The Impact of Short-Term Rentals on Local Communities
In real estate, rental property investment is an excellent means of financial freedom. More specifically, short-term rental investment continues to grow in popularity in recent years.
The popular short-term rental platform Airbnb is estimated to hit a billion listings by 2028. It’s a booming market that provides affordable accommodation for travelers. Better still, you can earn new income if you have a spare couch, extra room, or even an idle home.
Investing in vacation rental property is particularly popular in communities with increased lodging demand. These are areas with thriving business or entertainment, seasonal tourism destinations, close to universities, or those that host significant special events.
However, while Airbnb is significantly beneficial, the use of short-term rentals can have both positive and negative impacts on local communities. Read on for more insight.
How Do Short-Term Rentals Impact Local Communities?
Short-term rentals investing have both sides of a coin. While many factors come into play, the surrounding is the significant recipient. Here are some major pros and cons of vacation rentals in local communities.
- Economic Benefits
Investing in short-term rentals brings a positive economic impact to a city in many ways. For instance, vacation rentals provide a city with extra income through tax revenues. Still, the guests can economically benefit the community as a whole. They’ll be spending money on restaurants, bars, and places they visit, like museums.
You can be sure that the short-term rental investment is the best and most reliable way to earn additional income, even for house owners. Starting on the STR strategy takes a little time before you get revenue. Increased revenue is an excellent way of battling inflation.
Better still, it’s a perfect means for passive income from a rental property. So, you’ll just invest, and the experts do the rest. Hiring reliable and highly skilled vacation home experts will free you from managing, maintenance and marketing. Better still, the selling process will be easier to find the right market quickly.
- Tourism
The European short-term rental market is expected to hit 205.2 million people by 2026. This is due to the travel and tourism market’s recovery after the covid-19 pandemic.
When you invest in vacation rental property, you’ll promote community tourism. Several short-term vacation rental platforms for most cities continue to improve the local tourism sector. Due to the price advantage of short-term rentals, less-known tourist destinations are now attractive.
Consequently, some local governments are encouraging people to invest in short-term rentals. This is because they need more high-standard hotels for tourists. Still, even cities with significant hotels and established tourist industries are gaining from vacation rentals.
There’s also a significant relationship between short-term rentals and tourism job creation. Residents are getting hired to show tourists around the city and major attractions.
- Flexibility
When you buy a vacation rental property, you’re providing a flexible accommodation option for people who need a place for a short period. These are primarily remote workers who move from place to place and even leisure travelers.
A short-term rental also gives the owner much flexibility in every decision-making. In learning how to make money from renting property, you can charge nightly rates based on the following:
- The season
- Demands
- Property type
Property owners can also set a minimum-night stay for the weekends, holidays, and extraordinary events. In Chicago, for instance, vacation rental rates are likely to be higher during sports seasons. A homeowner can also blackout dates they wish to use the property.
- Housing and Job Availability
Short-term rental investments indeed reduce the availability of long-term housing. Subsequently, this causes a rise in housing costs, making it impossible to find a place to live.
On the flip side, vacation rental housing seems a better idea for most property owners due to the slow long-term housing market. Besides, it generates a 30% higher profit than long-term rentals. Most short-term rental platforms allow homeowners to use existing housing stock as vacation rentals.
Vacation rental homeowners have also created job opportunities. Due to high and frequent maintenance, property owners hire cleaning services, landscapers, and contractors.
Fortunately, the steady stream of short-term rental business provides job security. This is critical for part-time workers or those on fixed incomes. They most likely need help to settle their rent or mortgage, save for retirement or pay for their children’s education.
- Increased Traffic for Small Businesses
Short-term rental owners refer their guests to local shops and restaurants. Usually, the property owners have welcome books that have a list of the ideal local stops.
Local businesses rely on this increased and steady traffic of new buyers throughout the day. It’s even better if the shops are close to the short-stay apartments. Some guests are not there for leisure but for work and would prefer to take the shortest time outside.
Conversely, tourists and those on vacation want to move around frequently. Having a list of shops that are somewhat far would also be ideal.
- Regulations
The proven data makes it easy to see how short-term rentals are booming. Consequently, this popularity is also becoming a significant reason for regulations. Even though most cities limit vacation rentals, it’s a vital way of striking a balance.
For most communities, regulations on short-term rental investment bring positive effects. The policies protect homeowners, neighbors, and guests’ health, safety, and interests.
Thus, there’s a likelihood of fewer complaints about noise, garbage, and parking issues. With vacation rental policies in place, the communities can easily uphold their quality of life.
- Competition
Rental property investment strategies provide high competition for traditional hotels. This could cause a drop in revenue for these businesses. The hotel industry claims that the STR strategy has unfair economic benefits in two significant ways.
First, a short-term rental doesn’t have to hire staff. Homeowners can do the maintenance by themselves and even handle management. Because of this, vacation rentals give guests lower rates compared to traditional tourist hotels.
Secondly, when you buy a vacation rental property, you don’t pay tourist taxes, worsening the imbalanced competition. In some cities, Airbnb-style rentals are recording significant revenue increases in the number of hosts with many units. Since short-term rentals are not regulated like the hotel business, this could create a more significant threat to the hotel industry.
Parting Shot
Overall, the impact of short-term rentals on local communities will depend on various factors. Where to buy rental property determines the size and characteristics of the community, available short-term rentals, and management regulations.
Communities need to consider the potential impacts of short-term rentals and develop policies that balance the interests of homeowners, tourists, and residents.
