Hotel/motel tax revenue up in McGregor last year

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Downtown McGregor offers several Airbnb options for visitors. The rise in community listings on the lodging and vacation rental site has contributed to the increase in hotel/motel tax revenue. (Photo by Audrey Posten)

Uptick in Airbnb listings major contributor

By Audrey Posten, North Iowa Times

The amount of revenue generated through hotel/motel tax was up in McGregor this past year. 

According to the city, fiscal year 2017-2018 saw a jump of over $4,000 from the previous year, to $20,469.26. That’s the highest total since the Holiday Shores Motel was closed and torn down in 2015, when hotel/motel tax revenue reached nearly $30,000.

Although the fiscal year total accounts only for the revenue generated through the end of June 2018, the McGregor-Marquette Chamber of Commerce, which receives two-thirds of hotel/motel tax revenue as the city’s contribution to the chamber, saw higher-than-anticipated funds in the latter half of 2018, as well.

“And the Village Motel [on Walton Street] was not open at all,” said Kristie Austin, executive director of the McGregor-Marquette Chamber of Commerce. “So we should have seen a decrease, but we did not.”

“It’s pretty significant,” said McGregor’s deputy city clerk and economic development lead Duane Boelman of the increase. “It’s really come back, and, obviously, there’s no hotel.”

Austin and Boelman largely attributed the increase to the rise of community listings on lodging and vacation rental websites like Airbnb and VRBO (Vacation Rental By Owner). Between the two sites, people have listed at least a half-dozen properties in McGregor, ranging from a single room or downtown apartment to an A-frame loft in the woods or Victorian home. 

“It’s really very surprising how many listings there are,” Austin shared. “You can have one bedroom or a whole house. There are different ways to stay depending on your price and needs.”

As of Nov. 1, 2017, Airbnb began collecting hotel/motel tax on behalf of hosts and remitting it directly to the Iowa Department of Revenue, which distributes the funds to the corresponding city. The tax is directly assessed to users when they book lodging online.

Boelman said he doesn’t think the tax has deterred guests from staying at Airbnb locations. They expect to pay it when they stay anywhere, whether it’s a hotel, regular bed and breakfast or vacation rental.

“It’s just like sales tax,” he noted. “And it’s being reinvested in the chamber to promote tourism.” The city of McGregor also uses one-third of the funds for economic development.

With Airbnb collecting the hotel/motel tax, he said it makes the process easier for Airbnb hosts, as well as the city.

“Then the city doesn’t have to police it,” he explained. 

McGregor would like Airbnb hosts to get a permit from the city, however.

“It’s just a matter of knowing where they are, how many units there are,” Boelman said. “Occasionally, people stop [at city hall] asking about rentals.”

The increase in Airbnb listings is multi-faceted. In one way, said Austin, it creatively fills a lodging need in the community.

“People are recognizing that need and they’re filling it with Airbnb,” she said.

Brent Grinna, who, with wife Katie, owns McGregor Manor, an 1897 Victorian home located at 320 Fourth St., said much the same thing.

Both originally from the area, the Grinnas split time between Boston and Iowa. When their family isn’t staying at the four-bedroom, historic home, they make it available to others through Airbnb. During an interview over the summer, Brent said the home had welcomed visitors from the Twin Cities, Madison and Chicago, as well Taiwan and Australia, in just a few months.

“There was a need for additional lodging in McGregor,” he said. “It’s been fun to see how quickly we’ve been able to attract guests from all over the world.”

Boelman said Airbnb is a “good way to bridge the gap,” and encourages other locals to list their unused spaces. Until McGregor gets a new hotel—and even after—he anticipates it will continue to be a way to pick up rooms that haven’t been available. That’s because, in addition to filling a need for the community, it’s become, to many travelers, a preferred way to stay.

“Airbnb is like the Amazon of B&Bs. Everyone goes there [to find a place to stay],” he explained. “It provides a different experience—an experience people can’t get in other towns.”

“As long as the proprietors are following the rules, it can be a great thing—it is already,” he added.

Proprietors, like the Grinnas, are seeing that success first-hand. 

So are Richard and Charlene Palucci, who have listed their Old Jail and Firehouse Guest Suite on Airbnb for the past two years. Richard said they were attracted to Airbnb because of its growth and successful business model.  

He likes that they can set their own schedule, for example, keeping some dates blocked off so long-time customers who don’t use websites like Airbnb can continue to stay with them.

The Paluccis are also free to set their own prices. Previously, customers could not book using a credit card, but, now, Airbnb allows them to pay online using that method.

“It opened that up without any fees,” Richard said.

Through Airbnb, the Paluccis can also review their guests and get reviewed in turn. They’ve been so welcoming, they’ve reached “superhost” status. Richard said bookings have been up in the past two years, and the location is booked nearly every weekend, as well as at times during the week.

Richard warns, though, that Airbnb hosting isn’t necessarily for everyone. 

“Charlene has known the business for many years,” he said. “It has to be quality. You should have some guidance and some experience in hospitality.”

Austin is quick to note, however, that Airbnb isn’t the only factor contributing to the increase in hotel/motel tax. Last year, she started an email group for chamber members who have lodging establishments. The members correspond with one another each week, so they know who’s booked and who can take on additional visitors when referring people to local lodging.

“Instead of calling all over, they have that easy access referral. It’s right there at their fingertips,” Austin noted. “That’s also more timely for the customers. They don’t have to call three different places.”

Austin said the chamber’s lodging members have also learned how to market themselves better and become more readily found online.

“They’ve gone to trainings and classes. They understand what they need to do,” she remarked. “It’s the way people are looking for a place to stay.”

Drawn by the unique beauty of the bluffs and the Mississippi River, travelers continue to discover McGregor and Marquette. While some come from as far away as England and New Zealand, Austin said shorter-term trips were also more popular this past year.

“More people are doing a couple days and coming to local and regional places,” she said.

According to Austin, the combination of factors is working: “Everyone is staying booked more consistently.”

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