OCEAN CITY — While resort officials continue to attempt to track on-line short-term rentals in Ocean City, at least one of the main players is working with the town to help find room tax scofflaws.
During Monday’s Tourism Committee meeting, Planning and Community Development Director Bill Neville provided an update on the town’s efforts to track short-term vacation rentals booked online. For well over a year, Ocean City officials have been monitoring the proliferation of short-term vacation rentals in the resort brokered by Internet platforms such as Airbnb and VRBO, for example.
The concern has largely been on two fronts including the apparent lack of business licenses for the hundreds of online vacation rentals in addition to the lack of room tax remittal for those acquiring the requisite business license. Town officials for months have been attempting to gain a better understanding of the impact of Airbnb, VRBO and similar companies that provide an Internet platform for connecting visitors to accommodations in Ocean City. The companies enable property owners to rent homes, apartments and even single rooms to visitors searching online for accommodations by bypassing the traditional rental companies.
Just as Uber has changed the transportation industry, Airbnb, VRBO and others have made remarkable inroads with the traditional rental industry with millions of available accommodations in thousands of cities and countries across the U.S. and worldwide. The property owners pay the companies a percentage of the rent collected to list their homes, while the renters often pay a larger percentage to the company for providing the service.
In essence, the online short-term vacation rental companies get them coming and going, and the convenience and selection has turned it into a major industry. While it has been around for nearly a decade, the impact of Airbnb and similar companies started to make its presence felt in the resort three years ago.
Airbnb and similar companies that offer online vacation rentals have become a major concern in a resort that earns its living in the hospitality industry and whose budget relies heavily on room taxes. Worcester County collected over $13 million in room tax last year, largely derived from Ocean City, but that figure could take a substantial hit if Airbnb, VRBO and similar companies come in and take a sizable portion of the rental market without collecting or remitting the requisite sales and room taxes.
During Monday’s Tourism Committee meeting, Neville explained Expedia, which is the parent company to VRBO and HomeAway, among others, has become aware of Ocean City’s attempt to track the short-term vacation rentals and collect and remit the appropriate room and sales taxes. He said Expedia officials had approached his department and staff about working with the town to identify those property owners involved in the program and help ensure they are remitting the appropriate taxes.
“The main message to come out of these early meetings is they want to be good partners with the Town of Ocean City,” he said. “They are willing to require all property owners who utilize their sites in Ocean City to list their business license number. It might require some ordinance or code change, because they probably won’t do it voluntarily, but they will do it if it was our ordinance. They would support any kind of code amendment that would allow short-term rentals to continue in the community.”
It’s important to note Expedia was only speaking on behalf of its own online short-term rental properties including VRBO and HomeAway. It does not include Airbnb, which has its own reputation of not having its renters obtain business licenses and remit taxes.
Ocean City Hotel-Motel-Restaurant Association Executive Director Susan Jones said there are laws in place, including a handful currently being debated in the Maryland General Assembly, to better regulate online vacation rentals.
“Sales tax has been legislated, but room tax has not to a large degree,” she said. “Some of the companies like VRBO and HomeAway are complying and others are not. Airbnb has been the biggest offender.”
It is the property owner’s responsibility to remit the appropriate room tax to the county for rentals under six months, but because there are so many and because of the proliferation of online rental companies and even vacation rentals by owner, many are likely not acquiring rental licenses or paying the required sales and room taxes.
Neville said Expedia’s apparent willingness to partner with the town could help with the business license and room tax remittal issues for on-line short-term rentals at least with its companies.
“If they’re not advertising a business license, we know we can track them down,” he said. “If they do advertise a business license, we should be able to make sure they are remitting the appropriate taxes.”
The tourism committee voted to explore what would be necessary in order to have at least the Expedia companies’ rental properties in the resort advertise their business license numbers.
