Study examines short-term rental market in comparison to Canada’s hotel sector with a spotlight on Vancouver and Victoria, British Columbia
(Vancouver, BC) September 27, 2017 – The British Columbia Hotel Association (BCHA), in partnership with the Hotel Association of Canada, has released a new study which demonstrates that commercial operators are growing exponentially, far outpacing actual home sharing activity. Alarmingly, only 17% of Airbnb’s total revenue in Canada is generated by true home sharing where the owner is present during the guest’s stay. The other approximately 80% comes from hosts renting entire home units where the owner is not present.
Furthermore, the study reveals that units are being rented in increasing frequency. In fact, 1-in-3 Airbnb units in Canada were rented for more than 90 days per year and this segment generated over 70% of total Airbnb revenues during a 12-month period. These statistics highlight one simple fact: there is far more commercial activity occurring than people might realize.
The most comprehensive study of its kind, entitled An Overview of Airbnb and the Hotel Sector in Canada: A Focus on Hosts with Multiple Units, spotlighted 11 key markets across Canada and examined the short-term rental market in comparison to Canada’s hotel sector, with a key focus on Airbnb as the most widely used digital home-sharing platform in Canada.
“Over 80% of Airbnb’s revenues nationwide — $462 Million – come from whole-unit rentals where the owner is not present. Furthermore, 30% of Airbnb’s revenues in Canada are being generated by multi-unit operators who rent out 2 or more entire-home units. These multi-unit, entire-home hosts were the fastest growing Airbnb segment in terms of the number of hosts, the number of units, and revenues generated in the past two years,” said David MacKenzie, Chairman of the BCHA Board. “This demonstrates that almost one-third of Airbnb’s revenue is generated through actively managed businesses – ones that do not resemble the original concept of home-sharing.”
Notable takeaways from the study include:
“A commercial operator is an unofficial term we are using to describe the phenomenon that is occurring in which 2 or more entire-home units are being rented out on a consistent basis,” added David MacKenzie. “Effectively, these operators are running illegal hotels within residential housing. This unregulated commercial activity has given rise to unintended consequences including the loss of affordable housing, increased disruption in communities and a potential risk to guests, as there may not be any health and safety standards in place.”
The existing laws and regulations in Canada are not designed for the 21st century sharing economy and, in turn, have allowed new entrants such as Airbnb and similar platforms to avoid compliance with business responsibilities normally associated with commercial activity. These laws need to be updated so that all businesses operating in the accommodation space have a level playing field.
In Metro Vancouver, it is estimated that hotel room sales generate $177 million in consumer taxes and fees. Applying the same rates to BC’s Airbnb sector has the potential to generate an estimated $15.5 million from Vancouver and $1.7 million from Victoria in consumer taxes and fees.
“The traditional lodging industry welcomes competition and is prepared to compete on quality, experience and price; but the rules of the game have to be applied evenly to all players,” concluded David MacKenzie. “To be clear, we are not opposed to an individual using a home-sharing platform to rent out a room in his or her home to help make ends meet. What we are against is the continued allowance of commercial operators to act like hotels without the same responsibilities to taxation and fees, business licenses, health & safety standards, insurance and accessibility. This is about fairness – these laws and regulations should be upheld by anyone running a commercial operation.”
For more information or to access the full report, please visit www.fairrules.ca.