Short-term housing rental giant Airbnb has agreed to assess and collect a local hotel and motel tax on all Fayette County Airbnb rentals.
That’s good news for Lexington. According to 2016 data Airbnb released earlier this year, 1,500 guests stay at Airbnb homes in Lexington, generating $1.8 million in revenue for Airbnb hosts.
Lexington’s local hotel and motel tax is 8.5 percent. That means tourism officials could get an additional $150,000 in revenue from Airbnb stays each year. The local hotel tax goes to Lexington’s tourism bureau, VisitLex. A percentage will also be used to pay for some of an estimated $230 million expansion of the Lexington convention center.
Rusty Cook, the city’s director of revenue, said Airbnb and the city are still finalizing the deal but it’s likely that the 8.5 percent hotel and motel tax will be assessed sometime in the early part of 2018, probably by Feb. 1.
“We have been working on this a long time and we are very excited,” Cook said Tuesday during a Lexington-Fayette Urban County Council work session.
Cook said the city is exploring striking similar deals with other online short-term rental websites.
Traditional hotels have complained that Airbnb and other home-sharing websites have an unfair competitive advantage because state and local tourism taxes have not automatically been added to customers’ bills.
Airbnb and the state agreed to a similar deal earlier this year. Airbnb started collecting the state’s portion of the hotel and motel tax and state sales taxes on Oct. 1. Airbnb estimates the state could receive $1 million or more each year under the agreement.
In 2016, Kentucky Airbnb hosts made $10.2 million, according to Airbnb. Louisville was by far the top market with more than 43,000 stays generating $6.2 million for Airbnb hosts there. Louisville is still working to get Airbnb to collect Jefferson County hotel and motel taxes, Cook said.