Short Term Rental (STR) is the overarching term for Vacation Rentals and Investment Properties in the Lodging Industry. These rentals, when not properly adhering to the law, are threatening a delicate balance of industry that is responsible for a large portion of economic vitality in the area.
The majority of these rentals do not pay Hotel Occupancy Tax as required by law where they operate. In addition, most do not have or adhere to Zoning, ADA, Health and Fire requirements, or Commercial Property Taxes that traditional properties spend a significant amount of revenue to maintain. STR properties have a substantial advantage in requirements and tax payments over traditional lodging properties that have carried that burden and built the very industry that is now flourishing in New Braunfels and Comal County.
STR's also take a big bite out of inventory for workforce housing in New Braunfels and Comal County. In addition, there is also a current trend for apartment complexes to classify available units as STR’s and generate revenue without collecting hotel occupancy tax. The Local Hotel Occupancy Tax funds Arts and Historical Organizations, Municipal Civic/Convention Centers, and Destination Marketing Programs as the state and local law is intended to provide.
Currently, the Canyon Lake Area has 231 active STR properties. In these listings 42% are single owner properties, and the remaining 58% are multiple unit investment properties operating at a commercial level.
The New Braunfels Area currently has 642 active STR properties. In these listings 23% are single owner properties, and the remaining 77% are multiple unit investment properties operating at a commercial level. New Braunfels has seen a 97% growth in this market in the past six years. New Braunfels is on pace for STR inventory to surpass traditional property inventory by 2020.
The result of this industry segment is presenting adverse effects in neighborhoods, workforce housing, hotel rates, hotel occupancy, tax revenues, and ultimately Destination, Arts, Municipal and Historical organization budgets that are responsible for a $795 million economic engine for our area.
There is currently a collective effort at the Municipal level to engage a discovery and collection agency for the STR’s and should be in place in the next 90 days. Also, the ability for discovery and collection agencies to claw back up 4 years to garner lost occupancy tax collections might equal the playing field. Many destinations and organizations in Texas will be working toward having state and local standards updated to require booking and marketing platforms to pay both State and Local Occupancy Tax collections.