Airbnb impact may be bigger than you think
By Colleen Isherwood, Editor
VANCOUVER — The real impact of Airbnb may be bigger than you think it is, according to Chris Gibbs of Ryerson University and Ken Lambert of HLT Advisory, reporting at the Western Canadian Lodging Conference, held yesterday at the Vancouver Convention Centre.
A great deal has changed since their last presentation at the Canadian Hotel Investment Conference in May, Gibbs said. "The biggest issue in the world is the owner. How do I make some revenue out of my house or my car? And then there's the whole municipal issue."
Airbnb has been growing exponentially. In early 2014, Airbnb founder Brian Chesky tweeted that he would add 30,000 guest rooms every few weeks in 2014 — or 780,000 listings. "He only fell short by about 200,000, adding 500,000 in 2014 and 500,000 in 2015," said Gibbs. And Airbnb plans to grow revenue from $900 million in 2015 to $10 billion in 2020, according to Fortune 2015.
In Vancouver, Airbnb has 1,777 average active listings available. In Calgary, that number is 241, in Toronto, 2,280, and Ottawa, 239. To put that in perspective, the Toronto listings are about equal to the room count of the Sheraton Centre and the Westin Harbour Castle — numbers that should make hoteliers sit up and pay attention.
Contrary to the image of a homeowner renting out a room, entire places account for 60 to 70 per cent of Airbnb listings and 75 to 80 per cent of their revenue.
Phocuswright's recent report on why people choose Airbnb notes that convenient location, overall value for money and homelike feeling were the three most prevalent reasons for travellers to select Airbnb. Surprisingly, "lowest price" ranked 10th on the list.
Business travellers are starting to chose Airbnb. Gibbs gave an example of a woman from Barrie, Ont., who travels on business about 12 times a year. She has a per diem rate that includes $140 for a hotel and $60 for food, but if she can book on Airbnb for $90, she can pocket the extra money.
But the real growth is in the condo market, in places like Liberty Village and CityPlace in Toronto and similar neighbourhoods in other cities, said Gibbs. It's particularly suitable for intergenerational travel, since a family can rent an entire house. "Airbnb enables that," said Gibbs.
A number of cities have been enacting laws to license and control Airbnb rentals. Vancouver, for example, is experiencing a shortage of affordable accommodation. They recently announced a proposal to tax empty or vacant homes. Only principal residents will be able to get a license to rent. Basement suites and laneway homes would not be able to get licenses. Tenants of sub-leases would only be able to get a license with the permission of the landlord. This legislation is being discussed in city council this week, with draft regulations anticipated in early 2017.
Enforcement is the problem. In Montreal where licenses and legislation were introduced in April 2015, only 41 of 10,000 listings in that city have paid the license fee. Inspections have been carried out on 267 files, but only two have been prosecuted.
"Hotels can't just sit back," said James Chase, chief executive officer of the British Columbia Hotel Association, who was in the audience. "Numbers are increasing, there's not enough affordable housing, and it's changing the whole labour supply and accommodation. B.C. has chosen the license approach, but where they're struggling is catching you. In Quebec, if you rented your place for just two weeks a year, you didn't have to register. Ontario blew it with their Airbnb pilot project.
"You've got to be active and get local government to get involved."