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New Phila. tax on short-term home rentals in time for pope's visit

Short-term rentals, like those offered through websites such as Airbnb, are now taxable in Philadelphia - but officials won't speculate on what kind of revenue they could generate.

Short-term rentals, like those offered through websites such as Airbnb, are now taxable in Philadelphia - but officials won't speculate on what kind of revenue they could generate.

The bill, which became law last week, legalized short-term rentals in time for the September papal visit. The number of listings has tripled since the beginning of the year. The city will officially start collecting the 8.5 percent occupancy tax, paid for by those staying in the homes, July 15.

Philadelphia is the largest city to legalize renting through online marketplaces, joining San Francisco and Portland, Ore. Previously, most rentals in residential areas were illegal. Rentals lasting more than 30 days will now require a permit.

"This legislation will allow Airbnb to collect on behalf of hosts - which is revenue for the city and good for hosts, since this stuff can be really complicated. Hotels tend to have accountants to do it," said Alison Schumer, a spokeswoman for Airbnb.

The hotel industry - which has long paid the tax - had pushed for the measure, calling it a needed equalizer.

"It was more about fairness," said Ed Grose, executive director of the Greater Philadelphia Hotel Association. "We're one of the heaviest-regulated industries in the city, and we think it's only fair that Airbnb pays the hotel tax, which goes to fund the agencies that it benefits from - Visit Philadelphia and the Convention Center."

Councilman William K. Greenlee, who sponsored the Airbnb legalization, said there was no indication the tax will drive down demand.

"It's still less expensive than a regular hotel, plus, in the case of the papal visit, you might not even be able to get a hotel," he said. "Unless it's in, say, Newark, Del."

Airbnb listings for the weekend of the pope's visit, Sept. 26 and 27, are in some cases 10 times as expensive as on other weekends - but that doesn't necessarily mean hosts will find people willing to pay those rates.

"Everyone who lives in Philadelphia seems to be listing their place," said Ian McHenry, president and cofounder of Beyond Pricing, a California-based company that works with Airbnb renters to price their rentals. "Right now, there's a lot of supply."

For example, the weekend of Sept. 11, before the papal visit, the average Airbnb price in the Philadelphia area is $216 a night. For the weekend of the papal visit, the average listed price is $816.

"That is because hundreds of people have listed their places for outrageous amounts," he said.

On Thursday, a three-bedroom in Northern Liberties was priced at $10,000 for the papal weekend. A studio typically listed for $75 a night spikes to $750 a night when Pope Francis is here.

McHenry said prices will almost certainly drop closer to the visit.

"We saw this happen with the Grateful Dead concert in Chicago. All the hotels sell out, and then all the Airbnbs suddenly get booked up, and then people start listing for crazy amounts," he said. "The media picks up on them, and then a ton of people say, 'I'm going to make $5,000 a night,' and the market is flooded."

Airbnb suggests a more reasonable listing of $150 a night for "peak times" in Philadelphia. McHenry's team suggests a 40 percent increase in what a host would normally charge.

McHenry said regional hotel rooms - most of which have already been sold for the papal weekend - are on average 88 percent higher than normal.

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@juliaterruso