THE RISE OF SHORT-TERM RENTALS: An Opportunity and Challenge for Montana Residents.

• Author: Nickerson, Norma P.
• Position: TRENDING

In a recent study conducted in Gardiner, Montana, by the Institute for Tourism and Recreation Research at the University of Montana, unsolicited comments from nearly 50 percent of residents exemplified issues in Montana's affordable housing crisis. Those comments ranged from complaints about high rent to unreasonable housing prices. And while the state battles an affordable housing issue, it's also seen a surge in short-term rentals.

Short-term rentals, or vacation rentals, are defined as the rental of a home or a room in a home for less than 30 days. Many rentals are on a weekly basis, while some are a few days. Short-term rentals are currently flooding communities like Whitefish, Bozeman, West Yellowstone, Kalispell and Missoula. But smaller communities are seeing it too. Airbnb reported that in 2017, listings in rural locations accounted for 3.3 million guest arrivals in the United States, a 138 percent increase in one year.

Originally short-term rentals were considered a part of the sharing economy, offering travelers a low-cost option to pricey hotels or resorts. But a growing trend has emerged with commercial operators running hoteling schemes, which tend to fracture communities, raise safety concerns and increase the price of rent for residents while depleting affordable housing options.

Demand

Online lodging services that offer short-term rentals, like Airbnb, Vacation Rental by Owner, HomeAway, FlipKey and Evolve, are a sector of the economy that is growing. In 2018, Airbnb celebrated 10 years in business with some impressive statistics:

* More than 5 million listings worldwide.

* 81,000 cities with listings in more than 191 countries.

* 400 million guest arrivals with more than 2 million people staying at an Airbnb each night.

The success of the short-term rental business model is largely due to demand and investment opportunity. Consumer demand for short-term rentals includes a desire for perceived lower prices, the opportunity to interact with local people, the convenience of a home with a kitchen and an "at-home feeling." Sometimes it can be the novelty of a different type of experience, be it a luxury mansion or a tree house.

In Montana, visitor data shows a 12 percent increase in the use of short-term rentals within the peak summer season between 2017 and 2018 (Figure l). In 2018, more than 411,000 nonresident groups rented a home or cabin during their stays. And this growth is happening when overall visitation to Montana is...