Web rentals hard to track | VailDaily.com

Web rentals hard to track

VAIL — When most of your sales tax revenue comes from lodging, it's important to know who's renting rooms to whom. With the advent of rent-by-owner internet sites, tracking that information has become more difficult.

The town of Vail for the past year has required property owners self-renting their units to obtain town business licenses and pay lodging taxes. So far, about 300 people have done that.

In order to better track those internet units, the town will conduct a research study to better understand the rent-by-owner market. The town is hiring two research firms, Denver-based Destimetrics, and Boulder-based RRC Associates, to conduct that study.

That work will start early this year, but Destimetrics principal partner didn't want to discuss specifics before presenting details to his client, the town of Vail.

The town also is set to hire a half-time person to monitor internet rentals to ensure that people posting units on the web are known to the town — and paying their lodging taxes.

Understanding the rent-by-owner market becomes more significant as the number of owners using those sites increases.

Recommended Stories For You

Bed Base Impacted

So far in 2016, owners representing 335 condos and townhomes registered with the town — including posting their town sales tax numbers on their internet ads. Those owners paid roughly $600,000 in lodging and sales taxes through the end of September.

The town's entire short-term lodging inventory is roughly 1,000 units.

"We're losing a big enough portion of our bed base (to internet rentals) to be significant," Dale Bugby said. Bugby, owner of Vail Resort Rentals, served a two-year term on the Vail Town Council from 2013 to 2015. While he was on that board, Bugby often lobbied for the town to better track internet rentals. He also was part of an effort by lodging managers to require internet rentals to meet a set of quality measures.

Business License Required

Ultimately, the council agreed to require business licenses.

While some cities require self-renting landlords to meet lodging standards, it's common to require business licenses.

The town of Avon also requires business licenses from people renting their units on the internet.

In both Vail and Avon, town employees monitor rent-by-owner sites to ensure available units are on the towns' tax rolls. In an email, Avon Town Manager Virginia Egger wrote that the town also monitors compliance via complaints from neighbors.

In addition, Avon for the past several years has also prohibited short-term rentals in the Wildridge neighborhood.

As the rent-by-owner business grows, towns could potentially lose a significant amount of lodging tax. Bugby estimated that perhaps 10 percent of every complex is now in the rent-by-owner pool.

"If this affects 10 percent of your bed base, that's a lot," Bugby said. "If the trend keeps going that way, there's that much more reason for the town to (learn more)."

But, Bugby said, while internet rentals are growing now, he doesn't expect that growth to continue indefinitely.

"In the long run there's going to be a pendulum swing," Bugby said. "At some point, full-service management companies will come back."

Too Good to be True?

One thing people using rent-by-owner sites discover is that they don't get to keep the nightly rate appearing in the ad. Bugby said he knows of units that were purchased by rent-by-owner investors that have gone back on the market.

"It wasn't the easy money (owners) thought it would be," Bugby said, adding that the expense and difficulty of lining up housekeeping and maintenance services can be an unpleasant surprise for owners.

Bugby said rent-by-owner sites are just part of the economic change wrought by the internet.

"It's changed how we book flights, book hotels and how we buy groceries," he said. "It's disruptive, then balances out."

Vail Daily Business Editor Scott Miller can be reached at 970-748-2930, smiller@vaildaily.com and @scottnmiller.

By the numbers

331: Units available in Vail on http://www.vrbo.com for the weekend of Jan. 21

310: Approximate number of owners who have registered their rental properties with the town of Vail.

1,000: Approximate number of condos and townhomes for short-term rent in Vail.

4,000: Approximate number of lodging beds including hotels and short-term rentals.