Airbnb, the world’s leading community-driven hospitality company, announced Monday the company delivered a combined $22.4 million in tax revenue to Tennessee in the first year of its statewide tax agreement, exceeding initial expectations.
Collecting and remitting lodging taxes can be complicated and it is for this reason Airbnb has worked with hundreds of governments throughout the world to collect and remit taxes, making the process seamless and easy for hosts while contributing revenue for local comptrollers and tax collectors, said officials.
In January 2018, Airbnb announced an agreement with the Tennessee Department of Revenue authorizing the home sharing platform to collect and remit two taxes assessed by the state:
Tennessee State Sales Tax (7 percent)
Local Sales Tax (1.5-2.75 percent depending on the local jurisdiction)
That agreement took effect on March 1, 2018, with initial expectations of $13 million in annual revenue for the state. The $22.4 million nearly doubled those expectations.
In addition to the agreement to collect state and local sales taxes, Airbnb has agreements with Memphis, Knoxville and Hamilton County to collect and remit their local occupancy taxes on behalf of hosts.
“This tax agreement is allowing our hosts and platform to deliver revenue and economic activity to rural parts of Tennessee that lack traditional hospitality options,” said Laura Spanjian, Airbnb’s senior policy director. “We hope to build on this economic impact in Year 2.”
This comes as Tennesseans increasingly embrace the home sharing platform as an opportunity to earn supplemental income and make ends meet. In 2018, local hosts welcomed over 1.4 million Airbnb guest arrivals to Tennessee.
The home sharing community provides value through expanded lodging capacity for Tennessee communities when hotels sell out during big events. These include Knoxville during big college football weekends and university events, the Tri-Cities during NASCAR races, and Memphis during the May festival season.
Statewide data indicates that Airbnb and its host community appear to be complementing -- rather than competing with -- the Tennessee hotel industry. The most recent report from the Marcus & Millichap demonstrates that Tennessee hotels continue to thrive, even as local hosts welcomed hundreds of thousands of guests. This suggests that Airbnb is opening up the state to a new slice of prospective tourists by catering to travelers less able to afford hotels, those who desire to stay in neighborhoods or cities that lack hotels, and families who prefer to be together under one roof, said officials.