Government
BY COLBY FARR
McKinney updates hotel occupancy tax ordinance for short-term rentals
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 tourna- ment 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.
A new amendment to McKinney’s hotel occupancy tax collections will enable the city to collect taxes from short-term rental platform Vrbo for rentals operating within the city. 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. Hotel occupancy taxes were already being collected from homes rented on the Airbnb platform. 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. That money is used to promote McKinney as a tourist destination, said Sarah Nolting, senior communications and media specialist for Visit McKinney. “It really just levels the playing field and makes sure everybody’s paying the same amount in their hotel tax,” Nolting said of the new amendment. Officials have examined how to collect from Vrbo for about two years, Visit McKinney Executive Director Aaron Werner 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.
Hotel occupancy tax revenues
$4M
$3.1M
$2.9M
$3M
$2.4M
$2M
$1.4M
$1.7M
$1M
+121.43%
$0
2019-20 2020-21 2021-22 Fiscal year
2022-23 2023-24
Hotels vs. short term rentals
Avg. length of stay 2.3 days 4.6 days
Avg. stay value
Type of lodging
More information
$892 $264
Hotel
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.
Short-term rental
Average occupancy by day of the week
Hotel occupancy
Short-term rental occupancy
100%
75%
50%
25%
0%
SOURCE: VISIT MCKINNEY/COMMUNITY IMPACT
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