CANNON BEACH — Cannon Beach might require travel companies like Airbnb and Expedia to pay taxes directly to the city.
In the hospitality industry, it is becoming increasingly common for hotels and vacation rental owners to sell rooms through intermediary companies, which then take a cut of the profits. Hotels and vacation rental owners pay the lodging tax whether the rooms were booked through an intermediary or not.
City Attorney Tammy Herdener and City Finance Director Laurie Sawrey said they want to require companies like Airbnb to file taxes on the profits made from the sale of the room directly with the city.
Sawrey said keeping large companies accountable for providing the information necessary for the city to file tax returns is proving to be a challenge, and she hopes requiring them to work directly with the city can help reduce these issues.
City councilors plan to discuss an ordinance change in more detail at a November work session and hope to get more input from the lodging industry in the meantime.
In the past year, Cannon Beach took in more than $3.8 million in lodging taxes.
“If a hotel sells 100 rooms to an intermediary, we have no tracking mechanisms to see who they sold them to,” Sawrey said at a City Council work session earlier this month. “From the intermediaries, we want more info of who they purchased the room from.” City staff have been asking for this information, but, so far, most travel companies have not been forthcoming, Sawrey said. Often rooms are sold at a discount to these companies, which take profit off the sale. Without knowing which rooms are being sold to what company, figuring out which company to hold accountable for taxes on the profit is difficult.
“It takes more time for us. Are people not reporting? Do they misunderstand? We don’t know the situation if we don’t have numbers in front of us,” Sawrey said.
Sawrey and Herdener hope that changing the ordinance to require travel companies to file directly to the city or face fines will set clearer expectations.
Earlier this year, Airbnb presented a voluntary agreement to Seaside to collect thousands of dollars of lodging taxes on vacation rentals.
Some saw the agreement as an opportunity reap the benefits of previously untapped revenue. Some in the lodging community, however, think the agreement gives Airbnb an unfair advantage over other hotel owners, and ultimately drains affordable long-term housing units to the vacation rental market.
“This is an evolving area. Cities all over Oregon are having trouble with this,” Herdener said. “But to whoever is listening, it is important to have this in our code so (intermediaries) know they are responsible.”
It’s hard to estimate how much more revenue these changes could bring in for the city, because there is so much variation between lodging options. For City Councilor George Vetter, the solution comes from striking a balance between keeping the property owner and the intermediary on the hook.
“I’m reluctant to take the burden off the property owner, because those are the only people we have control over,” Vetter said.
Whatever the solution to this issue may be hard to come by.
“No city has figured this out perfectly yet,” Herdener said.