Why is Indianapolis one of Airbnb’s hottest cities?

Indianapolis, Indiana, has a lot going for it. A finalist for Amazon’s HQ2 contest, the Midwest metro has a growing tech and cultural scene, and is now celebrated for its Cultural Trail and recents investment in renovating its downtown. The New York Times, in typical fashion, noted that there’s more to the city “than the Memorial Day weekend whirlwind known as the Indy 500,” which is akin to being surprised that New York City has events other than the annual marathon.

But in a world of inexpensive airlines and emerging travel destinations, would Indy be your first guess if pressed to name a hot Airbnb market?

Indianapolis, as it turns out, has seen “explosive growth” on the platform, according to the first Short-Term Rental Index released earlier this month by AirDNA, a company that compiles unofficial data on the short-term rental market. The city’s hosts benefitted from 17.4 percent revenue growth year-over-year, which makes it one of the fastest-growing markets in the nation. But why Indy? And how does Airbnb activity chart, or correspond to, the growth and economic fortunes of a major city?

Dig deeper into AirDNA’s stats, and the growth seems even more noteworthy. The number of available spaces for short-term Airbnb stays in Indy has grown 39 percent between 2018 and 2019, while occupancy rates have gone up 6 percent. So even with a huge spike in capacity, there’s a comparatively larger spike in visitors.

“It’s pretty unordinary,” says Scott Shatford, founder and CEO of AirDNA. “Normally, when supply spikes, like it has in Indy, occupancy rates go down. But this is something of an anomaly. In all the top 25 markets in the U.S., supply growth is under 10 percent. There’s definitely an interesting story here.”

AirDNA suggested Indy’s “high quality of life and burgeoning tech scene” have been key to drawing so many visitors. Of course, special events, such as Gen Con, a tabletop gaming convention that brings 60,000-plus visitors a year, do make a difference. Every August, when the event takes place, bookings for short-term rentals spike. This May, during race weekend for Indy 500, 4,700 guests stayed in Airbnbs and generated $700,000 in supplemental income for city hosts, according to Fox 59.

But, as Airbnb itself said in its 2018 travel trends report, Indianapolis, like other midwestern cities such as Columbus, Ohio, “are seeing some of the strongest growth, driven by booming downtown districts humming with new restaurants, nightlife, and local arts.” Investments in a more livable city really pays off.

According to Visit Indy, the city’s tourism bureau, Indy has seen a record-setting number of visitors in recent years, 28.8 million last year alone. Morgan Snyder, senior communications manager for Visit Indy, says alternative housing like Airbnb has been key to driving these impressive numbers. Airbnb visitors to the city are up 63 percent, year-over-year, per Airbnb’s own stats, and host income is up 76 percent over the last year.

“Indy has been very welcoming and supportive of Airbnb,” says Snyder. “Without question, having an option like Airbnb has really helped us welcome the rise in visitors to Indy.”

It helps that Indiana has been open to Airbnb. A 2018 state law bans localities from banning the service, and until another law was passed this past July, hosts were required to collect taxes themselves, not via the platform. That’s led to some confusion, discrepancies, and underreporting of taxes.

“It’s in my contract that I don’t have to (handle taxes), so why would I?” said Rachel Prince, an Indianapolis-based Airbnb superhost, told the Indy Star. ”There’s a lot of gray areas and nobody’s exactly sure, so I think it’s been a little confusing to both my clients and I about what the exact procedure is.”

Currently, a number of bills have been submitted at the statehouse to rectify the situation. State Senator Karen Tallian says she filed a bill that would simplify collection of the 7 percent tax hotels pay after hearing complaints from the lodging industry that Airbnb hosts benefitted from tax-financed tourism campaigns.

“It’s gotten to be, as you know, a big business,” she told the Indy Star.

According to Airbnb, hosts in Indiana made $36 million in supplemental income last year, doubling their income from the year before. Marion County, which contains the city of Indianapolis, accounted for $14 million of the statewide total.

Indianapolis, with more lenient laws, plenty of big events, and an evolving downtown, may have all the factors needed for Airbnb success. Based on returns this year, it’s a trend that’s here to stay; over the month of August, per AirDNA, the city’s booked listings topped 1,694, an all-time high.