“We are beaten down. Everybody is overworked. We have way too many people here and it’s not sustainable and it’s not productive,” Martha Keene, a longtime service worker in Crested Butte told her town council last week as they weighed a year-long moratorium on vacation rental property permits. “I’ve never seen this town like this. I’m not here to live next to businesses. I want a neighbor. We need a moratorium to catch our breath and formulate a real plan to save our community.”
Only a few towns in the high country are not weighing adjustments to short-term rentals right now. Here are some of the measures communities are considering:
- A citizen petition in Frisco would ban short-term rental properties with non-resident owners.
- Three Telluride residents last week submitted a petition for a vote in November that would slash the number of short-term rentals in town.
- Steamboat Springs’ city council last month suspended new short-term rental applications for 90 days.
- Crested Butte, which in 2017 capped short-term rentals at 30% of all the homes in town, this week approved a 12-month suspension of all vacation rental permits.
- Breckenridge town leaders are considering a significant increase in fees for the town’s 3,800 vacation rentals.
- Buena Vista’s board of trustees are weighing a plan to cap short-term rentals, which make up about 7% of the town’s housing stock. Neighboring Salida last week approved a three-month moratorium on new short-term rental permits.
- Vail, which has more than 2,100 short-term rental permits, also is mulling increased regulation.
All the caps, suspensions and regulation efforts hope to slow the recent wave of investors buying properties leased long term by locals and converting them into nightly rentals for vacationers. There’s a growing sense of urgency, as local leaders watch businesses struggle to remain open when workers lose their housing and leave town.
“We are seeing our community suffer. We are seeing our business owners close their doors and struggle to keep staff. Burnout is high. Turnover is high,” said Emily Scott Robinson, a Telluride musician who joined a restaurant manager and a filmmaker in gathering 200 signatures supporting a vote on a short-term rental cap in town. “We should have done this five years ago. We need to turn back the clock a little bit.”
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Telluride has about 38% of its free-market units available for rent to visitors. That’s 737 homes, up from 382 a decade ago. Robinson last week submitted 200 signatures supporting a ballot question in November asking Telluride voters to cap short-term rentals in the town at 400, with permits available through a lottery.
Robinson — along with Hayley Nenadal and Olivia Lavercombe — know that many of the homeowners who lose their short-term rental permits will not automatically convert their properties into rental housing for locals. But combined with possible financial incentives to rent to local workers, she hopes a cap can “deflate a corner of the housing market.”
Like many locals in resort communities, she can name many friends who lost their rental homes in recent months as new owners purchased properties and converted them into more lucrative short-term rentals.
“We hope that a portion of them will convert back to long-term rentals,” she said, blaming investor-owned short-term rentals for inflating housing prices beyond the reach of local workers. “Most people we approach have been enthusiastic and they feel this is a fairly moderate proposal. This is one small step toward affordable housing and creating a sustainable community.”
Hayes Walsh has spent the past few weeks knocking on doors in Frisco to gather signatures for a petition requiring short-term rental owners to live in the house. Like Robinson, he’s finding residents eager to contain short-term rentals.
“I have overwhelming support,” said Walsh, who works for a property management company. “The people who are opposing this do not live in this town.”
He’s close to gathering the 400 signatures he needs and he recently launched a website — friscopetition.com — to help grow support for the petition that asks local leaders to pass an ordinance that bans short-term rentals unless the home is the owner’s primary residence.
“Everybody here gets it,” Walsh said. “People want to live in a more tight-knit community.”
Short-term rentals posted record numbers in 2020
The short-term rental business is huge, with worldwide bookings in 2019 exceeding $116 billion. And its main players, Vrbo and Airbnb, are multi-billion-dollar international companies, with tens of millions of property owners using their platform to rent visitors their homes in countries across the world.
Colorado is a hot spot for those companies, with thousands of rental properties listed. And those properties generate many millions in lodging tax revenue and fees for local communities.
Short-term rental bookings soared in 2020 as vacationers sought lodging away from hotels and the surge has continued into 2021. AirDNA, which tracks vacation rentals across the U.S., reported all-time high occupancy in vacation homes in every month of 2021 through April. Demand at destinations and resorts, which AirDNA counts as mountain, lake and ocean locations, was up 25% in April 2021 compared with April 2019.
“This milestone marked the end of recovery and the beginning of the next phase of expansion for the U.S. short term rental industry,” reads AirDNA’s post-pandemic outlook report.
AirDNA data for Crested Butte, Telluride and Summit County show the last half of 2020 with all-time high occupancy of short-term rentals booked through Vrbo and Airbnb. The AirDNA data show the number of short-term rentals in the three regions listed on the two platforms have remained relatively steady since 2017, but occupancy in those properties is climbing.
Here are some occupancy statistics revealing the increased use of short term rentals in the three communities.
- In June 2021, occupancy in the 973 vacation homes around Crested Butte — which includes all the short-term rental properties in Mount Crested Butte and unincorporated portions of Gunnison County — was 62%, up from 49% in 976 units in June 2020 and 32% in 940 units in June 2017.
- In June 2021, occupancy in 1,371 vacation homes around Telluride — which includes all the short-term rental properties in Mountain Village and unincorporated portions of San Miguel County — was 53%, up from 47% in 1,469 units in June 2020 and 40% in 1,386 units in June 2017.
- In June 2021, occupancy in 8,098 vacation homes in Summit County — which includes Blue River, Breckenridge, Dillon, Frisco, Keystone, Silverthorne — was 50%, up from 38% in 7,688 units in June 2020 and 34% in 9,359 units in June 2017.
Vacation rentals solved a different problem a decade ago
Brian Egan, the founder of Denver-based Evolve vacation rental and property management company, remembers before the short-term rental boom a decade ago, when popular destinations worried about entire communities of empty homes that were occupied only a few weeks a year. Vacation rentals kept the lights on in those homes and helped support local businesses with a steady stream of vacationers, he said.
When Egan launched Evolve, communities grappled with the new short-term rental boom and many began installing strict regulations requiring permits and taxation. The then nascent industry supported those measures, working with communities to craft easy-to-follow permitting rules and helping collect and remit lodging taxes.
A decade later, the conversation isn’t about managing short-term rental growth as much as slowing or even eliminating vacation rentals, said Egan, whose Evolve manages more than 15,000 short-term rentals, including 1,233 in Colorado. The confluence of overtourism, a labor shortage, a flood of new residents and a housing crisis has mountain town leaders scrambling. And short-term rentals are “an easy target,” Egan said.
“It feels like short-term rentals are getting pinned for things that are much bigger macro-challenges in these communities,” Egan said. “Look, we want these communities to be amazing places that people want to visit. We want to help. But short-term rentals are not the boogeyman. Short-term rentals did not create these problems. An $800,000 home sitting empty for 50 weeks a year is not going to help your community. Filling it with guests for nine months a year and taxing it can generate revenue that can help build affordable housing. Short-term rentals have a role to play in fixing these challenges.”
San Francisco-based Airbnb, which reported $4.8 billion in revenue in 2019, sent a message to its hosts in Crested Butte on July 27, urging them to fight a proposed moratorium on short-term rental permit transfers. The moratorium is part of the town’s first official emergency declaration of a housing crisis.
“Hosting is a vital economic recovery lifeline, and can be a key revenue source for many of our hosts,” the email from Airbnb’s Advocacy and Policy Media Team reads. “It should not be restricted at a time when many residents are still struggling from the impacts of the ongoing pandemic.”
Crested Butte Mayor Jim Schmidt, speaking at a council meeting on July 19, called the email from Airbnb “deplorable.”
Schmidt and the Crested Butte town council heard that night from dozens of distressed locals urging a one-year moratorium on short-term rental permits. Crested Butte already limits short-term rentals to 30% of all homes in the town and in 2017 voters approved a 5% excise tax on all vacation rentals in town. In 2019 that excise tax provided $302,714 to the town’s affordable housing fund, up from $285,447 in 2018. That does not count the lodging tax paid by short-term rental properties in the town, which set records last year.
Keene, the Crested Butte restaurant worker, said locals are overworked and the vacationer experience is worsening as wait times grow at restaurants.
“Airbnb is like an infection and we need to get rid of it,” Keene said. “If you choose Vrbos and STRs over our community you are voting against your own community.”
One resident asked “are we a community or a commodity?” Another pleaded with the council to “stop the bleeding.” One man said “all my friends are leaving.”
After nearly two hours of testimony from angry locals, Crested Butte’s council unanimously voted in support of the moratorium, which will give the council time to measure the impacts of short-term rentals, create more affordable housing and build incentives for property owners to rent long term. The council also is exploring a ballot measure for funding “community preservation,” which could include fees for homeowners who leave their properties dark and unused for most of the year.
“We are trying to figure it out but it seems like the ship has sailed a bit,” said Crested Butte councilman Will Dujardin, who sees the slow loss of locals eating away at the funky culture that has long defined his town. Dujardin himself is moving to Utah for a new job in a couple of months.
“The fact that it is so hard to see the light at the end of the tunnel here in terms of financial security definitely influenced my decision,” said Dujardin, who has taught skiing and mountain biking in Crested Butte for more than 13 years and was first elected to the town council in 2017 as a fierce advocate for affordable housing.
Breckenridge is consulting with its attorney as it explores raising fees on the town’s more than 3,800 short-term rental properties. The town is discussing how much to raise the fees as well as how to spend the new revenue.
“We are a short-term rental town,” Breckenridge Mayor Eric Mamula said. “Hotels are not how we house guests, but things have gotten askew between short-term rentals and long-term rentals. We are talking about balance. We are never going to stop short-term rentals but how do we get back to where things are more in line?”
The conversation is about more than the economic contribution of vacation rentals, Mamula said.
“I am concerned about the overall health and sustainability of a community when you are telling your workforce they have to live somewhere else,” Mamula said. “I don’t think that makes for the vibrant, lively community Breckenridge has been for all these years when people have to live far away.”
“A scalpel, not a hacksaw”
Tom Foley, who tracks traffic and lodging in mountain destinations for Inntopia, has seen a 25% increase in second-home owners using their short-term rental properties for personal use. (Foley tracks those as “non-revenue generating stays.”) He’s also seeing near-record tourist visitation at many resort destinations, with lodging reservations at 18 mountain communities in the West for the first half of 2021 up 7% compared with pre-pandemic traffic in 2019.
Foley said destinations across the West are seeing pressures from growing visitation. But there are many angles in those capacity struggles, he said, that include limited parking, limited hotel rooms, growing numbers of second-home owners spending more time in their properties and increased visitation.
“There are a lot of different factors here and the challenge is to avoid a knee-jerk reaction,” Foley said.
Long-term planning, not banning short-term rentals, is the key to managing tourism, its effects on the environment and “the local experience,” he argued.
“Frankly, I’m not sure reducing the number of short-term rentals will do anything,” Foley said.
Expedia Group, which owns the short-term rental Vrbo and Homeaway platforms used by thousands of Colorado property owners, is working with many communities across the state. The company is commissioning a report that will examine the impact of more than 4,000 short-term rentals in Summit County, measuring visitor spending, lodging revenue, taxes and how vacation rentals may be affecting affordable housing.
Expedia Group spokesman Noah Stewart said “balanced and enforceable” regulations can help communities continue to capture revenue while realizing “the benefits rentals provide.”
Expedia Group recently unveiled a risk assessment tool that helps identify properties or visitors who could be disruptive to neighbors. The company also offers its stayneighborly.com website where residents and local officials can report problem properties. The company also has partnered with Airbnb to create what it’s calling a “Community Integrity Program,” which will allow the two companies to share information on properties that have been removed from renting on the platforms because of disruptive issues.
Stewart said those programs, in addition to tools for hosts helping them collect and remit local lodging taxes, keep properties and owners in compliance with local rules.
“Expedia Group’s priority at this time continues to be collaborating with cities to find balanced solutions that address their unique concerns,” Stewart said. “A comprehensive review of the needs of each community will ultimately be better than a blanket approach.”
Egan said the short-term rental industry welcomes regulation and taxation of vacation rentals but warned that blanket bans, excessive fees or onerous regulation can lead to “a lot of unintended consequences.”
“They could see more empty houses and less revenue for towns to address the challenges they have,” said Egan, who suggested that bans on short-term rentals could reduce property values for both second-home owners and locals alike. “The property tax base goes down and the local residents, their primary asset in their life is less valuable and you have empty homes in the town.”
He is working with local communities to think long-term when adjusting fees and permit numbers or considering bans.
“All the dials and levers that are available should be adjusted for the long game,” Egan said. “History would say swinging the heaviest levers wildly right now will not work out well. Let’s take a measured approach. We need a scalpel, not a hacksaw.”