Myth-busting short-term rentals
The short term rentals sector accounts for 18% of all European accommodation industry revenues and has a global potential market value of $8 billion. Yet the sector remains misunderstood amongst travellers, travel managers and intermediaries.
In this blog we will address some of the misperceptions about a segment which, if predictions are realised, will make up 5% of business travel accommodation spend, some £235 million in the UK alone.
Myth 1: Airbnb and Vrbo define short term rentals.
According to Skift, 40% of the short term rental industry is professionally managed, which covers everything from traditional holiday homes to dedicated serviced apartments. A short term rental is defined as a rental of any residential home unit for stays of less than a month, although the maximum length of stay can vary by location. Each is a professionally managed business that meets business travel’s duty of care needs at a reasonable price.
Myth 2: The short term rentals sector is un-regulated.
Like hoteliers, short term rental property operators must comply with a myriad of legal obligations including health & safety assessments by local authorities, planning regulations, energy performance, tenancy agreements and leasehold agreements. Following the launch of a licensing scheme for short term lets in Scotland, the Short Term Accommodation Association (STAA) is consulting with government over future regulation in England and Wales. A list of regulations that apply to the sector can be found here.
Myth 3: Short term rentals take up scarce housing stock, driving up rent prices.
The evidence says otherwise. YouGov and Capital Economics found that 60% of landlords that offer long-lets are very unlikely to offer short term lets, whilst The Residential Landlords Association says that only 7% of its members had offered properties as short term lets. Oxford Economics found that, between 2015 and 2019, the rise in short term inventory did not significantly push up house prices compared to areas where availability stayed the same.
Myth 4: Short term rentals don’t contribute to the economy.
Although some short term rental businesses are too small to incur VAT, owners contribute 20 – 45% of their income in income tax. Like hoteliers, commercial short term rental operators and B&Bs are liable for corporation tax at 19%. Taking into account intermediary fees which automatically attract VAT, for every £100 in booking revenue, government takes an estimated £31.60 in taxation.
Myth 5: Short term rentals don’t contribute to local communities.
In rural communities, heavily impacted by the pandemic and cost-of-living crisis, the short term lets market has been more crisis-resilient than other forms of tourism accommodation. Consistent growth during the pandemic showed employment to be more secure than in hotels. Tourism linked to short term let activities employs over 600,000 people in the UK and made up 14.9% of total tourism employment in 2019.
Myth 6: Short term rentals provide unfair competition to hotels.
Many hoteliers say short term rentals have an unfair advantage because they are less heavily regulated, which we have already demonstrated (Myth #2) is not the case. Furthermore, they complement hotels because they serve a different market by providing incremental availability in high-demand locations. Between 2008 and 2018, the number of nights on which hotels were 90% full or more grew by 36% in London and 87% in Edinburgh.
Myth 7: Short term rentals are all about parties and anti-social behaviour.
When surveyed in 2018, London Boroughs were unable to provide evidence of exactly how many noise and anti-social behaviour complaints were linked explicitly to short-term rentals. Many properties’ T&Cs prevent short term lets being used to host large, disruptive parties, whilst STAA’s Considerate Nightly Lets Charter also helps manage residential amenity issues. A recent trial found that 100% of noise events were solved after communicating with guests, and 83% of guests gave positive feedback on the process.
Compared to hotels, where health and safety risks are often higher due to the range of amenities, such as gyms, pools, and bars, the risks in short term rentals are lower. One STAA member found that, of all their 2021 bookings, just 0.00018% incurred health and safety complaints. That’s partly because, since 2017, STAA has worked with Quality in Tourism to deliver accreditation across the industry, improving quality in the sector and increasing consumers’ trust. STAA has brought professionally managed and accredited operators into one platform, Trusted Stays. TrustedStays provides the ability for companies and organisations to book accredited stays in homes and apartments through the TrustedStays website or your travel management company via the GDS.
Myth 9: Short term rentals can only be booked well in advance.
As short term rental inventory has become more urban, travellers increasingly regard short term rental products as viable alternatives to hotels. 32% of European short term rental bookings are made within two weeks of check in, rising to 91% in urban locations globally.
Myth 10: The short term rentals sector is resisting greater regulation.
STAA believes that a simple, national, low cost registration scheme, as the best way to regulate the short term let market in the UK. Hosts would submit information about themselves and commit to compliance with all relevant regulations or demonstrate compliance via accreditation. Thereafter, spot checks would be made on properties with non-compliance would result in action by the local authority.
“The responsible growth of our sector is our strategic priority,” says Merilee Karr, Chair of STAA and CEO of UnderTheDoormat Group. “Our sector works to regulatory standards and at STAA we want to support the professionalism of the sector andbest practice across the industry. We are leading the way with Industry accreditation and programmes such as TrustedStays. Our goal is to help operators large and small to up their game; to continue to improve and deliver great product to market and great guest experiences.”