Global Best Practices in Short-Term Rentals

Short-term rentals (STRs) or vacation rentals have seen a revolution in the last 10-plus years. Platforms like Airbnb and VRBO have created popular, global peer-to-pear online marketplaces, vastly expanding the availability of private homes or apartments to visitors. STRs have now grown to around 15 percent of all visitor accommodation in the US (Source: Analysis from  Airdna) and Airbnb has become the world’s most valuable accommodation brand, with a market valuation of more than $75 billion.

The lack of thoughtful, balanced management and regulations has prompted a global backlash.

Long-running concerns about the negative impacts of STRs on communities have been amplified in 2023 with New York City, British Columbia and many other destinations across the world introducing dramatic restrictions on them. While a range of community concerns about STRs are often cited (e.g.: noise and changes in “community character”), a leading motivator is their impact on access to affordability housing. Unaffordable resident and workforce housing has developed into a social and political crisis in many parts of the world. However, the drivers of housing inflation are complex and multifaceted. Plus, our global study found that good research and data supporting the relative impact of STRs on this problem is often missing or mixed in many destinations.

Airbnb and Expedia’s relative lack of support for communities grappling with these issues has arguably contributed to the backlash, and jeopardized the sustainable growth of STRs. Like many major new online businesses of the last generation, they privatized much of the profits and socialized many of the costs of exponential growth in vacation rentals — largely leaving it to communities to find a thoughtful, balanced approach to STR management and marketing. The result has been a patchwork of STR strategies often based on little research or data and with a few narrow interests or loud voices in communities dominating policy settings. 

Destination organizations, such as CVBs or state or national tourism organizations, have typically not been involved in this debate. Only 13 percent of destination organizations in our North American and European survey of almost 300 DMOs in 2022 reported being involved at all in the management of STRs. However, destination organizations can be a useful and important partner to other agencies in developing smart STR policies — policies that balance the needs of different stakeholders and maximize the economic, visitor and host benefits of STRs while carefully minimizing, mitigating or compensating for their impacts and costs to the community.

In early 2023 Miles Partnership, Coraggio Group and Group Nao published a major study on STR management and marketing best practices. This was one section of Time for DMOcracy — a major North American and European study on community-engagement best practices in tourism.

Time for DMOcracy identified eight practical recommendations for how destination organizations can work with local government, industry and community partners to manage and market a short-term rental sector that is seen as overwhelmingly positive by residents:

1. Get Engaged: Start early and stay involved as a partner in STR management and marketing.
   • Destination organizations should contribute to a thoughtful debate, understanding and balancing the opportunities and challenges, benefits and costs of STRs in a community.
2. Know the Sector: Ensure there is a robust system of research, consultation and data collection.
   • There are a range of sophisticated data and research providers, as well as compliance-management platforms. Make sure your destination has all the information to make smart decisions.
3. Integrate STR management and marketing into a sustainable tourism strategy.
   • Smart STR management and marketing is just one element of tourism creating widely shared and well-understood benefits across your local community — not just for businesses and government.
4. Help develop or update your community’s STR management plan and regulations.
   • Tap into the many case studies of STR management we have collected in Time for DMOcracy that highlight these best practices in action around the world.
5. Customize STR Management: Target by neighborhood, housing type and/or type of host.
   • One size does not fit all in STR management. For example, create different zones for STR management to meet the very different needs of each neighborhood or area.
6. Support industry self-regulation that includes industry standards and guest education.
   • Ask your vacation-rental industry to step up and educate (and even help enforce) good-neighbor policies for STR guests in your communities.
7. Inclusive STR Registration: Implement a simple, low-cost and broad-based STR registration system.
   • Make sure your registration system incorporates as many STRs as possible and is recognized and used by Airbnb and VRBO in order for a STR to be listed on their sites.
8. Collect and allocate STR tax revenue, including funding for tourism.
   • STR tax revenue can be a newfound source of revenue. Make sure a dedicated percentage is used to help manage as well as market STRs, in addition to supporting other tourism programs. Consider whether these taxes can also contribute to a broader development fund or bond to address affordable housing for residents and tourism and hospitality workers in your community. Our study provides examples of such public-private programs, including 'Housing Now’ in Mammoth Lakes, California.

Resources: 

• Webinar - The State of the American Traveler: Destination Stewardship Edition 2023
• Access the short-term rental section of the Time for DMOcracy Report, including the toolkit of case-study examples and research summaries online here
• See the full North American Time for DMOcracy report and resources on community engagement. Read an overview here or access sections on community participation, resident-sentiment research, workforce, DEI and more online here.
• Download the European edition of Time for DMOcracy led by our partners at Group Nao online here.