City to Begin Collecting Hotel Tax Online from Short-Term Rentals in February

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A short term rental property located in Government Hill near the Pearl has been a popular location for travelers.

Scott Ball / Rivard Report

A short-term rental property located in Government Hill near the Pearl has been a popular location for travelers.

The City of San Antonio expects to go live Feb. 1 with a new online system for short-term rental hosts to pay hotel occupancy taxes and permitting fees for rooms or properties listed on platforms such as Airbnb.

The City contracted with Host Compliance , a California-based company that specializes in short-term rental permitting and tax compliance, to provide online payment capability, something short-term rental hosts say has been sorely lacking in San Antonio. The system is currently in the testing phase.

Host Compliance told the City it can go back at least two years and provide accurate records for San Antonio’s short-term rentals (STRs), allowing the City to collect back taxes on stays from hosts who have not already paid taxes on them, said Troy Elliott, the City’s deputy chief financial officer.

The City's Deputy Chief Development Officer Troy Elliott.

Bonnie Arbittier / Rivard Report

The City’s Deputy Chief Development Officer Troy Elliott.

“We will take that information and compare it to what we’ve received from those who are remitting and in the event that they were not remitting, we’ll contact those STRs and we’ll work with them, No. 1, from an educational standpoint, and No. 2, to collect if they had been operating in the past,” Elliott said.

Elliott said it might be possible to go back even further than two years to collect hotel occupancy taxes, news that could have some delinquent STR hosts fearing a big tax bill in the near future.

The new online platform is not an app, but the company has told the City its service will render on smartphones, making it easier for hosts to pay taxes each month, Elliott said. The current process requires hosts to pay those taxes over the phone with a credit card or mail the City a check.

City Council approved regulations for short-term rentals in November, setting density and permitting requirements and establishing fees and penalties for homes, apartments, rooms, and other properties listed on such platforms as Airbnb and HomeAway. Short-term rental hosts already were required under the law to pay hotel occupancy tax to the City, but only about 400 of as many as 2,000 hosts were doing so.

Elliott said since the regulations were passed in November, approximately 30 hosts who previously were not paying taxes approached the City, which is working on a process for them to make back payments.

Earlier this month, Airbnb reported that short-term rental hosts in and around San Antonio operating on its platform raked in $47 million in revenue from approximately 420,000 guest stays in 2018, indicating the potential tax revenue at stake. The San Antonio region includes 10 counties, but the majority of host income and guest stays came in Bexar County, where hosts made approximately $27.6 million from 263,000 guest stays.

The City collects taxes only for stays inside the City limits, but if the City was collecting on the entire $27.6 million Airbnb says was earned in Bexar County, it would amount to approximately $3 million.

Hotel occupancy tax revenue is used to help fund the City’s tourism industry, including providing more marketing and advertising to bring visitors to San Antonio.

Liza Barratachea, president and CEO of San Antonio Hotel and Lodging Association.

Bonnie Arbittier / Rivard Report

Liza Barratachea, president and CEO of San Antonio Hotel and Lodging Association.

Liza Barratachea, president and CEO of the San Antonio Hotel and Lodging Association, said she was not surprised by the revenue numbers Airbnb released because 2018 also was a good year for San Antonio hotels.

Barratachea, who participated in 18 months of discussion over the new short-term rental regulations, said getting those rules in place was needed to ensure that STR hosts are playing by the same rules as others in the lodging industry.

“We’re all competitors, and in my industry, we know this is a new trend and it’s here to stay, and we think that they should participate in supporting that local hotel occupancy tax like everybody else in our industry has,” Barratachea said. “…What we learned through the short term rental process is that they’re largely not.”

Barratachea said she would like to see Airbnb and other STR platforms assess the taxes on their sites and send that money to the City, making it easier on the hosts by taking them out of the process. Airbnb already performs that function for the State of Texas’ hotel occupancy tax.

Ben Breit, a spokesman for Airbnb, said the company has offered to collect hotel occupancy taxes for San Antonio but, he said, the City didn’t want to have to negotiate multiple systems for the various STR platforms. Airbnb does not have the capability to collect back taxes.

Elliott said the City likely won’t know how many STR hosts owe back taxes – and how much is owed – until April. He said it will take some time for Host Compliance to develop and decipher the data once the system is operational.

Charlotte Kerr Jorgensen rents out a room in her home in Olmos Park Terrace on Airbnb. She said she and other hosts are eager for the City to put its new tax collection system in place. While it might not be as convenient as Airbnb collecting the money for her, it will be a much more modern, user-friendly way of doing business.

“Our experience with the state has been so positive where Airbnb is just really transparent to the host and it’s directly billed to the guest,” said Jorgensen, who noted her rental was booked 95 percent of the time in 2018. “It’s a very smooth, easy system. I think the City was concerned about the back taxes and losing out on that money.”

2 thoughts on “City to Begin Collecting Hotel Tax Online from Short-Term Rentals in February

  1. I’ve always paid the HOT taxes on our AirBnB rental, while the ones who didn’t were able to undercut me on price. Seems only fair that the ones who haven’t paid it all along should be on the hook for back taxes. I do wish the city would just let AirBnB collect it and pay, which would make it a whole lot easier.

  2. Agreed Jim.

    The city needs to get to an agreement with Airbnb. To be honest, even if back taxes are not collected as a part of the agreement. Apparently compliance is still around 15-20% on taxes, so by not getting an agreement done, the city is is allowing a ton of rentals to undercut me on price when they could immediately fix it with an agreement. On top of that, if they agreed to let Airbnb collect the taxes, it wouldn’t just be easier, we, the hosts who are paying their taxes, would immediately see a 10.75% jump in revenue since the tax would be passed on to the guest like the state tax is…we currently have to pay the tax directly out of our nightly rate and cleaning fees….I would love that 10.75% to go into my pocket…

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