Sunday, October 8, 2017

Lee Harding: Taking the Air out of Airbnb

In Canada, Airbnb is getting…well…deflated. The ironic reason is that it has become too popular.

Airbnb is an online service for “Air bed and breakfast.” It’s for guests who want a cheap place to stay the night, even if it’s on an air mattress. Since its 2008 launch in San Francisco, Airbnb has exploded in popularity, boasting a net worth of $31 billion, having hosted more than 200 million guests in over 65,000 cities and 191 countries.

This juggernaut has alarmed hotel owners and workers afraid for their wallets and has inspired some strange demonstrations, even in Canada. Last spring, Toronto activists marched through Kensington Market in a mock funeral procession over departed rental housing. The murderer? Airbnb! More short-term rentals meant less long-term rentals, they insisted. Apparently, some people were (gasp) buying properties to profit from short-term rental demand. Such was the accusation of Fairbnb, an anti-Airbnb coalition started by Unite Here Local 75, a union that represents hospitality workers.

Is this really cause for alarm? An Airbnb report in 2016 showed that 89 per cent of hosts had only one listing and these accounted for 70 percent of the total number of listings. The service helped many hosts cover high mortgage or rental costs. Besides, this is a market-based response to a clear need that would not have been met otherwise. Guests didn’t want the Hilton and they didn’t get it. They got something they could afford from people happy to offer it at that price. Kensington market’s proximity to the University of Toronto and downtown hospitals meant Airbnb could benefit thousands wanting to visit loved ones without breaking the bank.

Just the same, it was great for the bank accounts of many Torontonians. Airbnb estimates that 450,000 guests spent more than $417 million in Toronto in 2016.

Alas, freedom couldn’t last. In June, Toronto followed Vancouver’s lead and restricted Airbnb listings to a primary residence. Hosts have to pay an annual fee to register with the city, plus a new municipal tourist tax that applies to both hotels and home-sharing services like Airbnb. Short-term renters have fewer choices and pay more for what remains. In 2016, Kensington Market had 464 listings, including 248 were entire residences and 216 shared or private rooms. As of October 2017, the number of listings had already dropped by 81 with just 183 entire residences and 192 rooms. On average these were rented 117 nights per year at $112 per night.

Airbnb’s enemies still aren’t satisfied. The Greater Toronto Hotel Association wants limits placed on the amount of days a person can rent out their own home (it is 90 or 60 in some cities). Lis Pimentel, chair of Fairbnb, invoked the mantra of “enforcement, enforcement, enforcement.” She insists officials should insist on documented proof of home residence, steep fines for infractions, and wants Airbnb out of secondary suites in a home residence, such basements.

This all means one unfortunate truth: a man’s home is his castle—until he tries to make money off of it.
Lee Harding is a Research Associate with the Canadian Frontier Centre for Public Policy HERE.


David Curl said...
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I can understand the concern of the workers. There livelihoods are on the line as all good CEOs cut staff to ensure profit for the shareholders when things go awry. (They could simply cut the CEOs salary by 50% and save the jobs of 100s of regular staff members tut this is never discussed) Industry bodies fight for survival as technology changes the way we do things. This is understandable. BUT if the hotel industry was not the biggest price gauger people would have empathy for them. they have proven that they are simply greedy so they need to be brought down to earth.
The consumer once was king. Now we are getting shafted on all fronts. Prices rise an jobs security is weak as shareholders are bribed. Consumers need to unite and demand a fairer system. If this changes how we have done things then so be it. But there is no such thing as Tax free income. Property speculators and airBnB operators need to pay their fair share of tax and the only way to do this is regulate the industry.You may only get 90 dollars a night after the Municipality tax, but surely if you are struggling, $90 is better than nothing.

Anonymous said...
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Hotels don't hesitate to double, quadruple their room rates based on demand during peak holiday periods and when special events take place in the cities they are situated in.
Their excuse is that it is all about supply and demand and normal comercial tactics so they really are being two faced and disengenous complaint about a lack of custom because of Air B&B.
They can't have it both ways so compete with Air B&B or put their tots back in their collective cots and stop whining.
Remember the price gouging from accomodation establishment during Olympic Games and major sporting events!

Anonymous said...
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Hotels in the USA and no doubt other countries now charge " cleaning fee" on top of their room surcharge when checking out!
Excuse me housekeeping is part and parcel of running a hotel and when the room rates go from hundreds of dollars a night for on average fairly small rooms with fees for parking, room safes, wifi internet etc ,often not even coffee or tea making facilities and now not even daily sheet or towel changing they have only themselves to blame for the increased popularity of AirB&B.

Clunking Fist said...
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AirBnB, Uber, budget airlines, electronic word processors, the horseless carridge, electricity, the bow and arrow, flint axes. There's always something new to shake up the status quo. We should by now realise that we need to allow this to happen in a free-market world. We all benefit.