FEATURE THE AIRBNB MIGRAINE Short-Term Rentals Disrupt the Marketplace by Alex Van Tol Wouldn’t it be terrible to suddenly discover another company undercutting your business, snatching your clientele and making buckets of cash while evading the rules that you have to abide by? 12 | <strong>alberta</strong> hospitality
THE AIRBNB MIGRAINE Airbnb revenue is expected to exceed {$900 million this year. Terrible, yes. And real. Because it’s actually happening: the short-term rental migraine. Whether it’s Airbnb, HomeAway or even Craigslist, cheap rentals are popping up in cities everywhere. Founded in 2008, and with over 1.5 million listings worldwide as of May 2015 - more than double what it had just a year earlier - Airbnb has become the world’s largest accommodation provider - without owning a single piece of property. The San Francisco startup was valued at $25.5 billion at the end of June – even more than Marriott’s $21 billion. And it has hoteliers shaking in their boots. Disruption with a Capital “D” It’s no secret there’s been an explosion in non-traditional accommodations in recent years. From a budget traveller’s perspective, this new kind of competition is a welcome addition to the marketplace. Public opinion is in favour of these types of accommodations, but hoteliers aren’t feeling the love. The hotel industry has been in turmoil since the slowdown of 2008, and recovery has been difficult because of the explosion in cheaper options for travellers. Home-sharing organizations like Airbnb and HomeAway aren’t required to pay hotel taxes, nor to operate within the same stringent health, safety and fire standards as traditional hotels. “They really are operating in the same business as us, but they’re not operating by the same rules,” says Alberta Hotel & Lodging Association President and CEO Dave Kaiser. The tourism levy and Travel Alberta are affected, too, because they’re not getting the much-needed hotel tax that then gets rolled back into promotion for tourism in the city and province. “The 4% tourism levy was brought in to help the tourism industry in Alberta,” says Kaiser. “[Illegal rentals] are taking advantage of that investment that the rest of the industry is helping to create and they’re benefitting from it, yet they aren’t participating.” Alarming figures are cropping up across North America: Sonoma County, for example, estimates it’s losing $500,000 - $1 million annually in tax revenues, and New York City estimates up to 72% of rental listings in the city are illegal. Calgary’s low vacancy rate makes it difficult to find affordable housing, yet hundreds of apartments sit vacant much of the month. At the neighbourhood level, short-term rentals generate complaints about noise, traffic, parking, garbage, and growing worries about strangers wandering the halls in your condo tower. To date, these kinds of accommodations have been difficult to track and regulate, and hotels have suffered as a result. “There are health and safety issues,” explains Kaiser. “These things are very challenging for regulators and legislators to enforce.” Laws can only be enforced if a property is being rented - and it’s difficult to monitor, because bylaw enforcement only knows there’s a problem if neighbours complain. While other municipalities in North America have taken measures to rectify the imbalance between illegal rentals and traditional hotels, Alberta cities have yet to take action. “We might be a little bit late to the party relative to the iconic destinations or to other big cities,” says Kaiser, “but they’re here and growing, and it is a concern for our industry.” Hoteliers, Raise Your Voices Airbnb is not going to go away. “This is an issue at the national level,” notes Kaiser. For its part, the Hotel Association of Canada is drawing <strong>alberta</strong> hospitality | 13
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