Losing business to Airbnb wasn’t the only reason Betti Newburn sold her Boise bed and breakfast, the Idaho Heritage Inn at 109 W. Idaho St. in Downtown Boise, in February. She lost about 20% of occupancy since 2011 and it was a big factor in her decision to sell to the neighboring and land-hungry St. Luke’s Boise Medical Center.
She said, “When you are running on slim margin anyway, losing (occupancy) is significant.”
Airbnb.com provides an online platform for property owners and renters to rent homes or rooms to vacationers. The site presents itself as a way for travelers to find more affordable accommodations than hotels, and for hosts to make extra money, often while they are vacationing themselves.
Airbnb lists more than 300 rental properties in the Boise area. Many of them are also listed on sites competing with Airnbnb, including Vacasa – which is headquartered in Portland but has office s in Boise – and Vacation Rentals by Owner, better known as VRBO.
Brian Scott, president of the Idaho Bed and Breakfast Association said, the growth of Airbnb and sites similar to it pose a “severe” threat to the bed-and-breakfast industry.
The number of Idaho bed and breakfasts have decline from 215 to 125 in just two years, according to Scott. Over the same period, the association’s membership has dropped from 80 to 51.
He also said, that some bed-and-breakfast operators have closed up shop because they lost business to Airbnb and its competitors. Others are converting to Airbnb-style businesses, that allows them to offer lower prices and avoid regulatory hassles and expenses faced by traditional businesslike, like fire inspections.
“A lot of former members are converting to the short-term rental sites,” Scott said. “They get more bang for their buck.”
The home-rental businesses often fail to charge taxes as well, which put bed and breakfasts at a disadvantage. New burn saod that taxes consisted of Idaho’s 6% sales tax, 2% lodging tax, plus the Greater Boise Auditorium District’s 5% tax, typically added $13 or more to the cost of an Idaho Heritage Inn room, which ranged fromm $99 to $135 a night.
Under Idaho law, all Airbnb and similar rentals are taxable.
Last year, a Vacasa executive told the Statesman that the company collects state and local taxes.
Last year, the executive director of the auditorium district, Pat Rice, asked the Idaho Attorney General’s Office whether rental sites collect appropriate taxes and fall under hotel rules. The office responded by saying that the properties posted on Airbnb and similar sites fit the state’s definitions for hotels and motels.
Idaho residents listing on those sites are required to collect and remit the same taxes as bed and breakfasts, said audit division administrator of the Idaho Tax Commission, Randy Tilley.
The commission, however, has to way of knowing whether a taxpayer is remitting funds collected from an Airbnb property or any kind of business, making it very hard to track compliance. The state is trying to contact property owners it things may be renting rooms through websites, but the sites do not provide any physical addresses or host names until renters pay for rentals, making the search harder.
“We’re looking at websites, communicating with taxpayers, trying to address as many of these concerns as we can given our limited information,” Tilley said.
The AG’s letter said website operators in other states do not have to comply with Idaho’s lodging rules. “(Given) the mere transfer of rents received to real property owner-hosts within this state, there is insufficient contact with Idaho in these activities to allow the state to require such booking services to collect and remit the taxes,” the letter said.