During the peak of the pandemic last year, the leisure and hospitality industry was among the hardest hit as lockdown life took over and travel stalled for many. In Dutchess County, occupancy tax revenue from hotels dropped almost 40 percent in 2020 from the previous year.
Nationwide, states and local communities are expected to lose $20 billion in tax revenue driven by hotel stays between 2020 and 2022, according to research from the American Hotel & Lodging Association. In 2019, direct state and local tax revenue — including hotel-specific occupancy taxes, sales taxes, property and other taxes — from hotels in the United States exceeded $41 billion.
The hotel tax revenue shortfall caused by the pandemic was felt regionally here as well. But short-term stays, which includes Airbnbs — a popular lodging alternative for many people looking to stay in the Hudson Valley during the pandemic — helped shore up tax revenue in Dutchess County where hotel stays dramatically dropped off.
“Short-term rentals did quite well because you can work from anywhere,” said Dutchess Tourism President and CEO Melaine Rottkamp. “Remote workers could get out of the city and spend time here.”
Dutchess County collects a 4 percent hotel-specific occupancy tax across the board, whether a visitor is staying in a hotel, a bed and breakfast or a short-term rental like an Airbnb. In other words, all lodging is treated equally from a tax perspective by the county. Dutchess was one of the first counties in the state to make an agreement with Airbnb to collect an occupancy tax.
The county saw a 40 percent decline in occupancy tax revenue from hotels and bed and breakfasts last year from the year prior. In 2020, Dutchess County collected $1,684,800 in tax revenue from hotels, compared to $2,783,706 in 2019.
Tax revenue from short-term rentals, however, saw a big increase in the 2020 pandemic year, which helped to mitigate some of the shortfall seen with hotels. Dutchess collected $608,888 in occupancy taxes from Airbnbs and short-term rentals in 2020 compared to $483,025 collected in 2019 — an increase of 26 percent.
“The lodging industry got pummeled,” said Dutchess County Executive Marc Molinaro, who added that the county had braced for a 50 percent loss in sales and occupancy taxes. “In short-term rentals, we’re grateful we saw an increase. It didn’t make up for the loss from hotels, but we unexpectedly had a benefit.”
Airbnbs also helped diversify the lodging mix at a time when business travel steeply declined. “The more opportunities you have for diverse lodging, the stronger the destination will be,” said Rottkamp, who said that while hotels are attractive to business travelers and other visitors, short-term rentals can appeal to families who might not want to book separate rooms.
Location also plays a role. “In the more rural parts of our county where there aren’t hotels, having short-term rental properties is great because people can support the nearby businesses,” said Rottkamp, referencing the Route 22 rural corridor between Pawling and Millerton. “That’s a part of our community that could use every extra dollar.”
Short-term rentals and their impact on the economic and social vibrancy of communities have been hotly debated among many Hudson Valley towns. Several communities from New Paltz to Kingston are exploring limits to Airbnbs to ease housing concerns; Woodstock in Ulster County in late July passed a moratorium on new short-term rental applications while it reevaluates town planning and design needs.
Dutchess County has at least 10 additional hotel projects in various stages of planning, according to Rottkamp, including the massive $500 million Bellefield at Historic Hyde Park project.
Aside from short-term rentals expanding lodging options for travelers, Molinaro said they can offer other benefits like giving homeowners an additional revenue stream if they wish to rent this way.
“I understand the balancing act,” said Molinaro regarding hotels and short-term rentals. “You don’t want to be saturated with one, but short-term rentals are a great opportunity for property owners and travelers.”
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Short-term rentals shore up tax revenue where hotels fell short - Times Union
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