Former Sarasota mayor Richard Martin and his wife, Elizabeth, live in a small fourplex they own near Ringling College of Art and Design. For years, they rented out the two-bedroom apartment in the fourplex on an annual lease. When their long-term tenants left, they listed the apartment on the online vacation rental marketplaces Airbnb and HomeAway.
Switching to a vacation rental model has doubled their annual rental income, Martin says. This year, their apartment—which rents for $100-$125 nightly or $750-$950 weekly, depending on the time of year—is 100 percent booked during peak season, January through March, and 80 percent in the off-season. “We used Airbnb for the first time while traveling in Vermont and had wonderful stays with great people. We decided to go for it, and we haven’t looked back,” says Martin. “Airbnb has allowed us to live more comfortably in retirement.”
Retirees like the Martins are part of the fastest-growing demographic of Airbnb hosts in the U.S., according to a 2015 Airbnb study, but they aren’t the only people deciding to rent out a room or a home in the new sharing economy. Airbnb’s global inventory has increased to nearly 2.3 million since it was founded in 2007. More than 750,000 people used Airbnb’s platform to book Florida vacation rentals in 2015, a 149 percent increase from 2014. More than 16,000 Floridians rented their homes or rooms through Airbnb in 2015, earning the typical host upwards of $7,000 annually. Airbnb tracker Airdna lists 759 active hosts and 1,228 listings in Sarasota and Manatee.
Sarasota’s Kimberly Martinez, CEO of Bonitas International and the mother of three school-aged children, is another one of those hosts. In May 2015, Martinez purchased a house in the Gulf Gate area with two attached rental units. Income was the goal. “Mortgage rates were super low at the time,” she says. “I jumped at the chance. It was a no-brainer.”
After renovating, Martinez listed the two rental units through Airbnb and HomeAway, ranging from $169 a night for a one-bedroom unit to $229 for two bedrooms. Within months, both units were 80 percent booked for the season. She also rents her three-bedroom house for $400 a night when she and the kids enjoy extended vacations. After only six months, Martinez earned enough rental income to purchase another property with two more rental units, and today she says she’s earning six figures a year from her rentals. “This is a real business and I’m good at it,” she says.
As Michael O’Neil, Airbnb’s regional head of public policy, says, “Home sharing is creating economic opportunity for thousands of Floridians.”
Hotels vs. Homes
Hotels are feeling the competition. Airbnb demand is approaching 10 percent of hotel demand in many U.S. markets, according to a 2016 report by global hotel consultant CBRE Hotels. In downtown Sarasota alone, five hotels are being built and three more are in the planning stages for a total of approximately 1,300 more hotel rooms, which only adds to competition for vacationers for existing hotels.
David Rubinfeld, the owner of Turtle Beach Resort & Inn on Siesta Key, says the competition with Airbnb and the other peer-to-peer rental platforms has hurt his business. “We’ve lost almost 100 percent of our long-term [two weeks and more] clients,” he says.
“It’s a price and size factor. We get cancellations all the time now from people who tell us they are renting a four-bedroom house for the winter for a fraction of the cost that they would spend here. They can even invite their friends and share in that cost. I can’t compete with that. Look at Anna Maria Island. It’s turned into one big hotel. People are buying homes all over [Siesta Key] as business investments.”
The vacation market is changing, agrees Virginia Haley, president of Visit Sarasota County. And yet, the impact of vacation home sharing isn’t as damaging in Sarasota as it is in major cities. Tourism is up, Sarasota hotel occupancy rates have held steady and hotels are increasing average daily rates, she says. And, in the 941 market, hotels are accustomed to competition. Condominium rentals have long been a bigger segment of the vacation market than hotels. “Airbnb is a new channel, but not necessarily a new rental,” she says. “The bigger impact is on available housing for locals.”
Sarasota has 15,430 rental units, according to the Sarasota Tax Collector’s December 2015 annual report. Of those, 7,056 were condos; less than 5,000 rooms were in hotels and motels. Of the more than $19 million in tourist development taxes from properties rented for less than six months, the majority—46 percent—came from condos, according to Sherri Smith, assistant tax collector. The hotel/motel industry generated slightly more than 32 percent; the rest came from single-family home rentals.
Haley thinks Airbnb and other home-sharing rental platforms, while disruptive, benefit the local economy. “The bigger picture is they are turning consumers into travelers and explorers,” she says. “Airbnb and HomeAway draw visitors to Sarasota County who might not otherwise come here because of cost or lodging availability. These are often people who don’t want to stay in a typical tourist area or vacation lodging; they prefer to experience neighborhoods and local lifestyles on a more grassroots level.”
Elliott Falcione, the executive director of the Bradenton Area Convention and Visitors Bureau, says the tourism industry is seeing a generational shift. “Millennials prefer new experiences outside the mainstream,” he says. “These sites allow us to reach that demographic and introduce them to the Bradenton area. As long as property owners comply with our tax office and contribute to our economy, which we know a vast majority are, we have no issue with them and see them as a positive.”
So far, Michael Saunders & Company’s vacation rental division doesn’t feel threatened, says division director Jamie Styers. Its current vacation inventory is 218 properties in Manatee, Sarasota and Charlotte counties, and he expects that to keep growing since demand is greater than ever. “We can’t fill the amount of inquires we receive now,” he says. “People are also staying longer. Five years ago, it was common for people to stay only for 30 or 45 days during season. Today, that number has stretched to 90 days.”
Styers also says there is more to renting a property than advertising. “Sites like Airbnb and HomeAway are great if you live nearby and can handle the day-to-day demands of property management,” he says. “But for those owners who want to reduce their hassle and have the marketing and property management handled for them, a full-service rental team is ideal.”
Initially, the hospitality industry and tax offices worried that the new breed of vacation hosts would avoid paying their share of old-fashioned taxes on rental income—in Sarasota and Manatee that means 5 percent of the revenue from rentals of six months or less. That concern is lessening as tax collector offices around the state get better at finding who’s in the extended-stay vacation rental market.
“Most people are honest,” says Smith, the deputy tax collector for Sarasota County. She adds that honest mistakes occur, and her office is working hard to educate the public. They also check up on vacation hosts, sifting through local properties on vacation rental websites and sending polite letters that tell property owners what they owe the taxman. Manatee County does the same.
But it’s not just about taxes.
“You need to make sure that you can rent the property out in the first place; some properties aren’t zoned for that. You also have to comply with any condominium or deed-restricted neighborhood regulations,” says Smith.
Guests need to follow the rules, too, she says. Each county has rules about firearms, noise and a whole host of issues that keep people safe and good neighbors.
For Henry Rodriguez, who spent $800,000 transforming an old hotel on Siesta Key into the boutique Siesta Key Palms Resort this year, Airbnb is here to stay. “You cannot regulate disruptive technology,” he says. “Hotels don’t get it. They think they’re selling hotel rooms. My job is to create a reason for people to come to my hotel. Guests want an experience, so we’ve created a tropical oasis. Unless you want to go the way of the dodo bird, you have to become competitive.”
Before you Home Share
Let’s say you’ve got a great space to rent to vacationers. The new online platforms make it easy as long as you follow a few rules.
“Do your homework,” says Michael Saunders rental director Jamie Styers. “Being a landlord is a serious responsibility.” Consider the costs and behind-the-scenes challenges: personality clashes, zoning changes and leaky roofs.
Home sharer Kim Martinez says, “You can’t simply cash the check and forget about it. The owner has to respond to inquiries, greet guests and keep the property well maintained.”
Martinez enjoys being a host and includes a basket of gourmet food and wine, luxe linens and bathroom accessories, coupons and tickets to area cultural and recreational events—even surfboards for guests who enjoy the waves.
“First and foremost, you have to want to be a host,” she says. “You can’t resent it or think it’s a chore. If you love making people happy, if hospitality is built in your DNA, you’ve got what it takes.”
For now, Martinez still rents mostly through Airbnb, but she’s also started her own rental company, Siesta Key Beach Apartments, to avoid dependency on a single entity. And, she adds, Airbnb “holds the money after the guest reserves the property and that can mean I’m not getting paid for six months. I have repeat guest business now. I have my own website. Giving that revenue away to Airbnb doesn’t make sense.”