The head of Ottawa’s hotel association is renewing his call for tighter regulations on Airbnb and services like it after a new study revealed the vast majority of hosts are turning their entire properties into guest lodgings.
The report found that in the 12-month period from April 1, 2016 to March 31, 2017, entire-home rentals – those in which guests have sole access to an entire property during their stay – accounted for 83 per cent of Airbnb’s total Canadian revenues of nearly $554 million. In Ottawa-Gatineau, about 78 per cent of the company’s revenue came from entire-home rentals, according to data compiled by Airdna.co.
Ottawa Gatineau Hotel Association president Steve Ball says turning a property into a short-stay lodging makes it a commercial enterprise that should be taxed and regulated like a business.
“There is no sharing going on here,” he told OBJ. “This is a rental business, and now it’s a commercial rental business. Airbnb continually promotes publicly that they are home-sharing, whereby Aunt Mabel has an extra couch or room and is in the home and helps visitors better enjoy the city they’re visiting, when in fact … almost 80 per cent of their revenue comes from the commercial operators.”
CBRE conducted the study, which was commissioned by the Hotel Association of Canada and compared the hotel and short-term rental sectors in 11 major Canadian markets.
Mr. Ball said Airbnb and other short-term rental agencies benefit from an uneven playing field because operators aren’t required to charge HST, aren’t taxed at commercial property rates and often don’t pay taxes on the extra income they earn from renting out their units.
Ottawa hoteliers also contribute to the local tourism industry through a voluntary three per cent fee that helps pay for marketing campaigns, he added. Mr. Ball said Airbnb operators profit from the region’s enhanced profile without contributing to the effort themselves.
The CBRE report said Ottawa-Gatineau’s Airbnb sector, which included more than 3,300 rooms in the spring of 2017, could generate up to $2.3 million a year in consumer taxes and fees.
“There’s a lot (of tax revenues) being left on the table,” Mr. Ball said.
The study also showed a sharp rise in the number of single operators who rent out multiple properties. It echoed a McGill University report released last month that said just 10 per cent of hosts in Toronto, Vancouver and Montreal accounted for nearly half of the yearly Airbnb revenue in those cities.
Mr. Ball said more and more lower-income tenants in those markets are being forced out of their homes by property owners who can earn significantly more money from turning the units into “ghost hotels.”
“It’s changing the ability for people to find affordable housing in the core,” he said. “That’s got some long-term implications.”
“There’s a lot (of tax revenues) being left on the table,”
In a statement, Airbnb spokesperson Lindsey Scully said the company supports the push to regulate the sector. But she questioned the CBRE report’s accuracy and said the hotel industry’s real motive is to “preserve antiquated business models” by going after ordinary people who are trying to make ends meet.
She said the average Airbnb host brought in $4,200 in 2016, calling those revenues a “wage supplement” that helps operators cover their housing costs.
“Vacation rentals have always been an important part of Canada's tourism economy,” the statement said. “Today, regular people in communities large and small are making some extra money sharing their space, too, but the hotels have made it clear they won't back down until they eliminate their competition.”
Ottawa city council voted in July to launch a review of Airbnb and other short-term rental services. The city of Toronto, meanwhile, recently proposed a number of new regulations on short-term rentals, including banning people from listing units where they don’t live, creating a new “short-term rental” zoning category, licensing Airbnb and similar companies and opening a registry of short-term rental units.
Mr. Ball praised Toronto’s approach and urged local politicians to implement similar measures.
“Many, many of the major markets are going that route, and we’re asking that Ottawa follow suit and follow a licensing model,” he said. “There are just some fundamental rules that are not being followed by Airbnb. Hence, you’re seeing the growth of commercial operators because it’s easy pickings.”