Popular room-sharing website draws Ottawa hoteliers’ concerns

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The “boutique hotel-style” room in downtown Ottawa looks like it could rival anything offered at an actual boutique hotel – for just $106 a night.

David Smythe is the general manager of the Lord Elgin Hotel.

By David Sali

It’s one of 416 properties in the capital listed as of Nov. 12 on Airbnb, a popular website where hosts rent out guest rooms in apartments, homes and condos for overnight stays to tourists.

The site was launched in San Francisco five years ago by a couple of roommates who couldn’t afford their rent and decided to hire out air mattresses in their apartment to guests. Today, it boasts 350,000 hosts in 192 countries who rent rooms to eight million people a year.

Enabling ordinary homeowners to offer lodging to out-of-towners – typically at significantly lower rates than hotels – Airbnb is one of the many “sharing” websites that have emerged in recent years.

It’s also a rapidly growing segment of the city’s hospitality market. The number of Ottawa listings on Airbnb’s site has nearly doubled in the past 10 months.

But not everyone is thrilled about the idea of private homeowners renting rooms to guests. There are no regulations governing the practice in Ontario, triggering safety and liability concerns as well as complaints that operators are dodging fees and taxes levied on the lodging industry.

“The odd person who (rents) a spare room, I understand that and can appreciate it,” says David Smythe, general manager of the Lord Elgin Hotel. “What’s concerning now is that it’s not just a spare room that people have – it’s people are now going out and buying condos and buying apartments and renting them as rental establishments.  

“In that case, it’s really circumventing a lot of rules and regulations that hotel owners are obligated to comply with – government regulations, taxation, health and safety. All of these things are a significant cost to the operation.”

Dick Brown, president of the Ottawa Gatineau Hotel Association, echoes those concerns. While Airbnb says it will reimburse hosts up to $900,000 for property damage, it won’t insure stolen cash, jewelry or collectibles for either hosts or guests.

“What are the implications in terms of personal safety, liability issues and so on?” says Mr. Brown, whose organization represents 55 hotels in the National Capital Region.

Unlike hotels, private room rental sites aren’t governed by provincial laws requiring nightly rates to be clearly posted. That opens the door to disputes between guests and homeowners, says Bay Ward Coun. Mark Taylor, who has asked city staff to report on how other jurisdictions in Canada and the United States are dealing with the issue.

“I don’t want to be alarmist about it, but I certainly think that as the sector grows, there’s obviously a greater and greater propensity for … misunderstandings, miscommunications about the amount of money to be paid, dispute resolution, those types of things,” says Mr. Taylor, the chair of the city’s community and protective services committee.

Although the city says it hasn’t received any complaints from residents about private rentals, Mr. Taylor worries about the safety and security of hosts and renters, as well as neighbours, in areas with dwellings that cater to transient guests.

“I’m not against it taking place, I just want to make sure that it takes place in a healthy environment,” he says. “What’s the dividing line? How are you actually using your place? I have absolutely no problem with people being entrepreneurial and saying, ‘Hey, I have a property and I want to make some money off of it.’ But we have a certain framework of rules and regulations to make sure that you’re doing it in a way that’s in keeping with what your neighbours are comfortable with.”

Just how much private rentals are cutting into the hotel industry’s business is difficult to determine.

Mr. Smythe has no hard numbers, but says it would be foolish to think Airbnb and similar sites aren’t starting to make a dent in the industry’s bottom line. The Lord Elgin is one of the city’s largest hotels at 355 rooms, a number now surpassed by Airbnb.

“It’s gaining traction,” says Mr. Smythe. “When there are 15 or 20 (private rooms) out there, it’s really not an issue. When they get into triple digits, that’s significant. They’re the same size and eating away at this hotel’s occupancy level. You could draw that conclusion.”

But over at Minto Suite Hotel, general manager David Zaltzman isn’t as worried, saying Airbnb and its competitors target a different clientele than major hotels such as the Minto Suite and the Lord Elgin.

“I don’t think it will affect the hotel business,” he says. “When you want to choose a hotel stay, you look at the product and you look at the service. I think this is a combination that Airbnb cannot really offer.

“If you have an issue or a problem at midnight, who would you call? If you have to relocate at night, who would you call? If you’re looking for a room, then Airbnb may be good for you. But if you’re looking for an experience, a stand-alone room is not what will service your expectations.”

Mr. Brown agrees.

“I can’t imagine that the experience of renting a bedroom in someone’s home is in any way comparable to having access to a legitimate hotel room, properly equipped and properly maintained,” he says.

Unlike its counterparts in major U.S. cities such as New York and San Francisco, the hotel industry in Ottawa-Gatineau isn’t pushing for governments to regulate Airbnb and similar sites, Mr. Brown says. Instead, he is taking a wait-and-see approach.

“I have not heard anything from member hotels that would indicate they have a concern at this point in time,” he says. “It’s clearly a matter that I’m sure governments and consumer protection organizations will be keeping an eye on.”

Minto’s Mr. Zaltzman agrees that while the issue is worth keeping tabs on, it’s not a hot topic of discussion yet.

“Right now, I don’t see it as a threat,” he says.

Sidebar: Hotel occupancy rates in Ottawa-Gatineau

2011    2012    2013

Jan.    53.8     57.9    48.1

Feb.    72.5    74.7    66.3

March    63.5    66.8     61.1

April    59.9    61.9    67.8

May    77.7    78.0     78.2

June    79.0    79.6    75.6

Source: Ottawa Gatineau Hotel Association

See also: The untapped tourists.

Organizations: Ottawa Gatineau Hotel Association, Minto Suite Hotel, Gatineau Hotel

Geographic location: Ottawa, San Francisco, Ontario United States National Capital Region Canada New York

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