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Airbnb activity surging in New Mexico

ALBUQUERQUE, N.M. — Airbnb’s business is booming in New Mexico, according to new data from the online vacation rental marketplace.

The Land of Enchantment is now home to about 2,300 active Airbnb hosts, 60 percent more than a year ago. Those hosts recorded 119,900 guest arrivals in 2016. That marks a 110 percent jump from 2015.

Airbnb, which enables individuals to use their own residences as vacation rentals, said its typical New Mexico host is making $5,100 a year by renting out his or her property for an average of 37 nights, according to a news release.

Figures detailing Airbnb’s New Mexico growth come amid discussions about the role and responsibility of such accommodation services within the larger hospitality industry landscape, particularly when it comes to paying taxes.

The New Mexico Hospitality Association says a “loophole” in New Mexico law exempts many short-term rentals — including those offered online through Airbnb, VRBO and HomeAway — from paying lodgers’ taxes, though Airbnb already has begun collecting and remitting taxes in some New Mexico communities.

State statute currently grants the tax exemption “if the vendor does not offer at least three rooms within or attached to a taxable premise for lodging or at least three other premises for lodging or a combination of these within the taxing jurisdiction.”

Two state lawmakers — Rep. Carl Trujillo, D-Santa Fe, and Sen. John Sapien, D-Corrales — have introduced bills to nix that exemption.

New Mexico Hospitality Association President and CEO Jen Schroer said removing that language would provide parity because short-term rental hosts who don’t pay the same taxes as traditional hotels and lodging operations are getting a 12 to 15 percent competitive advantage.

Charlie Gray, executive director of the Greater Albuquerque Innkeepers Association, said he could not quantify the impact the growing short-term rental market has had on the hotel industry, but “I think we all know that there is business being lost.”

He said he could better determine the impact if the short-term rentals paid into the lodgers’ tax system — a move he said would benefit both industries since the tax revenue helps advertise the state to potential visitors.

“There will be more money for marketing the state and if more people come to the state, they’ll stay not only at hotels, but I’m sure they’ll stay at short-term rentals as well,” said Gray, whose membership includes about 50 metro-area hotels.

Albuquerque’s lodgers’ tax rate is 5 percent. The city collected a record $11.8 million in lodgers’ taxes in fiscal year 2016, the highest since the tax was imposed in 1969. At least half of that revenue must go toward tourism-related marketing and promotion.

Schroer said some short-term rental hosts already pay the tax; in fact, Airbnb last year began collecting lodgers’ tax from its hosts in Santa Fe and Taos after forging an agreement with each municipality.

The city of Santa Fe has collected $158,000 in lodgers’ taxes from its Airbnb community since the agreement went into effect last August, according to a letter Tourism Santa Fe’s Randy Randall wrote to legislators this month. He said 2017 collections should top $500,000.

An Airbnb spokeswoman said the company is looking to do the same at the state level.

“Our community of hosts want to pay their fair share. Right now, tax rules are written for big hotels with teams of lawyers and accountants, not everyday people sharing the homes in which they live. This makes the tax remittance process challenging for our host community. We hope to reach an agreement with the state of New Mexico to be able to voluntarily collect and remit this tax on their behalf soon, like we do in more than 220 communities around the world, to make this process easier for everyone and ensure the state is getting 100 percent of this revenue,” spokeswoman Laura Rillos said in a statement.

Airbnb said its New Mexico hosts made a total of $16.5 million in 2016. The Santa Fe contingent saw the most action among New Mexico communities, collecting a total of $6.8 million. Albuquerque hosts made $3.2 million.

But Airbnb is not the only player in the short-term lodging market. According to a study commissioned by the New Mexico Hospitality Association, the state currently has 4,076 active short-term rentals with a combined 9,296 bedrooms. That’s the room equivalent of nearly 50 hotels the size of Hotel Albuquerque.

The study estimates the state could make an additional $6.9 million from the short-term rental market if all the hosts paid lodgers’ taxes and gross receipts taxes.

One of the bills in the Legislature has been recommended for approval by the House Taxation and Revenue Committee, and the other is pending in committee.

 

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