Los Angeles, known for its vibrant tourism industry, has successfully collected over $275 million in lodging taxes from August 2016 to June 2023. This impressive amount was made possible through a voluntary tax collection agreement with Airbnb, as announced by city officials on Wednesday.
Under this agreement, known as the transient occupancy tax, online travel companies like Airbnb are responsible for collecting and remitting taxes on the discounted or wholesale room rates agreed upon with hotels or property owners. This means that taxes are based on the agreed amount, rather than the actual payment made by guests.
The collaboration between Airbnb and the city took effect on August 1, 2016. Since then, Airbnb has been collecting and remitting the city’s 14% lodging tax on behalf of its host community.
Initially, city officials estimated an annual revenue of $13 million from this voluntary collection agreement. However, the actual results surpassed expectations within the first five months.
“Home sharing has not only allowed our residents to earn extra income, but it has also significantly contributed to the tax revenue that supports essential city services,” said Justin Wesson, Airbnb’s senior public policy manager in California.
Thanks to the increased revenue, city officials have gained the necessary resources and flexibility to fund community programs and initiatives for low-income housing over the years.
Airbnb emphasized that this voluntary tax collection agreement is part of their broader efforts to support communities worldwide. The company recognizes that tourism taxes play a vital role in financing local governments, especially in areas heavily impacted by the COVID-19 pandemic.
In a survey conducted among Airbnb hosts in Los Angeles, it was found that the average host earned more than $21,000 in 2022. As a community, the total earnings of hosts in 2020 exceeded $375 million.
Furthermore, tourism taxes collected for Airbnb hosts in the United States have witnessed a significant increase of nearly 130% since 2019.
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