Short Term Rentals Aren’t the Economic Boon They Claim


New Orleans Shotgun House

When it comes to short term rentals in New Orleans, don’t believe everything you hear – or read. On October 3, the City Planning Commission (CPC) voted to recommend tightening restrictions on short term rentals. The proposal is based on a report released by its staff released in September.

Several of the changes the 155-page study recommends involve tightening restrictions as they apply to whole-home rental licenses. The new recommendations would require those who wish to rent out an entire residence to prove that they own and live on the same lot, with a homestead exemption. The rentals would also be restricted to only one other unit on the property.

These proposed restrictions have trigged a loud pushback from members of the short-term rental industry. Almost every rebuttal includes the same thing, though: they all cite a study released last June by the Hospitality Research Center at the University of New Orleans (UNO). This study announced that short-term rentals generated nearly $900 million in positive economic impact, and generated more than 10,000 jobs.

Unfortunately, that may not be the truth. Several economists have now come forward to denounce the study, including Jay Brinkmann, former chief economist for the Mortgage Bankers Association. In a statement to The Lens, Brinkman calls the report “an extremely poor excuse for an economic analysis.” He goes on to point out that the study ignores the costs of short term rentals completely while overstating their benefits.

“This is more of a poll than a study,” Brinkmann stated. “This is not something that would show up in an academic journal. The problems I’m raising now are the most basic outline of how an academic peer might look at this and dismiss it.”

Dr. John Crompton, a professor at Texas A&M University’s Department of Recreation, Park, and Tourism Sciences agrees. He couldn’t find any evidence to corroborate the study’s findings. Further, in response to public records requests, the UNO Hospitality Research Center refused to release any of the data sources, data, and visitor profiles used in the study.

They did, however, release several emails from the Alliance for Neighborhood Prosperity (ANP). On their website, the group claims to be a “non-profit corporation,” however, they do not have 501(c)3 status, and donations made to the group are not tax deductible. In the emails, James Brubaker of the ANP tells the UNO researcher,

“If it will take a long time to generate all of these measures by market segment, we’d be happy to first receive just one measure by market segment that tells an impressive story. We look forward to your recommendation on which measure would be the quickest to generate and tell an impressive story.”

ANP paid Hospitality Research Center $7,229 for the short-term rental study. Additionally, their contract stipulates that they would be allowed to provide the key outcomes they wished to see from the study. They would collaborate with UNO during the conception, methodology, and procedural stages. This seems to be common; in several studies available from the Hospitality Research Center, the client paying for the study is also listed as a collaborator.

The influence those paying for the study have over its outcomes, combined with the center’s refusal to provide information regarding its data and methodology all point to serious issues with the research itself. Additionally, some of the data tables within the study showed extremely small sample sizes – in one case, results were based on a sample size of only 39 people.

And this isn’t the first time that the center’s research has been called into question. In their 2017 visitor profile provided to the city, they stated that 10.98 million people came to visit New Orleans in 2017. However, only two weeks later, a second study produced for the Convention and Visitors Bureau by research firm D.K. Shifflet & Associates found 17.74 million visitors came to the city in 2017. Their study also found that visitors spent $1.19 billion more than the Hospitality Research Center report.

Short term rentals don’t exist in a vacuum. Opponents of the CPC regulations who cite the UNO study do so as if stricter regulations would mean that visitors who currently stay in short term rentals would simply not come to the city at all. However, there is no evidence that would be the case – and the study conducted by the research center didn’t ask that question.

Furthermore, the study fails to address other important questions. How much is lost in the way of affordable housing in favor of short term rentals? How much is neighborhood quality being compromised? What are the negative impacts on neighborhood traffic? And how much do short term rentals cost the city in comparison to how much they claim to generate?

All good questions to consider before making a judgment on the impacts of short term rentals.

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Jenn Bentley has worked as an editor and writer for the past 10 years with publications like The High Tech Society, FansShare, Medium.com, and others. When she’s not writing or editing, Jenn spends her time raising money for Extra Life and advocating for autism awareness. If you liked this piece, be sure to check out her other work here.

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