Airbnb, the world’s leading community driven hospitality company, announced recently that it delivered over $15.3 million in home sharing and short-term rental tax revenue on behalf of its Texas hosts in the first year of its tax agreement with the State of Texas, far exceeding even the most generous projections.
In April 2017, Airbnb announced a tax agreement with the Texas Comptroller’s Office, authorizing the home sharing platform to automatically collect the 6% state hotel occupancy tax on behalf of its host community and remit the revenue directly to the state. That agreement took effect May 1, 2017, infusing a new revenue stream for the state to fully capitalize on more people visiting Texas and staying longer through home sharing.
At the time of the April 2017 announcement, Airbnb noted that if guest arrivals and host revenue were to remain consistent with 2016 numbers, it would mean an estimated $8 million to the state. The $15.3 million in revenue nearly doubled those projections.
“The sharing economy is a key component to the dynamic and evolving Texas economy,” said Texas Comptroller Glenn Hegar. “Airbnb has been committed to acting as a responsible partner with the Lone Star State and that partnership has been a success. We at the Comptroller’s office appreciate the opportunity to work with companies involved in the sharing economy, and I hope the success of this agreement is an example to other companies that partnerships like this can benefit all of us and keep Texas strong and growing.”
Collecting and remitting hotel taxes can be incredibly complicated. The rules were designed for traditional hospitality providers and large hotel corporations with teams of lawyers and accountants. For this reason, Airbnb has partnered with over 370 local governments throughout the U.S. 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.
The tax agreement with the Comptroller marked Airbnb’s first tax partnership in Texas. Revenue from the Texas hotel tax funds contributes both to the General Revenue Fund as well as the Texas Governor’s Economic Development and Tourism office, which helps market Texas as a global destination for family-friendly tourism.
Texan Airbnb hosts welcomed over 1.5 million guests to the state in 2017. And statewide data indicates that the short-term rental community is complementing — rather than competing with — the Texas hotel industry.
According to a third-party economic study conducted for the Governor’s office, Texas hotels experienced dynamic growth in 2017 — in parallel with short-term rental growth. This included 4.5% growth in total hotel rooms available, 7.6% growth in hotel room nights sold, 3.2% growth in hotel occupancy rate, and 8% growth in hotel room revenue. This suggests that home sharing and short-term rentals on Airbnb and other platforms are opening up the state to a new demographic of tourists by catering to travelers who are less able to afford hotels, those who desire to stay in neighborhoods or cities that lack hotels, and families who prefer to vacation together under one roof.