Myrtle Beach says they lose millions converting short-term rentals. Here’s how much
A new report to the City of Myrtle Beach claims that the city will lose millions if short-term rentals get converted for long-term use.
Prepared by the Greenville, S.C.-based firm Arnett Muldrow & Associates, the slideshow appeared at the city workshop Oct. 1, 2024.
The briefing outlined the potential lost income to Myrtle Beach, Horry County, and the state while highlighting the range from low, average, and high revenue loss estimates. The presentation claimed that converting short-term rentals to long-term use would cost the city, county and state taxes regarding revenues like the accommodations tax and business license fees.
Arnett Muldrow & Associates’ report estimated that converting short-term rentals to long-term use would cost the City of Myrtle Beach between $1.51 million to $2.52 million. For context, based on the slideshow’s assessment, if 1,000 short-term rental rooms converted for long-term use, Myrtle Beach would lose $2.48 million in revenue.
The City of Myrtle Beach 2023-24 Fiscal Year Annual Budget & Financial Plan stated that the 2024 budget included $81.2 million in total revenues. The slideshow also forecasted that the combined revenue lost between Myrtle Beach, Horry County and South Carolina was $4.58 million to $7.78 million. If 1,000 short-term rental rooms converted to long-term use, the report predicted that the city, county and state would lose $7.61 million.
The report also found that the net local government revenue lost equaled $3,761 and 48 lost jobs. The study also found that it costs fire and police more to service long-term rental properties versus short-term rental properties.
The report follows the city’s placing a moratorium on short-term rental conversions in April 2024 to study how doing so would impact the city’s finances.
The ban pertained to properties near the beach between the intersection of Highway 17 and Ocean Bouelvard and Grande Dunes Boulevard, which encompasses most of the area that allows for short-term rentals in the area.
While some cities are typically keen to ban converting long-term-use properties into short-term rentals, Myrtle Beach’s inverse approach is unique. In a previous September 2024 interview, City of Myrtle Beach Director of Public Information Meredith Denari said that she didn’t know if the city took inspiration for the conversion freeze from elsewhere.
It’s unclear if the city will extend the ban once it expires in January 2025. In that same September 2024 interview, Denari said she didn’t know whether the moratorium would receive an extension.
What recommendations did the new report provide Myrtle Beach? Here are the details
The presentation laid out three recommendations for addressing the issue:
- An overlay district.
- Updating the zoning code.
- Allowing long-term rental as a conditional use for residential multi-family but excluding hotels and motels.
In an interview with The Sun News, Tripp Muldrow, Arnett Muldrow’s principal, said, in his opinion, that rather than a formal recommendation to the city, the best solution for the moratorium would be a new overlay zoning district.
“An overlay would allow coverage, not of the city, but of districts where this could occur,” he added.
According to the University of Wisconsin-Stevens Point, overlays allow municipalities to add special caveats to the current zoning code, such as allowing long-term rentals in an area specifically designed for stays of less than 90 days.
Muldrow said that creating an overlay will require defining what a conversion could be. He added that hypothetically, a new caveat to current zoning would allow long-term use for a multi-family unit like a condo. Meanwhile, traditional hotels and motels would still be barred in a new overlay plan. Muldrow, who said he once interned for the City of Myrtle Beach 30 years ago, added that updating the zoning code could provide clarity, too.
“It’s time to update the zoning code, and everybody knows that’s the long and short of it is that,” he added. “That could be really creative as they explore all these other options to address the national housing crisis (that) is facing the Grand Strand as well.”
Here’s what we know about the study on converting short-term rentals in Myrtle Beach, SC
Muldrow said the study had a limited scope and mainly focused on single-room hotel units — excluding places like condos, hotels and motels. He added that the city provided a sample size of 821 converted units to study but added that there were probably more in the area. Muldrow also said that the number of conversions was progressing, highlighting a growing trend that warranted the moratorium for further study.
“The part of the study was there were some things we didn’t know whether there would be a good impact or a bad impact,” Muldrow said. “We knew it was evolving, so we had a couple of larger properties that we were looking at to understand.”
Some have argued that converting short-term to long-term rentals won’t negatively impact or result in a hotel supply crunch and show changing trends. According to this theory, the Grand Strand is moving from a seasonal economy to a year-round one.
In the aggregate, the loss in revenue and economic impact gets canceled out by other factors. However, Muldrow said that the city and county’s tax structure, which reduces the burden on locals by relying on tourists paying tax revenue for eating out and staying in hotels, eliminates that possibility.
“There’s always the possibility, particularly on the services side, that it would either be a wash or the conversions would decrease costs,” Muldrow said. “That turned out not to be true.”
However, Muldrow also said that the study didn’t quantify how quickly more units are getting requested for conversion or answer if losing units would negatively impact the Grand Strand’s hotel room supply. Muldrow added that the study also didn’t distinguish between high- and low-occupancy properties when determining the cost of fire and police service for short-term versus long-term properties.
Muldrow added that the initial loss of $5.7 million direct economic impact predicted by the Chamber of Commerce in April 2024 was relatively accurate.
“It was pretty doggone close,” he added. “
