In 2007 Brian Chesky and Joe Gebbia were broke and desperate to pay the rent for their San Francisco apartment. The Industrial Design Conference was in town and all the hotels were booked. So they offered attendees who needed a place to crash, airbeds, breakfast, Wi-Fi and a work desk. They called it “Air Bed and Breakfast.” What started out as an experiment turned into a hotel industry disruptor worth more than Hilton and Wyndham combined, second only to Marriott.

Airbnb’s dominance

Airbnb’s highs and lows

California’s short-term rental restrictions

Airbnb’s extraordinary growth came under lax regulations on short-term Rentals. Areas with a big Airbnb presence have had an increase in noise complaints, issues with parking and trash and the sentiment that rents were being forced up, limiting availability of affordable rental housing. As a result, municipalities worldwide have tightened restrictions on short-term rentals. Here’s a look at how restrictions vary in some of California’s destination locations:

SAN FRANCISCO

Short-term rentals are permitted for permanent residents, but you must spend at least 275 nights a year in the unit where you host short-term rentals. You also must own it and register that unit, obtain a business registration certificate and the certificate number must be posted on all advertised listings. No city complaints can be pending against the entire property. You may only rent 90 unhosted nights per year and provide accurate listings of hosted and unhosted stays.

CARMEL

While Carmel-by-the-Sea restricts renting a home for less than one month, Monterey County has no such restriction. Locations like River Beach, Carmel Point and Carmel Valley are outside the zone and may be rented on a weekly basis. Pebble Beach, Carmel Valley and the rest of the Monterey Peninsula homes are all minimum one-week rentals.

SANTA MONICA

Santa Monica City Council adopted the “Home-Sharing Ordinance,” which prohibits short-term vacation rentals. The law authorizes home-sharing, which is the rental of 30 consecutive days or less of one or more bedrooms in the home that is the primary residence of the host while the host lives on-site in the home throughout the visitors’ stay. The city prohibits vacation rentals 30 consecutive days or less of a home, in whole or part, for exclusive transient use.

MAMMOTH LAKES

Only apartments condos are eligible for nightly rentals. You must obtain a license with the city, have a certified home inspector review your property for compliance with the local Airbnb/VRBO requirements, pay the fees and set up your online bill-pay. A Business Tax Certificate and Transient Occupancy Tax Certificate are required.

SAN DIEGO

Short-term rentals of less than 30 days at a time on a hosting platform like Airbnb must register for a license under San Diego’s Short-Term Residential Occupancy Program. The San Diego Transient Occupancy Tax of 10.5% of the listing price, including any cleaning fee for reservations, applies.

BEFORE YOU BECOME A HOST

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Be aware that some cities have laws that restrict your ability to host paying guests for short periods, which are often part of a city’s zoning or administrative codes. You may be required to register, get a permit, or obtain a license before you list your property or accept guests. Certain types of short-term bookings may be prohibited altogether. Local governments vary greatly in how they enforce these laws. Penalties may include fines or other enforcement.

If you decide to purchase a property for the sole purpose of hosting during a period of booming demand in short-term rentals, have a backup plan or the skills to remain competitive during a downturn.

CREATIVE SPACES

Short-term rental platforms have paved the way for a night’s stay to be more than just a place to lay your head. Hosts around the world have promoted some unique environments that guests will share on their social media platforms and attract more bookings.

Land …

AIR …

SEA …

UNDER THE SEA 

Sources: airbnb.com, analytics.alltherooms.com, airdna.com, awning.com, talkroute.com, TIME, Phocuwright short-term rental report 2022, Inside, CNN, smgov.net, carmelrealtycompany.com, sfplanning.org