Owensboro’s evolving economy and development has put more focus on the local tourism industry. To accommodate the growing numbers of tourists, residents and businesses have begun hosting their properties as Airbnb locations within the city and county, allowing out-of-towners to rent the properties for various reasons, events and timeframes.
Airbnb agreed last year to pay the State Department of Revenue two annual state taxes–however, the agreement didn’t include local taxes that help support the tourism industry.
According to Hank Phillips, President/CEO of the Kentucky Travel Industry Association, a state-level transient room tax and sales tax have been added to the costs of hosts renting out locations for Airbnbs in the county and city. The new, local transient room tax supports marketing and tourism.
“People who owe taxes to Airbnb are the ones listing Airbnbs–those whose homes are listed,” said Phillips. “That agreement didn’t include the local transient room tax–the same hotel tax people pay as part of the cost of a hotel room. Because that’s a local and active tax, the agreement didn’t include it.”
Mark Calitri, President and CEO of the Convention and Visitors Bureau (CVB) of Owensboro, says the process of implementing local taxes on Airbnb locations has been fast-moving.
“As of this morning, Daviess County and CVB has begun the process to file paperwork to collect the occupancy tax from Airbnb rentals,” Calitri said on Wednesday. “Airbnb will be paying rates consistent with our hotels and, although there are only a few Airbnb properties in Daviess County, in today’s time, every dollar counts.”
Calitri said 3 percent of the tax goes toward the CVB, 2 percent will go toward the county, while 1 percent will go to each the City of Owensboro and state tourism.
Phillips said the local tax is “super important” because it funds local tourism development. The Kentucky Travel Association got involved and began discussions with Airbnb about adding a local tax to Airbnb hosts. Airbnb responded, saying the transient room tax was applicable to their operations but, initially, it wouldn’t be possible for them to pay local taxes around the state without a third party.
“At one point, they suggested legislation might be needed,” said Phillips. “We continued looking at third-party options. We went to a number of local visitors bureaus and have initiated the process of reaching an agreement with Airbnb. From the cases we’ve seen, the Convention and Visitors Bureau (CVB) takes the lead on beginning the process.”
Phillips said Daviess County Fiscal Court has reached out to Airbnb to get the process underway, putting the ball in Airbnb’s court to make the agreement happen.
“That puts Kentucky in a line of jurisdiction. Airbnb hasn’t been unable to estimate how long that’ll take,” said Phillips. “Not because it’s complex, but because there’s a long line of other customers wanting to make an agreement. I tell each group to be persistent.”
Bigger cities, such as Louisville and Lexington, have already made the agreement to include the local transient tax. Owensboro and other smaller cities are waiting for an agreement to be settled.
“There are fewer Airbnbs than hotels,” said Phillips. “But every dollar of marketing tourism, at the local level, counts.”