Colorado is the birthplace of short-term rentals. And the state is ground-zero for local regulation of the booming industry.
After several years of reactive, defensive responses to increased regulation and taxation legislation, the state’s short-term rental owners and managers are organizing with an educational campaign and lawmaker lobbying plans. Colorado House Speaker Rep. Julie McCluskie, a Democrat from Dillon, earlier this month warned that short-term rental legislation “is highly likely” in either the special session or next year’s session.
“We know that short-term rentals have become a significant part of the guest experience,” she said at a rally of short-term rental owners, managers and representatives from Vrbo in Silverthorne last week. “In order for our tourism economies to thrive, we need short-term rentals in places where the world wants to be.”
With no short-term rental legislation in this week’s special session where lawmakers hammered out a plan for property tax relief, “it does feel like we dodged a bullet,” said Julie Koster, the executive director of the Colorado Lodging and Resort Alliance and the Summit Alliance of Vacation Rental Managers.
Property owners and short-term rental advocates are planning to lobby and court policymakers heading into next year’s legislative session, hoping to stifle increased limitations on vacation rentals. Earlier this year, as the legislature debated Senate Bill 33 — legislation that would have quadrupled property taxes on vacation rental homes — McCluskie fielded more than 2,000 emails from constituents in one week. The third-term representative said she has never received so many emails.
She urged the short-term rental advocates gathered inside the Silverthorne Pavilion earlier this month to reach out now to lawmakers and share data — not just anecdotes — about vacation homes that rent to visitors.
“Short-term rentals are the new frontier for how we experience life. People are letting go of buying things and they are embracing ‘What happened to me yesterday,’” she said. “How do we ensure that there are short-term rentals available? How do we find balance?”
Balance is the top talking point for owners and managers who rely on vacationers renting private homes. The owners on Tuesday discussed the need for all owners to pay lodging taxes and comply with local regulations as they lobby local and state lawmakers to steer clear of what they call “heavy-handed regulation.”
Senate Bill 33, which was voted down in by the Senate Finance Committee, posed “an existential crisis” for the short-term rental industry in Colorado, said Tim Rosolio, who heads up vacation rental partnerships for Vrbo parent the Expedia Group.
“In Colorado, we kind of got to the brink there,” he said.
The crackdown on short-term rentals in cities like New York, Chicago and San Francisco is spilling into resort markets and it’s important that owners and managers organize to help build rules that protect the industry while alleviating concerns from neighbors and contributing revenue to housing challenges.
“The answer is not ‘no regulation,’ Rosolio said. “It’s important for us to land on something that is balanced … while making sure that we understand what a big economic driver short-term rentals and tourism are for the community.”
Tourism slowdown in 2024
Colorado overnight visitors spent $6.3 billion on lodging in 2023, generating $1.8 billion in local and state tax revenue and supporting 9,450 jobs. Visitors spent $28.2 billion in total in 2023 and vacationers who rented privately owned homes spent $4.1 billion.
In nine Western Slope mountain counties anchored by ski areas, visitors in short-term rental homes and condos — not hotels and motels — spent $1.2 billion in 2023, up from $1.1 billion in 2022 and 2021. That compares to $2.3 billion spent on traditional hotels and motels in 2023 and 2022.
Since 2019, the number of vacationers renting private homes has increased by 27%.
The taxes generated by tourism in Colorado equate to about $308 per resident. But in places like Summit County, the $96.3 million in state and local taxes paid by tourists in 2023 equals more than $3,150 per resident.
The Colorado Tourism Office collects annual spending figures and shares that data far and wide. That is part of the office’s mission to empower local communities so they can share their own plans for balancing the quality of life for local residents with tourist-based economies.
“What is the value of tourism? Where are you on the tourism cycle in your communities” said Colorado Tourism Office boss Tim Wolfe, who says the revival of international tourism is a key component for sustainable visitation in high-profile destinations like metro Denver and Summit County. He’s seeing more communities backing away from intense regulation of short-term rental properties as visitation and lodging tax collections ebb in the first half of 2024.
Proposition 123, passed by voters in 2022, last year directed $80 million toward affordable housing across the state. That river of revenue is flowing again this year as more housing plans unfold, Wolfe said.
“Are we giving this a chance to take root or are we going to pass three more things before this actually has a chance to take root and start generating housing,” Wolfe told the vacation rental advocates, urging a wariness of statewide regulation that could slow the flow of tourists into Colorado. “We have to be careful. If we make dramatic changes this (slowdown in visitation) could continue to accelerate.”
Hundreds of property owners and managers have united as part of the Colorado Lodging Resort Alliance, which rallied dozens of advocates to urge opposition to Senate Bill 33 earlier this year.
The group is again rallying its troops to thwart legislation that could impact vacation rentals. The Colorado Association of Ski Towns advocating for legislation that would enable local communities to ask voters to approve a tax on vacant homes that could include properties that are rented to vacationers. Another proposal by Colorado Counties Inc. would raise the cap on lodging taxes levied by counties to 6% from 2%, just like Colorado municipalities.
“This could give counties the opportunity to increase revenue for advertising and marketing local tourism, housing, childcare services, and facilitating and enhancing visitor experiences benefiting their county residents,” reads a legislative position statement from Colorado Counties Inc.
“There are some scary things out there looming around on the horizon,” Koster said.