EDITOR’S NOTE: Jacob Stump grew up in rural Southwest Virginia as the region was developing its tourism industry, which today generates nearly $1 billion in spending each year. Stump teaches international studies at DePaul University in Chicago. In this series of articles, he combines his insider knowledge with his academic training to look at the complex impacts of a tourism economy on a rural region.
In Southwest Virginia, a nearly $1 billion annual tourist economy has brought increased demand for lodging – and a call for tighter regulations of those accommodations.
Airbnb is a multibillion-dollar American-based company established in 2008. The company was late in arriving in the rural parts of southwest Virginia. But Airbnb recently reported that use in rural areas is expanding rapidly. Growth of rural rentals increased 18 fold since 2012, according to a company report. The same report says rural hosts earn on average more than hosts in U.S. cities, with rural hosts around the country earning $494 million during the report period.
It’s unclear how much of that income reached Southwest Virginia. The region’s tourist-cabin market predates Airbnb by more than a decade. Nonetheless, southwest Virginia has seen rapid growth in the number of Airbnb hosts recently, particularly in tourist-heavy areas along Route 58 between the towns of Abingdon and Damascus and in less developed mountain communities farther from town.
Rental Cabins in Southwest Virginia
Konnarock, Whitetop, and Green Cove are Virginia mountain communities located near the easternmost county in Tennessee. Rental cabins have been part of the local economy here for decades. Visitors are drawn by the region’s natural beauty and by outdoor recreational opportunities, like parks and trails. While Airbnb has facilitated rental-cabin growth in recent years, the market took off long before Airbnb was established. And many cabin owners still don’t use it. By my count, from knowing the area and keeping my ears open, there are about 20 rental cabins in Konnarock, Whitetop, and Green Cove. Only about half of those use Airbnb to book renters.
(I should note for purposes of transparency, my wife, Shiera, and I own one of the 10 Airbnb cabins in the area. It became clear to us several years ago that the number of tourists in the area indicated a demand for lodging that was not being met. We saw the opportunity and took the small business plunge in 2016. This is our second full year in business, with 95 percent of renters connecting with us through Airbnb.)
One owner in the area who doesn’t use Airbnb is Mary Blevins. Along with husband, John Blevins, they have operated The Green Cove Getaway for 19 years. That makes them one of the oldest private accommodations in the area.
Mary has never used Airbnb and has no plan to start. The Getaway is open from April to November and Mary said that usually she has “back-to-back” weeklong rentals, without having to pay a fee to a service like Airbnb. This year has been slower due to rainy and severe weather, like Hurricane Florence.
Mary and John’s cabin sits directly across a small country road from the Virginia Creeper Trail, the popular National Recreation Trail used by roughly a quarter-million visitors each year. Mary said that the Creeper and Grayson Highlands State Park are major draws for cabin renters. With no commercial lodgings in the area, cabin rentals are the only option for tourists who don’t want to camp at state or federal facilities.
Konnarock, Whitetop, and Green Cove sit at an elevation of about 3,000 feet. They are about 2,500 feet below the state’s second-highest peak, Whitetop Mountain. Whitetop treats visitors to beautiful Blue Ridge vistas that are easily accessible via the highest navigable road in the state. The Appalachian Trail winds through the communities, as do scenic rural routes, like the Route 58 “Crooked Road” and Virginia scenic byways. Craft and traditional music festivals also dot the annual calendar and draw tourists.
Until very recently, rural rental cabins were largely unregulated and untaxed. Without the cabin owner voluntarily alerting the county tax commissioner, rental cabins could easily glide under the county government’s radar. This is one of the factors that might explain why not all cabin owners use Airbnb. (That’s not the case for Mary, because she voluntarily reports her rental income to the county.)
The Expansion of Airbnb into Southwest Virginia
Airbnb quickly became controversial after the company’s 2008 formation, particularly in large cities like New York, Chicago, and San Francisco.
Critics pointed out that Airbnb had an unfair advantage because they were untaxed and unregulated compared to traditional hotels, motels and B&Bs. Others argued that Airbnb had driven up residential rents, decreased housing supplies for long-term renters, and exacerbated problems of displacement and homelessness for the elderly and poor who survive on limited and fixed incomes.
Airbnb in rural areas has not sparked the same kinds of criticisms that the company did in densely populated and expensive urban housing markets. Research on Airbnb’s impact on rural housing markets is also scant.
Taxing and Regulating Rental Cabins in Southwest Virginia
But some criticisms of Airbnb have echoed in our region.
In Richmond, Virginia, Governor Terry McAuliffe signed legislation in 2017 that empowered counties and municipalities to regulate Airbnb.
The Virginia Business magazine used Airbnb data about Virginia to criticize the legislature as “taking aim at short-term rentals industries.”
Abingdon, a small historic town in Southwest Virginia with nearly 60 untaxed and unregulated Airbnb hosts inside town limits, passed a 2017 “Homestay Ordinance” that went into effect with the New Year.
The Abingdon town council used the Airbnb website (and other “homestay” websites) to identify hosts within city limits. They contacted individual hosts to alert them of the new regulations. Abingdon town ordinances require Airbnb hosts to register with the town, pay a fee of $25, and pay taxes for each booked night, or face a $250-500 fine for each infraction. Abingdon is the seat of Washington County.
I spoke with David Henry, the Washington County Commissioner of Revenue. He told me that the county had 40 tax-paying Airbnb hosts. Henry said that the county Board of Supervisors expanded the already existent 5 percent Transient Occupancy Tax that applied to hotels, motels, campgrounds, and B&Bs, to include Airbnb hosts.
Commissioner Henry said that his office does not keep lists of Airbnb hosts in Washington County, and he has fielded no complaints about the county tax from Airbnb hosts.
None of the tax commissioners in the Virginia counties of Smyth, Grayson, and Wise responded to my requests for comment.
Speaking from my own experience with Smyth County: We voluntarily contacted the tax commissioner’s office when we opened the rental cabin, which was before the 2017 Virginia legislation had been passed. The Smyth County policy toward Airbnbs seems to have evolved, based on the commissioner’s 2018 request for additional information about our rental cabin.
Like Mary said, the Getaway had been a “success” for nearly two decades, long before Airbnb ever existed. That success will likely continue as long as people have money to spend on outdoor recreation.
But, because of Airbnb, the rural cabin rental business now enjoys the tighter regulatory hand of county governments.
Mary made it clear. She would prefer to see those increased county tax revenues put back into rural parts of the county, “which pay plenty of taxes, but don’t get much for it.”