Airbnb hosts cash in ahead of Derby Day. What’s the rental scene like in Lexington?
It’s Derby Week, and according to one analysis of the average Airbnb rates in Louisville, short-term rental owners there are making north of $300 a night during the week leading up to the event.
Writing for the personal finance website Money.co.uk, analyst James Andrews found a 340% spike in average nightly Airbnb rental rates in Louisville between Derby Day and the week before.
Lexington has its own charms to offer equestrian enthusiasts looking to soak up the bourbon distillery scene or scope out its world famous horse farms.
The city did not provide an estimate on the number of overall short-term rental units in Lexington, and a search of those available up to Saturday found about 30 still up for grabs. Rates varied widely from about $100 a night to $600 a night for the timeframe.
Here’s what you need to know about the short-term rental scene and the regulations in place.
Lexington’s short-term rentals are largely unregulated, for now
There generally aren’t many local regulatory hurdles you need to clear in order to start an Airbnb business — at least at the moment.
Lexington-Fayette Urban County Council member James Brown, who chairs the planning and public safety committee, said he’s working to help create a local policy governing short-term rentals.
In an interview Monday, Brown said he expects the proposal will be ready to go before the Urban County Council “in the coming months.”
It’s an ongoing project and one could be informed by a separate but related ordinance for accessory dwelling units (AUDs), commonly referred to as “granny flats.” The council approved that ordinance in October.
That AUD ordinance requires owners to get a conditional-use permit only if they want to use their granny flats as a short-term rental.
As for the ordinance that will apply to potentially all short-term rentals, such as Airbnbs, Brown said local stakeholders are most interested in how many nights a week the ordinance will allow.
There’s also some concerns about an “over-concentration” of short-term rentals in certain areas, he said.
“We’re still working on that internally,” Brown said of the ordinance drafting process.
What taxes do local Airbnb hosts pay?
According to Susan Straub, communications director for the Lexington mayor’s office, an 8.5% tax is collected on local short-term rentals, “which is then passed through to VisitLex (4%) and Lexington Center Corporation (4.5%).”
That transient room tax is collected when the room is booked and forwarded to the Lexington-Fayette Urban County Government, Straub wrote in an email to the Herald-Leader. The local government has agreements in place with several of the major platforms.
“We have voluntary collection agreements with AirBnB and Expedia Group (Homeaway and VRBO) to collect and remit transient room tax to LFUCG on behalf of their users,” Straub wrote.
How lucrative can Airbnb businesses be for their hosts?
In his analysis of most well-attended sporting and music events in the world, Andrews found the average nightly rate for an Airbnb during the event itself came in at $1,481.
During the week before, the average was $334 a night. Comparing the two rates, it was an increase of about 340% from one week to the next.
The Kentucky Derby took the No. 2 spot — coming in just behind the PGA Championship — in Andrews’ analysis of the lucrative sporting events for Airbnb hosts in the world.
Andrews explained his methodology as follows: “For the duration of each event, the average nightly cost of an Airbnb in the city was taken on Jan. 27, looking at the cost of an entire property for two guests. The average cost of Airbnbs in the same area was then taken for the corresponding date in the week before the event before the price difference between the two dates was calculated. Note that only events that saw a notable increase in prices were included, with many events (such as the World Cup final) either seeing no increase in prices or in some cases, a decrease.”
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