness. For some, it was even a dream, to one day run a small country inn in New England. Quickly these businesses became part of the fabric of the local communities in which they were located. They sent their children to the local schools, shopped in the local stores, provided jobs for town residents. The money they collected running these small businesses was circulated locally to the benefit of the whole community.

They lived in or right next to their “establishments” and personally entertained the guests who traveled to Vermont to take in the world-famous fall colors or ski at one of the booming ski resorts. No need for the community to worry. The proprietor was right there making sure there was no excessive noise after 11 p.m., or that 20 people were piling in to a dwelling suitable for only six. They became good neighbors and cared about the impact their business had on the community.

Today, what the communities are being subjected to is quite different. The new category of “lodging establishments” are called short-term rentals and are being sanctioned by the state of Vermont, all because they have been fed a sales pitch about the new “internet” age and think this is the answer to some of their monetary needs. Anything that brings more visitors to Vermont brings more tax revenue, the thinking goes. Not exactly.

What the state seems to be ignoring is the revenue these short-term rentals accumulate never sees the light of day in Vermont! Whereas the owners of traditional lodging establishments are residents of the communities where their businesses are located, the short-term rental owners are “absentee landlords” in the worst sense. The state sees green in the $23 million that Airbnb says their “hosts” will collect.

If they live up to their commitment, Airbnb should then be writing the state a $2 million check at the end of the season. The problem comes with the other $21 million. That money is being deposited in the personal or many times business accounts of the out-of-state property owners.

Instead of shopping in the local stores where their rentals are located these business owners circulate their revenue in the state where they live to that state’s advantage, not Vermont’s. That $21 million the Airbnb hosts are collecting was just sucked right out of the Vermont economy. And Airbnb, which is the only short-term rental site that collects and pays Meals and Rooms tax, is only a fraction of this new economy. If you assume that because they collect the 9 percent Meals and Rooms tax, Airbnb is not the lion’s share of these rentals, the number could be much greater, maybe three times the $21 million. That’s $60-plus million dollars that has left the state, never to be spent here. And that’s only the three months of ski season. What about the other nine months? The full effect is devastating to Vermont’s economy!

Even worse for the local communities, these absentee landlords never monitor or supervise the goings on of their renters. We’ve all heard the horror stories of the house that sleeps six but had 12 cars there over the weekend. Or, the house that doesn’t accept renters under the age of 21 but was full of teenagers last weekend since their parents were the ones who rented the house for them. Vermont’s small, peaceful communities being subjected to this mayhem are in danger of becoming a new version of the “Jersey Shore!” And anyone who tried to spend a nice, quiet summer at the Jersey shore knows exactly what I mean.

Vermont’s existing hospitality law is very clear in its definition of a lodging establishment and it is obvious from a cursory reading that these short-term rentals are covered by it. There’s no need for the state to carve out a new category to cover these rentals. Inns and B&Bs all around the state are being put out of business and their properties rendered worthless by these poachers who operate under the radar of the current, applicable regulations and put the lives of the traveling public at risk.

The empty, deteriorating inn and B&B properties, formerly thriving businesses, will become a virus as they drive down the property values of all those around them, only creating more opportunities for the real estate speculators. Pretty soon every house on the road will be an unsupervised, unregulated, unlicensed rental, just like the “Jersey Shore.”

  Written by Tom Checchia.

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