Airbnb will begin paying hospitality taxes in Hot Springs starting June 1, the company announced Wednesday (May 17). Hot Springs is the first city in Arkansas to reach an agreement with the home sharing company, which has made similar arrangements in municipalities throughout the world.
“These agreements are a meaningful revenue boost for communities, and we hope to reach similar agreements with cities around Arkansas soon,” said Laura Spanjian, Airbnb public policy director.
Guests staying within the Hot Springs city limits will be charged the city’s 3% lodging tax on their booking receipt, and Airbnb will remit the revenue to the Hot Springs Advertising & Promotion Commission, according to Airbnb.
“It’s only fair that they pay the tax like everybody else has to. It’s an issue of fairness as far as we are concerned,” said Steve Arrison, CEO of the city’s visitors’ bureau, Visit Hot Springs, and the Hot Springs Advertising & Promotion Commission. “It puts Airbnb on an even footing with other lodging properties.
“We will use that money to attract more tourism. It’s mutually beneficial,” he said.
Arrison was unable to estimate projected revenues from the agreement, because the commission has not found an effective way to identify Airbnb hosts within the city limits, he said.
However, Airbnb reported that Hot Springs hosts welcomed nearly 3,400 guest arrivals and earned $362,900 in 2016, showing a 300% increase from the previous year. In fact, Hot Springs had the third most visitors in the state, behind Fayetteville and Little Rock. In 2016, hospitality tax collections in Hot Springs totaled $6 million, according to the A&P. Collections garnered $644,405 in March, the latest available data.
On learning of the new local tax agreement, Hot Springs Airbnb host Eric Bartos said, “I understand the increase. … I’m sure the local hotels are also paying that tax. At the same time, I’m not a huge fan. I don’t really think it’s good for Airbnb in general.”
Bartos has logged 360 guests, since he and his wife, Cori, became hosts in 2014. Then, they were one of only a few hosts in the area.
“Now, the market is flooded,” he said.
He’s concerned how additional taxation will affect his income and said he’d like to see Hot Springs and the state earn money in other ways, by adding higher-paying jobs and capitalizing on untapped markets like medical marijuana.
“I’m not anti-government, but I think the government should also help its citizens,” Bartos said.
Airbnb agreed earlier this year to begin collecting the 6.5% Arkansas Gross Receipts Tax, the 2% state tourism tax and local sales and use taxes from its hosts. That collection began Feb. 1.
Tourism is a top industry in Hot Springs. Garland County, where the city is located, ranked fourth statewide in state tourism tax collections through January and February, according to the Arkansas Department of Parks & Tourism. Garland County garnered $144,158 during the two-month period, showing an 8.3% decrease year-over-year for the same time period in 2016.
Statewide, the 2% tourism tax generated $15.461 million in revenue during 2016, up 4.36% compared to 2015.
Bartos said he’s not yet sure how deeply the state tax collection has affected his Airbnb business, a source of income he deems crucial to his family.
“We love Airbnb. It’s been an amazing source of income that has kept balance and stability in our household, even through extremely trying times,” he said. “If it wasn’t for Airbnb, we would have been forced to sell our home due to unforeseen circumstances twice in the two and a half years that we have been here in Arkansas.”
Statewide, about 900 Airbnb hosts in Arkansas earned a collective $4 million in 2016. With 34,000 guest stays, the state’s Airbnb use grew 249% from 2015, according to the company. The number of hosts grew 104%.