I was raised in San Antonio, but we never went downtown, because it was too expensive and it was “for the tourists.” As most locals live in neighborhoods a long way from the River Walk and don’t frequently venture into downtown, perhaps visitors would appreciate that same authentic experience of our city.
Short-term rentals are more than a hotel alternative – they distribute tourism dollars more evenly across San Antonio. Companies such as Airbnb allow guests to enjoy locally enriched hospitality that cannot be matched by large chain hotels. This “home vacation business” is changing the way visitors experience cities, and competing for tourism dollars requires San Antonio to invest in a vibrant short-term rental stock.
Upsides for the City
Moving tourism dollars out of downtown has a lot of benefits:
- Better distribution of touristic traffic
- More spending at diverse local restaurants
- More necessity shopping at neighborhood commercial stores
- Decreased vacancy rates in a city with chronic oversupply of developed buildings (within Loop 410, San Antonio is approximately 25% vacant)
This adds resiliency to our base industry (tourism), which provides housing flexibility for both the medical and defense industries (our other biggest base industries). When including medical tourism, specialists on work assignments, and temporary duty postings, our three base industries have substantial appetites for temporary housing.
Correspondingly, the distributed nature of short-term rentals reduces the visitor impact that downtown is not always prepared to absorb. Cooling off the thirst for hotel rooms downtown will also adjust the property demand model, making residential housing more affordable downtown.
Downtown residential housing makes downtown more resilient to fluctuations in tourism seasons, as empty hotels mean empty touristic restaurants and empty streets. Unbooked AirBnB rooms can be temporarily repurposed on the fly in dozens of ways, while an empty hotel room is wasted city space.
On a regional level, should the Gulf experience another event like Hurricane Katrina or Ike, San Antonio not only has dozens of hotels to provide emergency shelter, but also several hundred homestay rooms distributed throughout the community ready to accommodate people in need while providing organized hospitality.
Redefining “Hospitality” is a Struggle
Most short-term rental operators have an extra room or a second house. They meet their guests and acquaint them with the amenities in their neighborhood, thereby realigning visitors’ experiences from “tourist” to “house guest.” Through immersion, guests are able to create special memories of San Antonio and its people rather than being penned up with other strangers in a high-priced “tourista villa” downtown. There are two other obvious outcomes:
- Guests will likely use the homestay option for future travel.
- They will remember San Antonio fondly, suggest it to friends and corporate planners, and keep it on their short-list for future travel.
The meager profit margins are a constant struggle for homestay operators. Given the burgeoning market there are no economies of scale of which to take advantage. Both hotels and short-term rental models require groundskeeping, housekeeping, guest services, and maintenance. Comparing a Holiday Inn to a short-term rental is like likening COSTCO to a mom-and-pop hardware store – There is a 10-to-1 efficiency advantage in favor of large hotels. The short-term rental model’s labor inefficiency, therefore, creates more jobs for San Antonio.
Given the low density of the city, public transit isn’t an efficient way to move from one side of Bexar County to another. The transportation drag effect, therefore, limits the short-term rental market throughout most of San Antonio. Where a place like Austin has 6,000 AirBnB options, San Antonio has only approximately 900 as of this writing.
Like it did for the music industry, the internet is giving us the chance to connect more intimately with our hosts. Where mega hotels impose a burden on the commons of the city (and should be taxed for the benefit they extract), the short-term rental industry is distributed throughout the city and more readily allows the community to realize income from our heritage. Hotels are net extractors from our local economy whereas short-term rentals are net contributors:
- They are locally owned
- They consistently employ locals rather than import management
- They direct more visitor dollars into other locally owned businesses
Regulation? Maybe. Tax? Not so much.
Are there any drawbacks to short-term rentals? There are some concerns about the impact on neighborhoods and increased traffic and rabble-rousing. The “not in my back yard” knee jerk response is largely fueled by the “stranger danger”mindset. If those same properties were left vacant they would suffer from neglect and vandalism which have documented negative impacts on community quality of life and property values.
The average two-person Texas household owns three cars. Given that short-term rentals cannot add more bedrooms than the house was designed for, the traffic influx is actually zero-sum.
If a company or developer started utilizing a distributed model to run a short-term rental operation from multiple residential lots, or worse, started amassing a neighborhood full of rentals, this would be a problem as there would be no improved guest experience. The distribution of guests into the neighborhoods would still be a benefit, but guests would not have the local connection to take advantage of local amenities – That is a hotel model in the suburban context.
Public safety factors are an interesting issue. Typically we rely on the government to ensure that we are reasonably safe outside our homes. This stems from a need to create accountability, so the government steps in to hold groups accountable. The American Medical Association is not a government organization, and yet we trust it to hold doctors accountable.
What makes a short-term rental successful is its accountability on the renting platform websites. While not a panacea for public safety, this system does create a strong disincentive to cut corners on quality and safety. Any major guest safety violation will likely get the property delisted and the host banned. As an architect and planner, I support safety standards, but I can’t deny that the sharing economy self-prunes the bad hosts and annoying guests.
A short-term rental operation is a locally owned small business – it deserves to be watered, not taxed. It isn’t efficient to tax individual rooms in a hotel. Rather, hotels pay a lump sum on tens of thousands of profit dollars. An individual short-term rental will be paying the equivalent of a tenth of a percentage point. The loss to the taxed value due to administrative inefficiency is absurd, the income potential a pittance, with little to show but a loss to the guest. Only hotels benefit if short-term rentals are taxed and regulated.
If the point of the hotel tax is to extract more value from visitors because they spend much of their money on big chains, then how great of a deal are short-term rental guests? Their money is already better directed toward the local economy.
If large chains are cows eating all the grass (net extractors), short-term rentals are squirrels planting a forest (net contributors). Putting squirrels in cages and trying to milk them defeats the point of having squirrels.
On a personal note, I have enjoyed meeting my guests. One in two wind up talking to me for several hours into the night. I’ve hosted a paramedic on oil exploration vessels and a doctoral candidate studying an extinct form of Taoism.
Amazing people come to San Antonio, let’s invite them to see the real SA.