2024 short-term rental industry highlights: Regulation ramps up

If there’s one constant in the short-term rental (STR) world, it’s change. STR opportunities, markets, operations, and regulations evolve along with trends in the larger world and within the industry itself. Here are some of the developments we’ve seen in 2024.

Just before 2024 came to a close, The Federal Trade Commission (FTC) finalized a new rule requiring STRs and other providers of short-term accommodations to provide transparency by clearly disclosing the total price for a stay to consumers at first glance, including all mandatory fees. 

The nationwide measure followed on the heels of similar laws in two states, California and Minnesota. These kinds of transparency requirements will most likely continue to be popular as a consumer protection measure.

The days of STRs flying under the radar are long gone. From the largest cities to small towns and rural areas, local governments have become aware that STRs are not only a source of tax revenue, but that they have the potential to cause community controversy. A growing number of local governments are putting STR regulations in place for the first time or updating older rules. 

Communities that passed measures to regulate STRs in 2024 include Bozeman, Montana; Indianapolis, Indiana; Jackson, Wyoming; Lexington, Kentucky;  St. Louis, Missouri; and many more.

Local governments with long-standing STR laws on the books have realized that STR ordinances must have enforcement teeth to be effective. In recent years, many local governments have taken steps to strengthen STR enforcement.

For example, Newark, New Jersey, started using a software platform to help identify operating STRs and increase compliance, an increasingly common tactic for local governments. The city can impose fines of up to $2,000 per violation for those who don’t follow the law. And in Portland, Oregon, officials launched a new STR permit application site in an effort to cut down a large backlog of applications hindering the city’s enforcement efforts.

Many jurisdictions are requiring STR marketplaces to assist in enforcement of STR regulations and lodging tax collection. Portland, Oregon, has committed to enforcing rules requiring STR marketplaces such as Airbnb and Vrbo to verify online listings have city-issued permit numbers. In March, city officials asked Airbnb to remove more than 100 listings lacking valid permit numbers. Other local governments, including San Antonio, Texas, and Summit County, Colorado, have created similar requirements.

A new Rhode Island measure requires marketplaces to make sure all their Rhode Island listings have state business registration numbers with expiration dates, and to notify hosts to register their STRs every year. Marketplaces are also required to provide quarterly reports to the state with information on listings, registration numbers, and occupancy.

States get more involved in short-term rental rules

Most STR regulation has traditionally been instigated by local governments rather than at the state level, but that’s changing. In 2024:

• New York state passed a law giving counties the option to create an STR registry. STR marketplaces such as Airbnb and Vrbo must submit data on their STR listings, including the amount of taxes collected, to counties with a registry. Marketplaces must also submit a report to the state on the number of bookings they facilitate in each county.
• In Hawaii, a new law gives counties more power to regulate STRs, including phasing them out altogether.
• A new law in Connecticut gives municipalities explicit power to regulate STRs.

Conflicts continue between states and local governments on STR regulation

Not all state governments are increasing STR regulation. Some aim to protect STRs by limiting the power of local jurisdictions to govern STRs. More often than not, these initiatives have failed in recent years. One example is Florida. While the Legislature passed a measure that would have invalidated recent local regulations and decreased local governments’ control, Governor Ron DeSantis vetoed it, stating that “vacation rentals should not be approached as a one-size-fits-all issue.”

In Arizona, the state has a history of restricting how cities can regulate STRs, although it did give cities more power in this arena in 2022. However, a 2024 state law places limits on how far local governments can go in regulating accessory dwelling units (ADUs). The legislation bars cities with populations over 75,000 from banning the use of ADUs for STRs. This has forced Phoenix and other cities to reluctantly change their ADU ordinances to comply.

More communities create and increase lodging taxes

As in past years, governments from the state to local level are increasingly recognizing the value that STRs can offer communities in terms of lodging tax revenue. At the ballot box in the November 2024 elections, several communities voted to increase existing lodging taxes and fees or create new ones. Others created new taxes or fees via legislation, such as Erie County, New York, and the states of Vermont and Delaware.

Get help with changing lodging tax rules

Avalara MyLodgeTax can help STR operators stay up to date on lodging tax compliance. We help short-term rental operators across the U.S. comply with state and local tax registration, collection, and filing requirements. If you have tax questions related to vacation rental properties, drop us a line and we’ll get back to you with answers.