There are about 140 Airbnb short-term rentals in the Nelson area. How is this affecting Nelson’s hotels and regular B&Bs and the availability of long-term rental accommodation?
These are not easy questions to answer, but in asking them, Nelson joins the ranks of cities and towns around the world grappling with this end-run by the “sharing economy” around the old way of doing things.
Across the world, the hotel industry says Airbnb is stealing its customers, and cities are upset because Airbnb operators don’t pay business taxes. At the same time, Airbnb has, according to the business magazine Inc., become the world’s biggest lodging provider, with 1.5 million listings worldwide.
Airbnb provides a platform for homeowners to provide short-term rentals of all or part of their house — or, to quote the company’s website, “from houses and apartments to tree houses and igloos.” Rentals are listed on the Airbnb site (with professional photography paid for by Airbnb) and the company handles bookings and payment. The average Canadian daily rate for an Airbnb rental is $149 per night.
“We welcome the competition,” says Chris Drysdale, the owner of a local bed and breakfast and chair of Nelson Kootenay Lake Tourism.
He says the organization is “in favour of anything that brings people to Nelson. But our issue is that it is not fair from a business standpoint. There needs to be a degree of parity.”
Cathy-Ann Glockner agrees. She runs the Victoria Falls Guesthouse, listed with Airbnb, located in a commercial zone in Nelson, and pays municipal business taxes and has a business license. She rents out five apartments in her house as short-term rentals.
The vacation rental business is very competitive, she says, and she wishes all accommodation businesses were held to common standards.
Maria Schuh feels the same way. Her four vacation rental suites are located in a commercial zone too, and she has a business license and belongs to the Chamber of Commerce.
Both Schuh and Glockner say a small portion of their income comes from their Airbnb connection but they signed up because it gives them more visibility on an increasingly popular platform.
Schuh says people like vacation rental accommodations because they are “homey and personal, and not cookie-cutter’ like hotel rooms. She also likes the fact that not only can customers review the business, but she can go on the Airbnb site and post reviews of her guests.
“This gives both sides a sense of security and responsibility,” she says.
But she says the issues of taxes and regulation “need to be put on the table” and everyone should play by the same rules.
What are those rules?
Zoning and licensing
Nelson’s zoning bylaw doesn’t mention Airbnb-style vacation rentals, but it does cover regular bed and breakfasts. Since many Airbnbs don’t fit the definition of a bed and breakfast in the city’s zoning bylaw, it appears they may be illegal businesses.
City planner Megan Squires puts it more diplomatically: “They are not a permitted use in any of our zones.”
If Airbnb isn’t a permitted use, then it’s not able to get a business license. Licenses within the City of Nelson for a regular bed and breakfast have stipulations about such things as number of rooms, amount of floor space, cooking facilities, insurance coverage, whether the operator lives there, parking, insurance coverage, fire separation, fire exits and placement of extinguishers. Airbnbs are operating outside all these requirements.
Hotel tax
Kootenay Lake Tourism charges all hotels and other accommodators a two per cent hotel tax and the money goes to market the area to tourists. But this only applies to accommodations with four rooms or more, and therefore probably would apply to very few Airbnb accommodations.
However, Dianna Ducs, executive director of the organization, says Airbnb businesses benefit from her efforts to market the area.
Ducs thinks something needs to be done at the local political level. Aside from the need for a level playing field, she says tourists need to have the benefit of regulated accommodation standards, and the municipalities need the tax revenue.
“We need that money to keep the potholes filled, keep up the historic aspects of the town, keep the lights lit, the streets paved, signage, Christmas lights. These things all benefit the locals and the tourists.”
Ducs expects the tourism association will approach city council about this soon, asking it to create and enforce some new rules.
Government taxes
Providing accommodation is a business, and the city taxes businesses at higher rates than residences.
But because Airbnb accommodations are not registered or regulated, no one knows how much tax the two senior levels of government are missing out on.
At the provincial level, the BC Hotel Association is hot on the trail of Airbnb.
“What has to happen,” says the organization’s executive director, James Chase, “is the local people need to approach their local government and get them to understand it and pass bylaws to get this issue controlled.”
He says the association would like to work on the tax issue — the fact that Airbnb accommodations don’t pay provincial or federal taxes — but they can’t do that until local governments put bylaws in place and enforce them.
He also said municipalities need to enforce the purchasing of business licenses and their conditions around health, safety, and fire.
“If we can get a critical mass,” says Chase, “10 or 20 communities who get it, and with bylaws, then we can start to work on the tax piece.
The long-term rental market
Chase says the provincial hotel association is also concerned about Airbnb cutting into the stock of rental accommodation because they are finding their hotel employees can’t find places to live.
“We are short of employees in many part of the province,” he says. “If they have no place to live, this has exacerbated this problem.”
In Nelson, Maria Schuh is worried that Airbnb accommodation takes long-term rentals off the market.
But the head of the local landlord association, Trevor Jenkinson, doubts operators of Airbnb accommodation would rent out their space long-term. He says he sees no evidence Airbnb is hurting the rental market here.
Jenny Robinson, the executive director of Nelson CARES, which does housing advocacy for low-income groups, also says the availability of rental housing has not changed since the recent incursion of Airbnb operators.