City Hall should rethink its draconian short-term rentals ban and capitalize on their economic potential

By Robert St. Genis

The author is director of operations at the Los Angeles Short Term Rental Alliance.

The Santa Monica City Council made headlines in May when it banned the short-term rental of a full unit or house for less than 30 days. Then this fall the council voted unanimously to amend the equally draconian 2004 prohibition of corporate rentals with a ban on advertising them. Is this short sighted? What could be next?

We at the Los Angeles Short Term Rental Alliance (LASTRA) know that short-term rentals and home sharing have been prevalent in Santa Monica since Ford came out with the Model T. The mild climate and close proximity to Hollywood provided a quick getaway where many people bought second homes. For decades, owners rented out those second homes. Now, Santa Monica still boasts a hearty tourism industry, along with Silicon Beach, the area by the coast between Santa Monica and Venice that is home to hundreds of start-ups that bring millions of dollars a year to the area.

With companies like Google, BuzzFeed and Demand Media having contractors coming to their offices in Santa Monica, the demand for short-term rentals is only growing. Instead of trying to restrict modern ways by putting more regulations on short-term rentals, Santa Monica should be more welcoming and tap into the economic gains of the area. This way of doing business goes against the online platform companies use that call Santa Monica home. At what point are you driving business out of town?

Residents have invested considerable time and money, sometimes for generations, in Santa Monica. Now the city is impeding on their income. Some families have used the money they received from renting their vacation home to put their children through college. Others use the money to help augment a fixed income in their old age.

Santa Monica’s heavy-handed rules are not improving housing supply or lowering rents. Although Santa Monica still allows home sharing in a home that is owner-occupied, that home must now be registered with the city and is subject to a 14% transient occupancy tax.

In April 2015, AirDNA identified 1245 separate listings on Airbnb in Santa Monica, however this number is misleading — only 652 actually had any bookings. This is a common mistake, as many listings are not active, so those listings should be excluded when adding up number of rooms available. During that month, there were 8,324 stays booked through Airbnb in Santa Monica, split over 2,086 separate bookings. That works out as 277 bookings a night on average; 71% of these were in entire properties, 27% in private rooms and the remainder in shared rooms. The average length of stay is 4.49 nights. Airbnb rentals had an average daily rate of $205, occupancy of 61% and a revenue per available room of $125.

LASTRA believes removing the ban on short-term rentals would enhance the community and not detract from it. Instead of trying to strengthen an antiquated corporate rental law, Santa Monica should be looking at ways to strengthen corporate rentals. The city could allocate the over $3 million in potential transient occupancy tax revenue toward affordable housing instead of hiring three new bureaucrats with a budget of $410,000 for the first year.