Short Term Home Rentals Could Generate $11M During SXSW
Bars and hotels aren’t the only ones who stand to make money from the quickly approaching South By Southwest Festival in March. Austin homeowners could make as much as $11 million renting their condos and houses to festival goers.
In early February, there were 874 properties in Austin for rent during SXSW listed on HomeAway.com, an Austin-based website that connects travelers with short-term rentals. Dozens more were listed on sites like Craigslist.org, vrbo.com and airbnb.com. Although it’s hard to tell what listings are on more than one of these services, it’s safe to assume that 1,000 or more properties in the Austin area are available as short-term rentals during SXSW March 8 to 17.
There are slightly more rentals available during SXSW Music (March 12-17) than during SXSW Interactive (March 8 to 12), with 476 available properties compared to 405, respectively. And as of early February, about half of all properties listed were booked, with Interactive boasting 54 percent occupancy and Music at 45 percent occupancy.
“As the date gets closer to SXSW, we anticipate this [occupancy] percentage to increase significantly as evidenced from past years,” said Jon Gray, vice president of HomeAway. “Assuming all the vacation rentals listed on HomeAway.com are rented for the entire nine-day festival at the rate demanded by owners, the potential economic impact SXSW makes on the short-term rental industry could be as high as $11 million.”
Carly Christopher owns three properties that she rents out during Austin peak travel times like SXSW, Austin City Limits Festival and Formula 1 events. One property, in the South Congress area, is listed for $1,200 per night and sleeps up to six people; it was her husband Clayton’s first home, and now the couple rents it out year-round.
“Renting out the property during high-traffic events allows us to capitalize on the influx of individuals seeking lodging in Austin,” she said. “We actually prefer to stay in homes when we travel, and we seek to provide others with the same luxury that accompanies having your own kitchen, parking, back yard, separate rooms, etc.”
Like Christopher’s 78704 home, the majority of homes listed on HomeAway are second homes used as vacation rentals throughout the year. However, during high-traffic events, HomeAway also offers a 60-day subscription for those who want to rent out their house and go on vacation when the tourists come to Austin to play. SXSW falls on the same week as UT and AISD's spring breaks when many locals would be on vacation anyway.
Last year, a fairly heated debate waged between Austinites who didn’t want short-term rentals in their neighborhoods and those who wanted to be able to cash in on the city’s popularity. Opponents cited things like the lack of a background check on visitors, potential large gatherings at the houses, lack of additional off-street parking and noise. Christopher said she hasn’t had issues with her rental properties.
“We work with each renter to secure a mandatory deposit and have them sign a pretty detailed short-term rental contract that protects us as property owners and specifies how the property should be treated,” she said. “Additionally, I try to screen all our renters so I have a good idea of their needs and reasons for staying in Austin. All of our renters have been really great so far, and very friendly.”
And while some residents who live near permanent short-term rental properties on popular stretches like South Congress complain of having to cope with neverending house parties of one stripe and another, pretty much all of central Austin becomes party-town during SXSW week anyway.
The outcome of last year’s debate was that the City of Austin would continue to allow short-term rentals but that they would need to be registered with the City and a $476 fee paid, in addition to occupancy tax paid when the property is in use. HomeAway sees this as a win-win for the City and homeowners wishing to rent out their houses.
“Vacation rentals in Austin provide the city with additional occupancy tax revenue during peak seasons of the year when there aren't enough hotel rooms available; it also serves as an additional revenue stream for local businesses,” Gray said. “In many cases, vacation rentals also provide a lower-cost alternative for travelers, enabling them to take trips that might be cost-prohibitive or simply difficult to find suitable accommodations for families or groups with more traditional lodging options.”
In a quickly growing city, short-term home rentals also provide Austinites with the ability to find other ways to help cover mortgages while holding on to valuable property, “but more importantly, it provides these owners with more opportunity so they can choose to either retire in the home one day or not sell in a down market,” Gray added.
It seems like a lot of work to rent a property year-round rather than simply selling it, but Christopher said it’s worth it to her family.
“We have the flexibility as a family to manage this property in addition to our regular jobs,” she said. “For those that don't have the time, selling that property may be a better option. For us, it provides us with additional cash flow each month, while providing the basis for a long-term property investment in a strong real estate market.”