What happened?
McKinney City Council members passed the amendment during a Sept. 2 meeting. It updates the city’s ordinance language so that the city’s hotel occupancy tax will apply to short-term rentals reserved and paid for on all platforms including Vrbo, according to city officials.
Revenues collected from the hotels and short-term rentals in the city have increased in each of the last five fiscal years, according to data from Visit McKinney. In fiscal year 2023-24, more than $3 million was collected through the tax.
“This new amendment is expanding it to Vrbo and basically all short-term rentals,” Nolting said. “It really just levels the playing field and makes sure everybody’s paying the same amount in their hotel tax.”
Hotel occupancy taxes have long been collected from Airbnb, Visit McKinney Executive Director Aaron Werner said during an Aug. 26 Visit McKinney meeting. Officials had been examining how to collect from Vrbo for about two years, he said.
“We are one of the few cities in Texas that get an automatic collection from Airbnb, and that is extremely helpful for us because we don’t have to chase down every individual short-term rental property and have them self-report,” he said.
The city’s ordinance language had to be updated in order to collect from Vrbo, Werner said.
How it works
When a visitor books a hotel or a short-term rental, they pay a 13% hotel occupancy tax. The city keeps 7%, and the remaining is collected by the state. Dollars collected by the city are used for promoting events that generate overnight stays, Nolting said.
In the past, money has been used to promote events like the CJ Cup Byron Nelson golf tournament and the Texas Open pickleball tournament.
“That’s a big way that we use the money is marketing to the public,” Nolting said.
Currently, there are more than 300 short-term rentals operating in McKinney, Nolting said. In the past 12 months alone, houses listed on the Airbnb platform have generated 47,000 stays.
In the last 12 months, the average length of stays in short-term rentals is longer compared to hotels, according to data from Visit McKinney. Hotels are reported to have a higher average occupancy.
Airbnb is the second largest hotel occupancy tax generator in the city. Having the ability to tax Vrbo homes will add more to the city’s tax revenues, Visit McKinney Assistant Director Alisha Holmberg said during the Aug. 26 meeting.
“We don’t anticipate it’ll necessarily be as much as Airbnb, but it will be some more coming into our account,” she said.
For more information about hotel occupancy taxes in McKinney, visit www.mckinneytexas.org/1488/hotel-occupancy-tax.
