As Airbnb popularity soars, Alberta hotels step up calls for government regulation

Calgarysun.com
Sept. 27, 2017
By Reid Southwick

Armed with a new report that shows Airbnb is exploding in popularity, Alberta hotel owners have launched a new offensive pushing for government regulation and taxes to "level the playing field" between the traditional industry and the online platform.

Airbnb, the site that allows property owners to rent their entire home or a single room for days or months at a time, has been seizing market share from hotels, as Uber upends the taxi industry.

The rise of Airbnb and other home-sharing platforms in Alberta also comes as hotels are struggling from high vacancies due to lingering effects from the recession and an influx of newly built hotels planned before the downturn.

Just as taxi operators did when Uber came to town, hotels are calling for Airbnb to play by the same rules the industry has always followed.

And as Calgary saw with its Uber dustup, the Airbnb debate has triggered a war of words between the traditional and emerging industries.

"The big corporate hotels are at it again, peddling lies about home-sharing to protect their ability to price-gouge consumers, and preserve antiquated business models," Airbnb spokeswoman Lindsey Scully said in a statement.

"The big hotels should join Airbnb and focus on creating new and modern rules instead of engaging in self-interested attacks on every-day Canadians sharing their homes in an attempt to protect profits."

The new report, commissioned by the Hotel Association of Canada, found that property owners who rent more than one home on the online platform - as opposed to single rooms - represent the technology firm's fastest-growing segment.

Dave Kaiser, chief executive of the Alberta Hotel and Lodging Association, said these houses and condos are operating like hotels but don't follow the same rules for health and safety or pay the same taxes and tourism levies.

Kaiser said his group, which represents 800 hotel and campground operators, has also heard from angry residents dealing with noise, property damage and parking problems due to Airbnb tenants.

"If government doesn't weigh in with some fair rules, then you're going to see impacts on the general economy," he said, adding the industry spent $500 million building new hotels in Calgary and Edmonton in 2016 alone.

"That creates a lot of jobs that aren't just in our industry, around construction, finance, real estate. If our industry is marginalized because of something like these home-sharing platforms, all of that economic activity is impacted."

The report, compiled by the commercial real estate services firm CBRE Ltd., shows a total of 3,000 Airbnb units were available for rent in Calgary last year, doubling in just one year, with total revenues hitting $11 million.

Kaiser estimated Airbnb controls less than five per cent of the accommodation sector in Calgary, based on revenues. But he said the unregulated player's foothold is increasing at a time that just 58 per cent of the city's hotel rooms were occupied, on average, during the first seven months of 2017.

Calgary property owners who rent out multiple homes on Airbnb collected a total of $2.4 million in 2016, which more than doubled in two years.

Among 11 large Canadian cities, Calgary ranks in the middle of the pack for total Airbnb units and revenues. Montreal, home to 21,500 Airbnb units, and Greater Toronto, where renters reaped $120 million in revenue last year, lead the way.

James Costello had rented his downtown Calgary condo on a traditional lease until the 2014 oil price collapse bottomed out the rental market as tenants demanded lower rents and other concessions.

Unable to afford the drop in revenue, Costello turned to Airbnb, which allowed him to earn three or four times what he used to, though it's a lot more work.

Costello said he'd pay for a business licence, and would also pay a tourism levy typically charged against hotels - as long as Airbnb received a fair level of promotion in return.

His income property is fully insured, and he believes he does more than hotels on health and safety precautions, showing his guests what to do in case of an emergency.

"This is a business for me, and I regulate it as if I was running a hotel; I just don't have a front desk," he said.

Airbnb is a "tourism opportunity, not a market killer," he said. "If someone can't afford to stay in a hotel downtown, they are able to stay in a property like mine, and that brings a different demographic to our city.

In Canmore, short-term rentals are illegal in most residential areas, but are permitted for properties with a business licence in commercial or mixed-use zones. Banff has banned home-sharing completely.

The City of Vancouver, which is dealing with a shortage of affordable housing in a tight and increasingly expensive rental market, has proposed new rules to ban short-term rentals on secondary income properties.

Neither the Alberta government, nor the City of Calgary, has taken any steps to regulate Airbnb so far. The NDP government said it's reviewing the new report as it attempts to determine the best approach to the changing accommodation sector.

Calgary Coun. Richard Pootmans, who is not seeking re-election, expects the issue will land on the next council's agenda after the Oct. 16 vote.

Pootmans said a small influx of short-term rentals can change the complexion of a neighbourhood from a stable environment where residents are raising families to something more transient.

But he said the city needs to get a better grasp of the foothold that short-term renters have in Calgary before introducing any rules.

"I would not rush headlong into regulation; I think that would be very premature at this stage."