Idaho bed-and-breakfast owners cry foul over Airbnb

Losing business to Airbnb wasn’t the only reason Betti Newburn sold her Boise bed and breakfast, the Idaho Heritage Inn at 109 W. Idaho St. in Downtown Boise, in February. But the losses in occupancy — about 20 percent since 2011 — were a big factor in Newburn’s decision to sell to the neighboring and land-hungry St. Luke’s Boise Medical Center.

“When you are running on slim margins anyway, losing (occupancy) is significant,” she said.

Airbnb.com provides an online platform for property owners and renters to rent homes or rooms to vacationers. The site pitches itself as a way for travelers to find more affordable accommodations than hotels, and for hosts to make extra money, often while they are vacationing themselves.

Airbnb lists more than 300 rental properties in the Boise area. Many of those are also listed on sites competing with Airbnb, including Vacasa — which is headquartered in Portland but has offices in Boise — and Vacation Rentals By Owner, better known as VRBO.

The growth of Airbnb and similar sites poses a “severe” threat to the bed-and-breakfast industry, said Brian Scott, president of the Idaho Bed and Breakfast Association.

The number of Idaho bed and breakfasts has declined in two years to 125 from about 215, Scott said. The association’s membership has dropped to 51 from 80 over that period.

Some bed-and-breakfast operators have closed shop because they lost business to Airbnb and its competitors, he said. Other operators are converting to Airbnb-style businesses, allowing them to offer lower prices and avoid regulatory hassles and expenses faced by traditional businesses, such as fire inspections.

“A lot of former members are converting to the short-term rental sites,” Scott said. “They get more bang for their buck.”

The home-rental businesses often fail to charge taxes, too, putting B&Bs at a disadvantage. Newburn said taxes — Idaho’s 6 percent sales tax and 2 percent lodging tax, plus the Greater Boise Auditorium District’s 5 percent tax — typically added $13 or more to the cost of an Idaho Heritage Inn room, which ranged from $99 to $135 per night.

All Airbnb and similar rentals in Idaho are taxable under Idaho law.

A Vacasa executive told the Statesman last year that the company collects state and local taxes.

Last year, Pat Rice, the executive director of the auditorium district, asked the Idaho Attorney General’s Office whether rental sites collect appropriate taxes and fall under hotel rules. The office wrote back to say properties posted on Airbnb and similar sites fit the state’s definitions for hotels and motels.

Idaho residents listing on those sites are required to collect and remit the same taxes as B&Bs, said Randy Tilley, audit division administrator of the Idaho Tax Commission.

But the commission has no way to tell whether a taxpayer is remitting funds collected from an Airbnb property or any other kind of business, making compliance tough to track. The state is trying to contact property owners it thinks may be renting rooms through websites, but the sites do not provide addresses or host names until renters pay for rentals, making the search harder.

“We’re looking at websites, communicating with taxpayers, trying to address as many of these concerns as we can given our limited information,” Tilley said.

The AG’s letter said website operators in other states do not have to comply with Idaho’s lodging rules. “(Given) the mere transfer of rents received to real property owner-hosts within this state, there is insufficient contact with Idaho in these activities to allow the state to require such booking services to collect and remit the taxes,” the letter said.

This story was originally published March 15, 2016 at 11:45 PM with the headline "Idaho bed-and-breakfast owners cry foul over Airbnb."