The New Mexico short-term rental market
is no longer an afterthought
How is this impacting tourism and your community?
With recent technology disruptions and online booking agents, the short-term rental market is now a major global tourism player. Airbnb, one of these online platforms, has surpassed Marriott International (the leading hotel chain in the world according to Smith Travel Research) in the number of rentable rooms across the globe. These properties largely operate in the dark without collecting tax (Gross Receipts Tax and Lodgers’ Tax) or complying with public safety regulations and licensing.
Is this happening in New Mexico? YES!
The Findings
4,076 number of short-term rental properties
9,296 number of short-term rental rooms
$2.6 million of potential revenue from Lodgers’ Tax*
$4.3 million of potential revenue from Gross Receipts Tax*
76% of the properties were identified as multiple properties OWNED BY ONE OWNER
*Revenue projections based on an Airbnb national average 40% occupancy rate and 50% compliance. National average occupancy rate estimate provided by Smith Travel Research (STR).
What does this mean for New Mexico?
1. Need for Parity
Due to potentially avoiding Gross Receipts Tax and Lodgers’ Tax, some of these properties can have a 12% – 15% competitive advantage over traditional lodging establishments, depending on the GRT and Lodgers’ Tax rate of the community. Even though many of these short-term rentals do not collect and contribute to Lodgers’ Tax, they are benefiting from contributions to Lodgers’ Tax from others that pays for marketing
and promotion.
2. Need for Unified Enforcement Definition
Exemption G of the “Exemptions” section of the Lodgers’ Tax Statute (3-38-16) is a tax loophole for these short-term rental properties. Properties with less than three rooms are exempt from the Lodgers’ Tax Statute, but the definition of a ‘room’ is applied differently across counties and municipalities around the state.
3. Need for Statewide Solution
Removing Exemption G from the”Exemptions” section of the Lodgers’ Tax Statute (3-38-16) will formalize all short-term rental properties, streamline local enforcement efforts, and create a level playing field for the entire lodging community.
