Opinion: Proposition S threatens St. Louis city’s tourism economy

To maintain a thriving business environment, taxes should not be increased on any business, but creating a special tax for only short-term rentals — and not for competing business models, such as hotels — places an unfair burden on citizen-led tourism. Proposition S is inherently anti-competitive, as it would create an imbalanced business environment that unfairly favors traditional hotels over newer and more innovative accommodation options like short-term rentals.

The fairer approach would be to allow short-term rentals to compete on a level playing field with hotels, rather than subjecting them to a uniquely burdensome taxation regime.

Additionally, this targeted tax risks diminishing the appeal of St. Louis as a flexible and affordable destination for visitors. Short-term rentals attract tourists, who contribute to the local economy by spending money on restaurants, shops, and attractions — often outside traditional tourist corridors.

Targeting short-term rentals with additional costs may discourage local residents from opening their property to visitors, which would in turn limit affordable accommodation options for visitors and encourage them to choose other destinations.

Reducing St. Louis’s supply of accommodations is also likely to reduce the city’s tourism revenue. Tourism supports 91,000 hospitality jobs in the St. Louis region. According to Explore St. Louis’s annual report for fiscal year 2022, “Taxes paid by tourists reduce the tax burden of each St. Louis household by an estimated $1,201.”

In 2023, the Gateway Arch National Park alone attracted 2.4 million visitors. Yearly economic value generated by tourism is in the billions. What’s more, visitors pay local occupancy and sales taxes every time they stay in a short-term rental in St. Louis, generating valuable tax revenue for the city. Hamstringing this industry with foolish taxation of short-term rentals will only harm the city.

Other cities have attempted to severely limit short-term rentals, and it has ended poorly for residents and visitors alike. These efforts do nothing to promote the interests of the public. Instead, they only benefit the interests of hotels.

New York’s onerous regulation of short-term rentals — which hotel-industry groups lobbied hard for — demonstrated this fact. Shortly after the regulations went into effect, Wired reported that “Hotel occupancy rates in New York have been slightly up year over year.” The other beneficiaries were nearby localities that didn’t penalize short-term rentals. “Jersey City has seen demand [for short-term rentals] rise 77 percent year over year as of mid-February…while in Weehawken and Hoboken, demand has increased 45 and 32 percent, respectively,” Wired says.

Proposition S’s narrow and anti-competitive scope would create a blatantly uneven playing field and undermine the city’s tourism economy. Property owners should not have to endure unfair taxation to make use of their property as they see fit.

Tourists and other renters should have access to the best and cheapest types of accommodations provided by the free market. Because short-term rentals are a relatively new business, they can seem like an easy political target for new taxes. However, that doesn’t make unfair taxation good policy.

The fact that, in the fast-paced modern economy, people continue to find new ways to make themselves and their property of use to others in their communities is a good thing for St. Louis and cities across the U.S. St. Louis should not discourage new business models with poorly considered taxes and regulations.