Long Beach is making more money than ever off short-term rentals such as Airbnb listings, according to recent data from the city’s Department of Financial Management.
The city has garnered some $3.872 million in tax revenue from short-term rentals through July this year. That’s an increase from last year when the city collected just $3.927 million over the course of all of 2022.
That money is coming in through transient occupancy taxes, TOT, which is an extra 13% per-night fee visitors pay at hotels, motels, and any legally operating short-term rentals, which are required to register with the city before listing on websites like Airbnb and VRBO.
TOT revenue from short-term rentals is a relatively new source of funding for Long Beach.
The city first enacted an ordinance governing and taxing short-term rentals in 2020, said Scott Baldwin, program specialist for the city’s short-term rental program. Prior to 2020, it was like “the wild west” for Airbnb operators, he said.
Since the city began regulating them, 830 short-term rentals have been registered with Long Beach, although it’s unclear how many may still be operating illegally.
Getting regulations in place before the COVID-19 hit turned out to be quite a boon for Long Beach.
Even though the pandemic decimated the travel industry, TOT revenue from short-term rentals still reached $2.17 million in 2020. In 2021, that number rose to $2.787 million, largely due to the pivot to “staycations” in short-term rental offerings on platforms such as Airbnbs, according to Geraldine Alejo, a revenue management officer for the city.
“This was one of our highlights in 2020,” Alejo said. “So even though TOT revenues overall experienced a shortfall from our budgeted expectations—and that’s due to the pandemic and associated health order restrictions that impacted business travel … STR (short-term rental) revenue actually helped mitigate some of the revenue loss.”
Short-term rental revenue ended up coming in above budgeted expectations in 2020, Alejo said.
With pandemic-era restrictions in the rear-view mirror, financial management has been closely monitoring the city’s recovery, although its impact on consumer behavior has yet to be fully understood, Alejo said.
For this reason, it is unclear if the continued rise in TOT is because of an increase in short-term rentals, a rise in prices, more people staying in short-term rentals versus hotels, or other factors, said Alejo.
Some of the increase is undoubtedly due to Measure B, a 2020 ballot measure that increased TOT from 12% to 13% with the promise that the extra percentage point would be split between funding for local arts organizations and improvements at the city-owned convention center.
The other 12 percentage points are also split evenly, with half going to the city’s general fund—which supports many of the city’s core services like public safety, parks, sidewalk repair and library services—and the other half going to the city’s special advertising and promotion fund, which is reserved for increasing tourism through projects that highlight Long Beach’s attractions.
Although tax revenue from short-term rentals is growing, the data shows most visitors are still staying in hotels. Between 2020 and 2022, short-term rentals have on average made up only about 12% of total TOT revenue, Alejo said.
Whatever the reasons for the increase, it’s a good sign for Long Beach’s tourism industry since the pandemic, according to Alejo, who takes it as a sign that “we have recovered.”